1、 Trend analysis

According to monitoring data from Business Society, copper prices first fell in August and then slightly increased. At the beginning of the month, copper prices were 70968.33 yuan/ton, and at the end of the month, copper prices fell to 69596.67 yuan/ton, with an overall decrease of 1.93% and a year-on-year increase of 8.11%.

According to the current chart of the Business Society, the spot price of copper in August is generally higher than the futures price, and the main contract is the expected price in two months. Copper in August is generally bullish. Towards the end of the month, the main basis decreases, which is good for buying hedging.

According to LME inventory, LME copper inventory slightly increased in August and is at a higher level this year.

In July, the US CPI was 3.2% year-on-year, with an expected 3.3% and a previous value of 3%; The core CPI is 4.7% year-on-year, expected to be 4.7%, with a previous value of 4.8%. The MLF rate and reverse repurchase rate of the People’s Bank of China will be lowered by 15 basis points and 10 basis points respectively. The PMI values of European and American countries in August were lower than market expectations, reducing market expectations for further interest rate hikes by European and American central banks and raising expectations for possible interest rate cuts next year.

In terms of supply: In August, copper supply remained abundant. In August, the centralized maintenance of domestic smelting was completed, with only one refinery undergoing maintenance. Production will return to a relatively high level, but it will face centralized maintenance again in September. The spot processing fee TC for imported copper concentrate has fallen, but it is still at a high level, driving smelting enterprises to improve capacity utilization. The domestic supply of electrolytic copper will increase month on month. As of the end of the month, the domestic production of electrolytic copper will reach 243000 tons, an increase of 4000 tons month on month.

In terms of demand: In the traditional off-season of consumption, although terminal demand is not strong, it still has resilience. Partial orders from the power grid will be delivered in August, boosting the industry’s operating rate; Air conditioning is gradually entering the off-season, and consumer support is weakening; The policy of ensuring the delivery of real estate has boosted the completion data, but the front-end data is still weak and faces the risk of weak follow-up. It is still necessary to pay attention to the implementation of the policy; The demand for electronics is slowly recovering.

Based on the above situation, in August, copper supply was abundant, demand was decent, inventory was relatively high, and the overall trend of copper prices was weak. Towards the end of the month, China is implementing intensive stimulus policies, with the central bank firmly preventing the risk of exchange rate overshoot, supporting the resolution of local debt risks, and adjusting real estate policies in a timely manner, boosting market confidence. However, the macro bearish interference has not dissipated. Chairman Powell of the Federal Reserve stated that further interest rate hikes are still needed to combat high inflation, which in turn increases market tension and further suppresses the increase in copper prices. Therefore, short-term copper prices continue to be greatly affected by macroeconomic sentiment fluctuations. However, copper prices have shown strong performance under the support of low inventory and peak season, and it is expected that the high and volatile trend of copper prices in September will be the main trend.