Summary of SMM Copper Morning Meeting on November 5th: The supply of scrap copper is tightening, and the price difference of refined scrap remains low
[11.5 SMM Copper Morning Meeting Minutes]
Macroscopic aspects: 1) The US dollar rebounded sharply and stopped falling for five consecutive days. The US dollar index hit a new three-day high of 97.57. Under the rising optimism of the trade prospect, the yield of US treasury bond bonds climbed, driving the US dollar stronger against other major currencies
2) The monthly rate of factory orders in September in the United States was -0.6%, lower than expected and previous values; The final monthly rate of durable goods orders in the United States for September was -1.2%, lower than expected and previous levels.
3) The final PMI for Markit manufacturing in the Eurozone in October was 45.9, higher than expected and previous levels; The Sentix investor confidence index for November in the Eurozone was -4.5%, higher than expected and previous levels.
Fundamentals: 1) Copper concentrate: Zijin Mining announced that its wholly-owned subsidiary, Zijin Europe, acquired a 72% B-class stake in CuAu held by Free Port Exploration Company for an initial purchase price of $240 million, thereby acquiring the underlying mining rights of Timok copper and gold held by Free Port Exploration Company and the exploration rights held by Rakita.
2) Copper scrap: Yesterday, the price difference for refined scrap was 807 yuan/ton. The supply of scrap copper is tight, and the prices charged by holders have been strong recently. Therefore, downstream pressure has been placed on the scrap copper trading points, and SMM scrap copper trading points are still trading at 6 points. At present, the market is paying attention to the China US trade negotiations and the issue of future approval documents for the import of scrap copper. Whether the two sides can continue to release positive signals also needs to be waited for. The number of approval documents for the import of recycled copper has significantly decreased, and supply is expected to be even more tight in the future.
3) Imported copper: Yesterday, there was a loss of about 150 yuan/ton in imports. The price comparison has not improved, and market demand continues to remain weak. Yesterday's quotation remained at last Friday's level without any significant changes. Entering November, the market's shipment sentiment is gradually intensifying, and domestic inventory continues to accumulate. Despite the continued weak demand, it is expected that the market quotation will continue to be lowered.
4) On November 4th, LME copper inventory decreased by 3550 tons to 251475 tons; The copper warehouse receipt inventory of the previous period increased by 983 tons to 69912 tons.
5) Spot: Due to entering the beginning of the month, there are currently no financial restrictions for enterprises, and the buying sentiment has increased. Coupled with the recent closure of import windows, the market circulation of goods is limited, accelerating the price increase of holders. It is expected that the prices of holders will remain high today, but the continued upward space is limited, and the acceptance of the high price market is expected to be low. It is expected that the spot price will increase by 50-100 yuan/ton today. Copper prices and forecasts: Last night, copper prices in both domestic and foreign markets rose, mainly due to the positive development of the trade situation and the shift in market sentiment towards optimism. The global stock market rose, with the Dow Jones index reaching a new high, US oil breaking through the $57 mark, and gold prices falling below $1510. The preference for risky assets boosted copper prices. However, in terms of macro data, the October Markit Manufacturing Index for Germany and the Eurozone released yesterday showed that Germany's manufacturing industry is still in recession, while the Eurozone's manufacturing industry is experiencing its largest decline in seven years. The weak economic performance in Europe has limited the magnitude of copper price increases. At present, Shanghai copper is closing positive, and there are two moving averages above it, which hinder the upward trend of copper prices. After yesterday's close, due to the rise in US bond yields, the US dollar index rebounded significantly, and the high point of oil prices fell by more than 0.6 US dollars per barrel, which is expected to drive copper prices down today.
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