Betrayed by copper or a small market

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Betrayed by copper or a small market
Views: 315  Update Date:Apr 09 , 2018

copper or a small market


In late March, the financial market fluctuates, the market has just adapted to the Fed to raise interest rates, the United States has launched a head-to-head battle against China’s export tariffs, all the commodities fell across the board for a time, Shanghai copper’s main strength fell to around 48,500 yuan/ton, and the copper price was low. The minimum reach of 6523.5 US dollars / ton. Investors began to dip at the bottom of the copper price of 52,000 yuan/ton. Until the price of copper fell to around 49,000 yuan/ton, the trading in the fundamentals has been disrupted, and most investors are waiting to see the market.


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Aside from events such as the Fed’s rate hike, China’s two sessions, and futures on crude oil, which are often judged as heavy news by investors, the main factors affecting the upward movement of commodities are Sino-US trade issues. The Sino-U.S. trade issue is an increase in US export tariffs on China’s copper and aluminum commodity dumping. Its purpose is to curb the rapid growth of China’s foreign exchange reserves, thereby suppressing the “Manufacturing 2025” plan and the “One Belt and One Road” initiative of China, and will also To disrupt the supply and demand rhythm of Chinese commodities, suppress the prices of Chinese commodities, affect the debt ratio of Chinese companies, and ultimately restrict the Chinese economy.


Regarding the trade issue between China and the United States, only one point is resolved. That is, at present, China’s non-financial enterprises have nearly 200 trillion yuan in debt, and the current average interest rate is roughly 6 points, which is equivalent to the annual repayment of 12 trillion yuan by Chinese companies. Interest, and China’s GDP in 2017 is more than 80 trillion, and the growth rate is 6.7%. The increase in one year is only about 5.5 trillion. The incremental GDP is not enough to repay the interest of corporate liabilities. The gap is as high as 6.5 trillion. The gap will inevitably have a large part of the business going bankrupt. This is still the Chinese central bank did not raise interest rates with the Fed. If the Chinese CPI is higher than 3%, then the Fed will raise interest rates in the future, and the Chinese central bank will also passively raise interest rates. The gap in corporate liabilities will also expand. The Sino-U.S. trade issue will ultimately affect fundamental companies and expand this gap, thus suppressing the Chinese economy.


However, since the wounded enemy has lost more than 800, China is not a lamb to be slaughtered. The reason why the United States is conducting trade issues against China also shows that China is strong, and the Chinese Ministry of Foreign Affairs is also actively facing this trade issue and has achieved Good progress. China also lowered its corporate value-added tax last week, from 17 points to 16 points, which also gave fundamental businesses a boost.


From the perspective of the copper market, first of all, the price of copper has been falling for three months, and the demand for market accumulation has not yet been released. When the news is clear, the price of copper will bottom out. Secondly, the prospects for the supply of copper raw materials are not optimistic. In 2018, foreign copper service contracts expired more frequently, which led to an increase in the probability of strike suspension and production; and from the perspective of the qualifications of waste scrap copper import companies announced this year, the number of copper mine service contracts has decreased significantly from last year. This will affect the supply of raw materials. Thirdly, from the perspective of demand, the downstream demand in 2018 remains strong, including the construction of the national grid, and the One Belt One Road policy, as well as downstream automotive, real estate, and air conditioning terminals. The dependence on copper is heating up.


Therefore, the probability of a rebound in the copper price outlook is relatively large, but when the rebound will depend on the current national situation, it is assumed that Sino-U.S. trade problems will stop as soon as possible, copper prices will fluctuate upward, stand firm at 50,000 yuan/ton, and even break through to 53,000 yuan/ton. Above.


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