Although the Sino-US trade talks have released optimistic news in the short term, the market is still far from being fully deflated, and the market optimism is slightly blind. There are still many uncertainties in the future, and the macroeconomic situation is still complicated. In 2019, China’s domestic industrial restructuring will continue, and technological advantages will continue to make up for the contribution of cost advantages to economic growth.
Looking forward to 2019, the release of copper mine production will be less than in previous years. The disturbances such as strikes are expected to have little impact, and the supply of copper concentrate will be tightened. It is expected to push the focus of processing fees down. The “Spent Seven” imports will be fully suspended in 2019, and scrap copper supply is expected to decrease, but there is uncertainty, and in the context of more consistent upstream expectations, it is most likely to trigger a sharp correction. The new smelting capacity was concentrated in the first quarter and the fourth quarter. Due to the late launch of the fourth quarter, the contribution to the overall refined copper output in 2019 was relatively weakened, and the release of refined copper production was suppressed. On the demand side, before China’s new economic growth driving force has made significant efforts, stable growth still needs to rely on infrastructure and real estate to drive, and the policy direction of economic deleveraging and fiscal revenue and expenditure have made the infrastructure construction drive copper demand. The new start of the property may become the main link to drive demand for copper. The air-conditioning industry has returned to normal values in the second half of 2018, and the inventory has accumulated to a higher level. The demand side “Qibing” has not yet appeared. There has been no real change in the automotive industry, and stocks are still accumulating rapidly with both production and sales slowing down. It is expected that the demand for copper will be limited.
Throughout the entire copper industry chain, the fundamentals have not been substantially profitable. In addition, the global macro-environment uncertainty is still large, and the economic growth of major countries in the world are facing different degrees of tests. We believe that there is no bull market foundation in 2019.
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