South China Sea Arbitration limited impact on copper trading chain

Since South China Sea arbitration tribunal makes the so-called final ruling, copper recent price performance mainly reflect market concerns about the trade channel. However, the conflict escalated to the extent of the impact of the degree of trade channels, the probability is not high, copper prices are still overall shocks.

The incentive factors for copper prices are mainly due to concerns about the structure of China's copper supply. In 2015, China's copper supply for 13.75 million tons, the domestic copper concentrate 1.67 million tons, regeneration copper production of 2.3 million tons, imports of refined copper 3.46 million tons, copper concentrate imports equivalent to about 2.66 million tons, imports of copper scrap 3.66 million tons : total imports to 9.78 million tons, the actual foreign dependence degree up to 71%. Among them, the refined copper and copper concentrate imports mainly rely on South America such as Chile, Peru and other countries, the overall dependence on the Pacific route is relatively large; And the United States has a greater advantage in the Pacific, copper imports of transport channels are relatively easy to be controlled. Therefore, imports of the copper channel must remain relatively smooth situation; after arbitration results in the South China Sea, the copper price performance mainly reflects market concerns about the trade channel.

However, the overall supply is relatively abundant according to the global copper supply chain. Despite the country data from the point of view, there is a certain slowdown in the growth of copper supply, but from the view of the company's output, the world's ten largest copper concentrate production targets are still maintained in 2016. While the ten largest copper concentrate production enterprises still maintained at 162 tons. And in 2016 the foreign refined copper production capacity of fewer than 30 tons of new estimation, China's refined copper production capacity is also relatively limited, 

Therefore, throughout the global supply of copper concentrate and refined copper point of view, the overall supply to maintain good flexibility, the supply is difficult to appear in the short supply situation.