Supply-side Leading Copper and Aluminum Prices are Expected to be "Step By Step"?

On March 29th, the 5th China Commodity Industry Forum hosted by Xinhu Futures was held in Shanghai. Relevant experts in the non-ferrous industry analyzed the operation of the copper and aluminum markets and the current market focus.

"The current copper market is in a stage of macro waiting for verification and microscopically weaker than expected." Wu Haohui, general manager of Ningbo Kaitong International Trade Co., Ltd. said that domestic copper production in 1998 was 8.73 million tons, up 9%; import volume was about 3.73 million tons. , an increase of 14.46%; apparent consumption of 12.09 million tons, an increase of 10.82%. From a micro perspective, there is a clear divergence between the performance of copper and the domestic economic trend.

"There are two major changes in copper in 2019: First, the market generally believes that global copper mines have limited increments, and the news interference rate has increased; second, in the past two years, copper smelting capacity has been released." Wu Yihui is expected to be 2019. The growth rate of refined copper production exceeded 2.5%, which was higher than the growth rate of copper concentrate supply by 1.8%.

Sun Haowen, director of all color research and development at Xinhu Futures Research, said that the actual increase of copper concentrate in 2019 is expected to be around 440,000 tons, and the growth rate will fall by about 1% to 2.5%. The supply of copper concentrates is tightening, processing fees are also continuing to fall, and current spot processing fees have fallen to the level of $70/ton.

It is worth noting that the scrap copper import policy has also changed. This year, the waste seven categories began to ban imports, reducing the amount of imported metals by 280,000 tons. At the end of last year, the Ministry of Environmental Protection requested that the seven categories of waste be included in the restricted import list in July 2019, and that all imports may be banned by the end of 2020. "If the six categories of waste tightening are strictly implemented, it will have a big impact on domestic and global short-term supply. It is expected that the waste six categories will accelerate into the country in the first half of the year." Sun said.

"The market cannot underestimate the speed of the transfer of scrap copper dismantling capacity. It is expected that the change of scrap copper in 2019 will not have a great impact on the market." Li Wei, general manager of North Mining Technology Consulting Co., Ltd. said.

“The macroeconomic factors such as the downward pressure on the domestic economy, the sluggish real estate market, and the risk of recession in the global economy are the main negative factors for the future operation of copper prices.” Wu Yihui believes that copper supply is tight under the global pattern, mines and The disturbance in smelting has increased, and the tightening of the six-class copper import policy has become the main boost for the future copper price. At present, copper's global dominant inventory is low. In the case that global liquidity tends to be further relaxed, once the global trading environment is substantially improved, copper prices may rise more than expected.

“The main variables affecting the supply and demand of the alumina market in 2019 are concentrated in import and export. The most directly related is the possibility of recovery of the alumina plant in the first half of the year. The uncertainty of alumina exports in the second half of the year increases. The supply of domestic alumina is increasing. If there is no special export situation, there is still a lot of pressure on the supply of alumina.” Shi Fuliang, dean of the Aladdin Zhongying Network Aluminum Research Institute, said that in 2018, China’s alumina production A trend turning point, due to the slowdown in demand growth, alumina production growth rate has decreased significantly since last year, the annual output was 71.61 million tons, an increase of only 1.5%. In 2019, the tight supply pattern of alumina will be eased, and global supply and demand will basically fluctuate around the equilibrium line. At present, the alumina production capacity shows a steady growth trend. As of March, the domestic alumina production capacity was 84.17 million tons, and the operating capacity was 73.75 million tons.

Shi Fuliang believes that in 2019, the overall output of alumina is expected to be 74.35 million tons (up 3.83% year-on-year), net imports will be reduced by 300,000 tons, and the total supply will be 74.05 million tons. In terms of consumption, this year is expected to be 74.38 million tons. , an increase of 2.32%. The overall supply and demand gap is 330,000 tons.

In terms of policy, following the reform of the supply side of electrolytic aluminum, the state is further introducing a policy of alumina regulation. At present, the supply of bauxite has become the core focus of the market. He said that as the environmental protection policy continues to be severe, the approval of mineral rights continues to be strict, and the inland alumina production capacity expands, the overall supply and demand pattern remains tense.

“In terms of price performance, alumina prices are affected by Alunorte's 50% production capacity reduction and Rusal's sanctions in the short term, which has been driven by rising costs for a long time. As costs continue to rise, overall industry profits will be squeezed.” He said that from aluminum In the case of the earth-mine-alumina-electrolytic aluminum-aluminum processing industry chain, profits are transferred to upstream raw materials and downstream processing. From the perspective of bauxite to alumina, the cost of main raw materials for electrolytic aluminum is on the rise. At present, electrolytic aluminum is adjusted at low level, alumina bottom, bauxite, and is expected to reverse later.

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Hales H.//SMC Editor