The strong season supports Shanghai copper gradually bottoming

Last week, metal prices rebounded. After the copper broke through the $9,000 line, it quickly rebounded. Shanghai copper opened higher on Friday. Strong earthquakes threatened the opportunity and the metal gradually bottomed out. When the negative factors in the market environment are filled, the metal fundamentals are different. Zinc is still the least promising of the base metals. Looking into the future market, we believe that after the strong earthquake market with multiple factors, Shanghai copper gradually bottomed out, and the mid-term price of copper is still on the rise. At this time, it is a good time for bargain-hunting. The most important factor driving up copper prices is consumption. As long as the consumption exists, there is limited room for copper prices to fall. Judging from the current official data and the surveys conducted by the workshops, although the speed of entry into the peak season earlier this year was slower than in previous years, the current overall atmosphere in the spot market is good, and the downstream purchase enthusiasm is high. The Chinese consumer aura is still shining. The official data released last week showed that the output of copper in February was 603,000 tons. In the Spring Festival holiday in February, the maintenance rate of copper-related companies was relatively high, and most workers returned to work in late February. Therefore, copper production in February decreased by 14.1% from the previous month. However, compared with previous years, the output of copper materials in February was fair, which was an increase of 19.2% year-on-year, and the total volume from January to February increased by 15.2% year-on-year. This also reflects from the side that the overall benchmark is higher this year and consumption growth is significant. This round of copper prices plummeted. The domestic spot price fell below RMB 70,000/t, strongly encouraging the enthusiasm of the mid-to-downstream companies to purchase. The spot premium structure for several months has also turned into a premium, and the spot market volume has increased significantly. In the earlier period, due to shortages of labor and capital, and other issues, the consumption of copper processing enterprises in some regions of China was slow to recover, causing the country's overall access to the peak season to be slower than in previous years, resulting in slower imports and higher exchange stocks. However, according to research, the shortage of migrant workers has also been resolved. The company's recent focus is on bargain purchase, with a high degree of enthusiasm. From the point of view of the operating rate, the operating rate in Jiangsu and Zhejiang has risen to more than 80%, which is higher than 75% of last year. Many phenomena indicate that there is a large space for consumption. Under the background that the supply of copper could not increase significantly for a long time, the growth potential of consumption is relatively large, and the favorable situation of fundamentals is the most favorable guarantee for copper price support below. In April, it was the peak season for China's consumption, and consumer support prompted Shanghai Copper to bottom out. However, it should be pointed out that while the fundamentals are good, the crisis in the market environment still exists. Libya, China’s interest rate hikes, and Japan’s nuclear radiation problems are short-term heavyweights that are waiting in the wings to influence the market. These factors have generally had a significant effect on the market sentiment. France has officially launched an attack on Libya in recent days with the approval of the UN Security Council. Libya’s crisis has escalated again. Libya alone is concerned, regardless of the country's land area, population, industrial conditions, as well as the basic metal production, consumption accounted for a small proportion of the global, but the ** as the stronghold of the situation in North Africa as a whole is the general concern of the market of. Since March 25, the People's Bank of China raised the deposit reserve ratio by 0.5 percentage points to 20%, which is a historical high. The main purpose of this time is to hedge liquidity, and this time about freezing bank funds 460 billion yuan. Concerns about China's tightening liquidity market are the focus of problems in recent months. The market has long been expecting this, as long as there is no impact on the market for raising interest rates, this time raising the deposit reserve will slow down the rate increase. After the earthquake and tsunami in Japan, the nuclear radiation problem affected global panic. The latter's influence is higher than the former. As of press time, the water temperature of Units 5 and 6 is stable, but as long as the units do not return to normal, the global fear of nuclear radiation will not stop. The above three kinds of invisibility** have a greater impact on market sentiment, and the impact is for all commodities rather than a single base metal. In the later period, factors affect the existence of faintness and need to be closely followed up. Taken together, the price of Shanghai copper, which is supported by consumption, gradually bottomed out after the price shock. China's consumption has gradually entered the peak season. The spot market has good enthusiasm for procurement and the market is more prosperous. However, in the later period, the effects of the three invisibility policies of Libya, China’s tightening policy and nuclear radiation have not faded, and they may intrude into the overall commodity market again. We suggest that when a strong earthquake threatens to take the opportunity, Shanghai Copper can wait for long odds to enter the market, but it still needs to be highly vigilant about environmental factors.