Copper prices rise Why is the market expected to be so bullish on copper?

Issuing time:2017-11-22 15:58

The recent 2017 LME Week (London Metal Exchange Activity Week) voted that in the next 12 months, the market is most optimistic about the trend of copper prices, followed by the hot "devil nickel." Why is the market expected to be so optimistic about the trend of copper? What kind of interpretation will the analyst give from a professional perspective? Let us explore this favored copper.


Signs of bullish copper prices:


First, the mine is interrupted. Goldman Sachs’ forecast of “supply increase” in August 2016 will push down copper prices, but this forecast cannot be realized with the disruption of the world’s two largest copper mines and the decline in production. At the same time, affected by this, Goldman Sachs analysts raised their copper price forecast for the next 12 months from $5,500 per ton to $7,050 in late October.


Second, the signs of austerity. Codelco, the world's largest metal producer, has for the first time in four years boosted its copper copper premiums to European customers as demand continues to grow. In addition, Freeport-mcmoran inc. said it hopes to reduce its concentrate processing fees as it says the smelter is vying for a limited supply of copper.


Third, the competition has intensified. As electric vehicles become more popular, mining companies are accelerating production, hoping to benefit from growing demand. BHP Billiton, the world's largest mining company, is looking for more copper deposits, as the company expects that by 2035, the demand for electric vehicles will reach 140 million electric vehicles, which will meet demand for copper. 12 million tons.


The government said that after billionaire Gina Rinehart won the competition against Australia and Canada, he obtained a franchise for exploration in northern Ecuador.


Dan Heckman, an investment adviser with U.S. Bank Wealth Management in Missouri, said: "The situation in copper looks good." The company manages $150 billion in assets. “Does copper prices continue to rise?” We think this is very likely because demand is still very strong.


Ye Jianhua, an analyst at Shanghai Nonferrous Metals, believes that the seven categories of waste imports, strict environmental protection, and increased import policy requirements will lead to a significant reduction in scrap copper imports. In the next 2-3 years, the amount of China's smelting capacity put into production will surge, and domestic smelters will become more dependent on imported copper concentrates. The global mine supply contraction expectation and smelting capacity will lead to the pressure on the mine end supply. In terms of demand, China's copper consumption is expected to enter a period of moderately low growth. In terms of electricity, the power cable industry has further concentrated production capacity. In terms of real estate, after the real estate purchase limit is limited, the real estate new housing starts, completion, construction, and sales area will begin to cool down, and will be gradually transferred to copper consumption. The vigorous development of new energy vehicles will drive the growth of copper consumption. Due to the influence of policies, the production and sales of new energy vehicles will maintain rapid growth, which will drive the consumption of copper. On the whole, global copper consumption is expected to continue to grow in 2018, and the contraction of the supply side will become the main supporting factor for the rise of copper prices.



Guotai Junan Futures said: The fundamentals of copper are still good. The demand for copper in China's major terminal sub-sectors is optimistic, and the growth rate of copper consumption is higher than the growth rate of supply. The growth of domestic infrastructure investment is the main driving force behind copper consumption. Overall, the growth of infrastructure investment can offset the decline in real estate investment. In terms of electricity, the second batch of bidding projects of the State Grid continued to increase copper consumption. However, due to the decline in the grade of copper ore and the slowdown in the growth of capital expenditure, the growth rate of copper concentrate production is limited in the future.


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