According to the principle of microeconomics, when the supply of a commodity exceeds the demand, its price falls, and vice versa. At the same time, price will affect supply and demand in turn, that is, when the price rises, supply will increase and demand will decrease, on the contrary, demand will increase and supply will decrease, so price and supply and demand are interactive.
An important indicator reflecting the relationship between supply and demand is inventory. The inventory of copper is divided into reported inventory and non-reported inventory. Reported inventory, also known as "explicit inventory", refers to the inventory of the exchange. At present, London Metal Exchange (LME), COMEX Branch of the New York Mercantile Exchange (NYMEX) and Shanghai Futures Exchange (SHFE) are internationally influential copper futures trading institutions. All three exchanges regularly publish the inventory of designated warehouses.
Unreported inventory, also known as "hidden inventory", refers to the inventory held by manufacturers, traders and consumers all over the world. Because these inventories are published irregularly, it is difficult to make statistics, so they are generally measured by exchange inventories.
International and domestic economic situation
Copper is an important industrial raw material and its demand is closely related to the economic situation. When the economy grows, the demand for copper increases, thus pushing up the price of copper. When the economy is depressed, the demand for copper shrinks, which pushes the price of copper down.
When analyzing macro-economy, two indicators are very important, one is economic growth rate, or GDP growth rate, and the other is industrial production growth rate.
Import and export policy
Import and export policy, especially tariff policy, is an important means to control the import and export volume of a certain commodity and balance domestic supply and demand by adjusting the import and export cost of commodities. At present, the import tariff of copper raw materials in China is 2%, and the export tariff is 5%.
Changes in the development trend of copper industry
Consumption is a direct factor affecting copper price, and the development of copper industry is an important factor affecting consumption. For example, after the 1990s, copper used in pipelines in developed countries increased greatly, and the construction industry became the largest consumer of copper, which promoted the rise of international copper prices in the mid-1990s. The housing operating rate in the United States also became one of the influencing factors of copper prices. Since 2003, the development of real estate and electricity in China has greatly promoted the growth of copper consumption, which has become one of the factors supporting copper prices. In the automobile industry, manufacturers advocate replacing copper with aluminum to reduce the weight of automobiles, thus reducing the amount of copper used in industry. In addition, with the rapid development of science and technology, the application scope of copper has been expanding, and copper has begun to play a role in medicine, biology, superconductivity and environmental protection. IBM has used copper instead of aluminum in silicon wafers, which marks the latest breakthrough in the application of copper in semiconductor technology. These changes will affect the consumption of copper to varying degrees.
Production cost of copper
Production cost is the basis of measuring commodity price level. The production cost of copper includes smelting cost and refining cost. The calculation of copper production cost is different in different mines. The most common economic analysis is to adopt "cash flow guarantee cost", which decreases with the increase of by-product value. After 1990s, the production cost showed a downward trend.
At present, the average comprehensive cash cost of internal combustion copper smelting is about 62 cents/pound, and the average cost of wet smelting is about 40 cents/pound. At present, the output of copper hydrometallurgy accounts for about 20% of the total output. The calculation of domestic production cost is different from that in the world.
The trading direction of the fund
Although the fund industry has a long history, it didn't flourish until the 1990s. At the same time, the fund's participation in commodity futures trading has also greatly improved. Judging from the evolution of the copper market in the last decade, funds have played a role in fueling many big markets.
Funds are large and small, and their operation methods are quite different. Generally speaking, funds can be divided into two categories. One is Macrofund, such as arbitrage fund, which is large in scale, ranging from several billion dollars to tens of billions of dollars, and is mainly used for strategic long-term investment. The other is short-term fund, which is managed by CTA(CommodityTradingAdvisors). Small in scale, generally around tens of millions of dollars, short-term operation depends on technical analysis, so it is also called technology fund.
Although the rise and fall of copper prices may be excessive because of the participation of funds, the overall trend of prices will not violate the fundamentals. Judging from the changes of COMEX's copper price and non-commercial positions (generally considered as speculative positions of funds), there is a very good correlation between the rise and fall of copper price and fund positions. Moreover, because the fund has a deeper understanding of macro fundamentals and a "foresight", understanding the trend of the fund is also the key to grasping the market.
The price fluctuation of oil and other related commodities will also have an impact on copper prices.
Crude oil and copper are important international industrial raw materials, and strong demand can best reflect the quality of the economy. Therefore, in the long run, the level of oil price and copper price has a good correlation with the speed of economic development. Because both crude oil and copper are closely related to macro-economy, there is a positive correlation between copper price and oil price to some extent. However, this is just the same trend. In the short term, the positive correlation between crude oil price and copper price is not very prominent.
If the rise of oil price from less than 10 to around $20 is a reasonable return of price and a manifestation of economic recovery, then the rise of oil price should be consistent with the rise of copper price, because it is driven by economic bottoming. However, if the oil price rises to a certain extent, what everyone cares about is not the economic recovery, but the negative impact of the soaring oil price on the future economic development, and even the economic recession, which will lead to the overall decline in demand (which will inevitably affect the demand for copper). At this time, the rise in oil prices has become a negative factor in the copper market.
exchange rate
International copper transactions are generally denominated in dollars, but at present, several major currencies in the world implement floating exchange rate system. With the official launch of June 1 99965438+1October1Euro, the international foreign exchange market has formed a three-legged trend of USD, EUR and JPY. Because the exchange rates among the three major currencies often fluctuate greatly, the international copper price denominated in US dollars will also be affected by the exchange rate, which can be reflected in the sharp drop of 1994- 1995 USD against the Japanese yen, the continuous weakness of 1999-2000 EUR and the depreciation of the US dollar in 2002-2004.
According to past experience, the change of the exchange rate between the yen and the euro will affect some short-term fluctuations of copper prices, but it will not change the general trend of the copper market. The exchange rate has a certain influence on copper price, but the fundamental factor that determines the trend of copper price is the relationship between supply and demand of copper. The exchange rate factor cannot change the basic pattern of the copper market, and may only affect the fluctuation range.