1, the relationship between supply and demand-the fundamental factor affecting price fluctuation.

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.

Stock reporting, also known as "visible stock", refers to the stock 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 stocks, also known as "invisible stocks", refer to stocks held by manufacturers, traders and consumers all over the world. Because these stocks are published irregularly, it is difficult to count them, so they are generally measured by exchange stocks. In recent years, in the total social inventory, the proportion of consumer inventory has decreased, while the proportion of exchange inventory has increased. Therefore, this trend must be considered when analyzing the inventory level.

2. 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. For example, in the early 1990s, western countries entered a new round of economic weakness, and the copper price dropped from 1989 to 1995 USD/ton. From 65438 to 0994, the economies of the United States and other western countries began to recover, the demand for copper increased, and the price of copper began to climb again. 1When the Asian economic crisis broke out in 1997, the consumption of copper in the whole Asian region (except China) dropped sharply, which led to the lowest price of copper in 20 years. On the contrary, in the second half of 1999, the Asian economy improved and copper prices gradually picked up.

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.

3. Import and export policies and tariffs;

For a long time, China has always adopted the policy of "wide import and strict export" in copper import and export, so when the domestic copper price is higher than the international copper price, the import of traders will narrow the price difference between the two markets; The opposite is not the case. With the gradual cancellation of export tariffs, copper can basically be imported and exported freely, thus making copper prices interactive at home and abroad.

4. 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, in the mid-1980s, the electrical industry accounted for the largest proportion of refined copper consumption in the United States, Japan and Western European countries, and China was no exception. After entering the 1990s, the consumption of copper for pipelines abroad increased sharply, becoming the largest copper consumption industry in foreign countries, and the housing operating rate in the United States has also become one of the factors affecting copper prices. One of the reasons for the increase in copper prices of 1994 and 1995 comes from the development of the construction industry. In the automobile industry, manufacturers advocate replacing copper with aluminum to reduce the weight of vehicles, thus reducing the amount of copper used in the industry. In addition, with the rapid development of science and technology, the application scope of copper is constantly expanding, and copper has played a role in medicine, biology, superconductivity, environmental protection and other fields. Recently, IBM used copper instead of aluminum in silicon wafers, which marked the latest breakthrough in the application of copper in semiconductor technology.

5. Production cost of copper

With the development of science and technology and the adoption of new smelting methods, the production cost of copper is decreasing. At present, the international average cost of copper smelting by internal combustion method is 1400- 1600 USD /t, and the cost of copper smelting by wet process is 800-900 USD/t. The total output of copper smelting by wet process is growing rapidly, and it is estimated that the proportion will reach 20% in 2000.

6. Trading direction of international hedge funds and other speculative funds

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 ten years, the fund has played a role in the soaring copper price in the first half of 1994- 1995, 1996- 1997 and the plunging copper price in 1998- 1999.

Funds are large and small, and their operation methods are quite different. Generally speaking, funds can be divided into two categories. One is macro funds, such as arbitrage funds, which are large in scale, ranging from several billion dollars to tens of billions of dollars, and are mainly used for strategic long-term investments. The other is short-term fund, which is managed by CTA (commodity trading consultant). The scale is very small, usually around tens of millions of dollars. Short-term operation depends on technical analysis, so it is also called technical fund.

According to ed&; According to F Man's survey, CTA currently manages assets of about 40 billion US dollars, of which 65,438+00%, or about 3.9 billion US dollars, is invested in the metal market. Of this $3.9 billion, about $2.3 billion is used for trading LME futures contracts.

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.

7. 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.

Generally speaking, in the long run, copper prices and oil prices are positively correlated, especially when the economy has just started or just peaked. It should be emphasized that this correlation is in the medium and long term and should be understood from the perspective of economic cycle. In the short term, there is no strict correlation between the rise and fall of crude oil prices and the rise and fall of copper prices. The quality of macro-economy is the most fundamental factor affecting the future demand of copper, and oil price is only one of many factors affecting the future economy.

8. 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 1 99965438+1October1Euro, the international foreign exchange market has formed a three-legged trend of USD, EUR and JPY. Looking back at the whole 1990s, before the introduction of the euro, the exchange rate between the US dollar and the Japanese yen was the focus of the foreign exchange market, and since the birth of the euro, the exchange rate between the US dollar and the euro has become the center of the foreign exchange market.

Because the exchange rates among the three major currencies often fluctuate greatly, the international copper price priced in US dollars will also be affected by the exchange rate, which can be reflected in the sharp decline of the US dollar against the Japanese yen at 1994- 1995 and the continued weakness of the euro at 1999-2000.

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.