since last year, the price of copper has been rising steadily, and now the border of Chile, the largest copper producer, has been closed, and the tension has spread again for a time, which is expected to add another fire to the rising price of copper.
The expectation of economic recovery is the main factor supporting this round of copper price increase. As one of the most widely used metals in industry, copper is also used in almost all fields, from wires to batteries and motors. As the copper price rises, its influence is gradually transmitted along the industrial chain.
The global commodity market meets the "black swan" again. Even though the rise has become the key word of copper price in the past six months, this situation is particularly obvious in the last two days.
as of the close of the 7th local time, the copper price of London Metal Exchange (LME) was 8981.5 USD/ton. On the previous day, the copper futures price of LME once rose by 3.6%, breaking through the threshold of 9 USD/ton to 914 USD/ton, hitting the highest point in two weeks.
The international copper price has also been transmitted to China. On April 8, the A-share market, the steel and non-ferrous sectors showed a strong trend throughout the day, leading the industry sectors. Among them, Anyang Iron and Steel and Jintian Copper had daily limit, while Jiangxi Copper and Tongling Nonferrous once had daily limit.
The reason for the soaring copper price points to Chile, the world's largest copper producer. Prior to this, in view of the grim situation of the epidemic rebound, the Chilean government announced to upgrade a series of epidemic prevention measures, including closing the border from April 5 to May 1, local time, to strengthen the prevention and control of the epidemic.
for the copper market, Chile's decision is somewhat influential. It is understood that Chile is the world's largest copper producer and the second largest lithium producer. According to the data of the US Geological Survey (USGS), Chile's copper and lithium supply accounts for about a quarter of the global supply. In 22, the global copper production will be about 2 million tons, of which Chile's output will be about 5.7 million tons, ranking first.
However, Jiang Shu also mentioned that the reality is that in the past, even if there was no epidemic, Chile often suffered from earthquakes, and sometimes there were strikes. In fact, there were short-term interruptions in the past, but each news had a different impact on the market in different backgrounds. Moreover, it is hard to say whether Chile's port closure will have an absolute impact on logistics. After all, mining production is not carried out in a sealed environment, so the supply process itself may not be greatly affected. This news is mainly a psychological impact on people. Later, everyone can think about the actual impact of Chile's port closure, and may gradually return to the fundamentals of the economy.
Codelco, the world's largest copper producer, is trying to calm the market about external concerns. Juan Benavides, chairman of Codelco, was asked if Chile's tightening of blockade measures this week would interrupt the company's operations and shipments. He said, "Absolutely not." However, according to Reuters's report on the 8th, Juan Benavides also mentioned that copper prices may remain strong, but the spread of Covid-19 varieties may trigger new market fluctuations.
in fact, the madness of copper price didn't start with the "black swan" in Chile. Since the fourth quarter of 22, global commodity prices have risen rapidly, among which copper prices and lithium prices are in the forefront. According to the statistics of China Nonferrous Metals Industry Association, in the first two months of this year, the output of ten commonly used nonferrous metals exceeded 1 million tons, up 1.6% year-on-year.
As the price of raw materials rises, the pressure on downstream enterprises can be imagined. As one of the most widely used metals in industry, copper is used in almost all fields, from wires and pipelines to batteries and motors. Copper is also an essential element in power equipment, motor manufacturing, electronic products and other fields, which is not only a weather vane of economy, but also a key factor to promote the development of renewable energy and electric vehicles. The data shows that China's consumption of copper in the world accounts for more than 5%, which is mainly used in electric power, household appliances, construction, new energy vehicles and other industries.
CCTV Finance once mentioned that the main force of Shanghai Copper hit a nine-year high of 7, yuan per ton at the end of February. Because the profit model of copper processing enterprises such as enameled wire is to collect processing fees, it does not directly bear the pressure of copper price increase, and the pressure of copper price increase directly falls on downstream enterprises. For example, Midea has informed that since March 1st, the price of Midea refrigerator products will be raised by 1%-15%. According to relevant data monitoring, the average market price of offline refrigerators, washing machines and air conditioners increased by more than 1% year-on-year.
In addition, Jiang Shu also mentioned that the rise of copper price will definitely have some impact on the downstream market, but the current financial market has also given many downstream enterprises the means to deal with it. Even if not all downstream enterprises can hedge their impact through hedging, at least some enterprises will do so. Moreover, in the industrial chain, all levels can gradually digest the price increase, and the situation is not so serious at the end. In addition, technological innovation will also lead to an increase in production capacity, and the pressure will be decomposed through sales.
economic recovery is the key to support the rise of copper prices. The non-farm payrolls report released by the United States last week was better than the optimistic expectation that triggered economic recovery, which was good for international copper prices, and the infrastructure construction plan announced by US President Biden also meant an increase in demand for copper. On the other hand, the widening gap between mine supply and demand also supports the sharp rise in copper prices. According to the data of the World Bureau of Metals Statistics, in 22, the global refined copper output was 23.94 million tons, up by 2% compared with the same period of last year, and the global demand was 25.33 million tons, up by 6.1%. The global copper market is short of 1.391 million tons, which is nearly 1 million tons more than the gap of 383, tons in 219.
As for the rise of copper price, Hu Qimu analyzed that there are two main factors driving the rise of copper price at present. One is the price increase brought by monetary easing, and the other is the sustained recovery of demand that drives the price increase with the easing of the global epidemic. Because Biden's government has recently introduced a huge economic stimulus plan, China's economy is expected to achieve a year-on-year growth of about 2% in the first quarter, and many countries have been slow to withdraw from the loose monetary policy in order to make the economic recovery more solid. Therefore, even if the copper price is close to the historical high, it is still possible to continue to rise.
more importantly, copper prices have also caught the fire of green energy. Not long ago, Goldman Sachs also mentioned. Copper, which has performed brilliantly in the past six months, has more room for price increase in the future: because copper is also one of the indispensable metals in the green industry, among the major economies in the world, green industry is a well-deserved hot spot at present. Goldman Sachs predicts that the demand for copper related to green industries will reach 1.1 million tons this year. According to its basic assumptions, it will reach 3 million tons in 225 and 6.2 million tons in 23.
Hu Qimu explained that, first of all, the development and application of energy-saving and emission-reduction technologies in copper mining and smelting and the improvement of copper use efficiency can reduce carbon emissions. In addition, the recycling of waste copper will also play an important role in reducing carbon emissions in the industrial chain. Jiang Shu mentioned that the general green industry is mainly from the perspective of carbon emissions, and the biggest part still involves energy, that is, reducing fossil fuels as much as possible, so as to adopt sustainable green energy. In terms of green energy, such as wind power generation and solar panels, copper can participate in it. As an important metal with good conductivity, it will definitely be widely involved in the manufacture of electric energy equipment.