China's refined copper price is expected to continue to rise after the Spring Festival, as a gradually recovering economy and continuously optimizing epidemic control policies in China will boost the demand for refined copper. In addition, most downstream enterprises will purchase after the holiday since they don't reserve sufficient raw materials before the Spring Festival.
Review 2022, copper price in China rose first and then fell, with a large fluctuation. Due to the geopolitical crisis and inflation, the SHFE (Shanghai Futures Exchange) copper price soared to more than Yuan 76,000/tonne in the first quarter. Due to the unexpected interest rate hikes of major global economies and the slowdown of global economic growth, China's copper price fell sharply to the lowest of nearly Yuan 53,000/tonne in the second quarter. In the second half of the year, copper prices continued to rise to the range of Yuan 65,000-69,000/tonne due to the recovery of China's economy, the strong demand for the new energy industry, the shortage of copper scrap supply, and the slowdown of the Federal Reserve's expectation of raising interest rates.
Data Source: Mysteel
China's refined copper production increased in December. On the one hand, large smelters with a total capacity of about 0.6-1 million tonnes began to maintain in November and gradually resumed production in December. On the other hand, some smelters have increased their capacity. In addition, the tight supply of blister copper and copper concentrate had been partially alleviated, supporting the production increase of smelters. It is expected that the output of refined copper in China will drop by 2.7% month on month and 0.1% year on year to 871,400 tonnes in January, as new large smelters will carry out maintenance in January.
Data Source: Mysteel
China's refined copper social inventory and bonded area inventory continued to decline from the second half of 2022 to November, mainly because the import was in a loss most of the time, transactions of warehouse receipts and bills of lading were more difficult, and it was difficult for imported copper to enter the Chinese market through customs clearance. However, many regions in China were affected by the spread of the epidemic, so downstream production and demand were always weak.
The social inventory of refined copper in China increased slightly in December. Firstly, because the rising copper price restrained downstream customers to purchase. Besides, market participants were unwilling to keep too much inventory as they made financial final accounts at the end of the year. Last but not least, refined copper output increased.
With the optimization of China's epidemic control policy, economic operation and downstream demand are expected to continue to improve from the first quarter of 2023. In addition, several large smelters planned to carry out maintenance in January, and the output will reduce. Therefore, China's refined copper social inventory is expected to remain low after the Spring Festival, supporting copper prices.
Data Source: Mysteel
Data Source: Mysteel
Written by Edenlis Huang, huangting@mysteel.com
Edited by Paula Xu, xuzhongping@mysteel.com