On May 7, the LME Asia Annual Conference was held in Hong Kong. At the special forum "The basic metal market in 2019: the end of the fluctuation or the calm before the storm", on the topic of new energy vehicles, scrap copper imports and other topics, many market participants expressed their views that copper is still the best Potential breed. Judging from the current situation, although market sentiment has temporarily affected the copper price, it is expected that the factors that dominate the copper price will return to the fundamentals during the year, and it is necessary to pay attention to the trend of scrap copper import policy. Aluminum prices are not eligible for long-term rise, and nickel prices are expected to remain stable during the year.
In the past two years, copper has become a non-ferrous species that investors are most concerned about. In this regard, FreepointCommodities commodity strategist David Wilson said that copper is currently in the second half of the bull market, and the change in scrap copper import policy will become the key to affecting copper prices.
According to the reporter of Futures Daily, starting from July 1 this year, "six types" of scrap copper will be included in the list of restricted imports, and by the end of 2020, all metal scraps with a grade below 99% will be restricted. As China ’s efforts to crack down on imports of “foreign garbage” increase, the supply chain of waste products shipped to China will face more challenges.
"The probability of copper prices has peaked in April. As the economic growth of developed countries slows down, there is a downside risk to copper prices. However, combined with the current situation of China's imports, the downside risks will not be immediately reflected in the disk." DavidWilson believes that at present The US construction industry's demand for copper is at a relatively low level, and Germany is very dependent on China's copper imports. From a macro perspective, the current economic data of Britain and the United States is not as optimistic as market expectations.
Marex Spectron Global Market Analysis Director Guy Wolf analyzed the current situation of the copper market from the financial perspective. In his opinion, speculative funds have been accumulated in the non-ferrous market since 2017. Since the third quarter of 2018, the capital of the copper market has not been concentrated in a single direction, and the fluctuation of price difference has been increased. The main reason for the fluctuation is that the quantitative strategies for arbitrage and hedging are gradually increasing in the copper market.
He said that compared with the CTA strategy, the market activity of the arbitrage quantitative strategy is increasing, indicating that the influence of electronic trading is increasing, and this phenomenon deserves market attention.
"Actually, China's supply-side reforms have not changed the supply structure of the aluminum market. Although last year's supply fell for the first time in recent years, this decline was determined by the supply and demand of the market itself. When the profit rate rises, aluminum supply is expected to increase. "Regarding the current supply and demand situation of aluminum, Singapore office general manager IanRoper said that China's new electrolytic aluminum production capacity will be 2.9 million tons in 2019. Overall, China's oversupply of electrolytic aluminum is being eased. Therefore, aluminum prices have been good recently.
"It is expected that by the end of the second quarter, new capacity of electrolytic aluminum will be 1 million to 1.3 million tons. The increase in output will put pressure on the market in the third quarter." IanRoper believes that although the short-term aluminum price has rebounded,it is expected that the rebound is only temporary based on the current supply and demand situation. It is difficult for the oversupply of electrolytic aluminum to undergo a major reversal, so aluminum prices do not have the conditions for long-term rise.