Inventories Are Extremely Low And Copper Prices Could Soar To Even Higher Levels--PUDA Machine

Over the past three weeks, copper prices have not reached new heights, but have fluctuated between $9,500 and $10,000 a tonne as global inventories continue to fall. As for what's next, Goldman Sachs, which has been bullish on copper so far this year, still believes that global copper inventories are at record low levels and that multiple quarters of inventory deficits in 2022 will again put copper at risk of persistent shortages, strongly suggesting that, despite the wide volatility expected throughout the winter, Copper prices need to rise significantly to achieve a more sustainable balance between supply and demand.

Copper mining and copper scrap supply: Goldman track accounts for about 70% of global copper supply production company, due to the reduced level and production disruptions and maintenance, most of the company's earnings below expectations, new construction projects to stagnate in the third quarter production fell by 1% year-on-year, is expected in the second half of the output increased only 1%, and reduce the trend of the 2022 guidelines. Moreover, scrap, which accounts for 20 per cent of global refined copper production and nearly 30 per cent of semi-finished copper consumption, has often provided short-term relief during previous periods of copper market tightness. But Goldman argues that the current shortage far outstrips the capacity of scrap recycling systems to provide additional supplies. Similar to copper mining, it is clear that scrap supply has tightened significantly since mid-year.

Hidden copper inventories are relatively low: a common assumption in the market is that a large amount of electrolytic copper is in the form of non-standard warehouse orders, which could eventually be settled against LME short positions if physical inventories do run out. There is no doubt that hidden inventories in base metals markets are an important consideration, but Goldman says there is strong evidence that they are relatively low in copper. First, recent periods of LME spread tightening have historically encouraged delivery of LME copper inventories, but we are not seeing this at the moment, suggesting fewer units are ready to be delivered to LME locations. Second, based on refined copper balances and spot inventory trends after excluding China's net imports, we conclude that hidden non-standard warehouse receipts outside China have decreased by 2.1 million tons from 2017 to date. Third, and more specifically, the LME non-standard warehouse receipt series since the beginning of 2020 shows that stocks have fallen from a peak of 180,000 tonnes in April 2020 to just 29,000 tonnes in September this year.

Copper demand is stronger than it appears: One of the main reasons investors remain cautious about copper, despite extreme stress in the copper market, is the fear that weak demand will eventually weaken the market. The main data point supporting this view is the apparent weakness in refined copper demand in China. From the second quarter, China's fine copper demand declined to varying degrees year-on-year, but considering the factors of 2020 storage, as well as the performance of the first quarter, the cumulative consumption of 9.98 million tons of fine copper from January to September, the cumulative year-on-year growth of 1.16%, demand performance is not poor, and 2019, 2018 than the increase in demand is more significant. China economists at Goldman Sachs expect copper completions in the Chinese market to grow in both 2022 and 2023, with demand from the property sector continuing to grow given the roughly two-year delay in new starts.

高盛(Goldman sachs)预计铜价将达到12美元,000 a tonne or more in 2022. As inventories continue to run down, the market will be forced to take increasingly drastic measures to prevent them from running out entirely. Importantly, the seasonal surplus in the first quarter of 2022 could also temporarily ease the apparent inventory shortage, which typically occurs after the Lunar New Year. Over the past five years, global spot copper stocks have risen by an average of 310,000 tonnes in the first quarter. But this should be seen as a temporary reprieve, with Goldman sachs forecasting a cumulative deficit of 587,000 tonnes for the rest of 2022. At the same time, Goldman sachs predicts that at the current rate of copper inventory decline, physical stocks could be close to exhaustion by February, representing an unprecedented short-term fundamental outlook. As a result, Goldman sachs expects copper prices to remain at an equilibrium level of $12,000 a tonne through 2022, but given the extent of market price distortions so far this year, copper inventories are likely to reach extremely low levels during the transition, with prices likely to surge to even higher levels based on previous similar developments in the copper market.