Spot Tension Support Copper Price Rebound

The macro

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1.Last Friday, the U.S. released July nonfarm payrolls that were more than double the previous month's expectations, with the unemployment rate falling to 3.5% and payrolls returning to pre-pandemic levels. A strong labor market can provide resilience to economic growth by driving wage growth. After the release of the data, the expectation of a 75 basis point rate hike in September has risen to 70%. However, receding recession fears are positive for financial markets. In addition, the CPI data for July will be released this week, which is widely expected to be lowered from 9.1% last month

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2. Crude oil rebounded Monday, reflecting the bullish impact of waning recession fears. The Iranian nuclear talks are being held again. The overall technical pattern has been weak, the volatility range may move down to the 94-84 area

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3. China's exports rose more than expected in July, reflecting the continued strength of overseas demand. 4. Summary: US employment has been stronger than expected, recession fears have abated, the market began to prepare for the Fed to raise interest rates by 75 basis points in September, focus on this week's CPI data and market interpretation. China's July exports more resilient than expected, also to some positive sentiment. Overall maintain rebound sentiment

The spot

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1.LME库存maintained a small decrease and cancelled warehouse orders rose slightly, but spot discount fell back to $8, which has no obvious support for the time being, or indicates the impact of weak consumption in the off-season in Europe. China's imports of copper and copper materials rose in July from a year earlier but fell by 70,000 tonnes from the previous month, prompting a faster drawdown in domestic inventories and higher spot premiums. Shanghai backwardation Monday go high to low to 200 yuan, the spot to still far march premium exceeds 900 yuan, guangdong area due to the arrival of the goods less imports, premium increased to 400 yuan, area differences inevitably lead to the goods, premium under the overall pattern of low inventory to litres of water a substantial decline, exchange stocks fell to 35000 tons, crowded warehouse before delivery pressure is still strong. Shanghai spot import profit recovered to more than 200 yuan, will continue to attract imports, or will provide support to the LME again. The overall bullish

2. The domestic copper inventory stopped falling last week, because of the increase in imports and the high price to stimulate the enthusiasm of selling goods, according to SMM statistics, the shipments of scrap metals in East China doubled from the previous week, and the refined scrap price gap narrowed sharply. However, the tight supply situation of low oxygen rod since last week is maintained, and the delivery time of low oxygen rod is longer. The price difference is still favorable for the replacement of refined copper rod to low oxygen rod, which may indicate that the terminal demand is gradually better, and the price is strong support.

3. In July, the domestic non-ferrous metal production, refined copper production of 840,000 tons, slightly decreased month-on-month, due to maintenance and crude copper supply is tight, it is expected that after August, centralized maintenance will be completed, the output may rise to 900,000 tons. Therefore, in August, we are faced with the situation of both supply and demand recovery, as well as the gradual outflow of high unset inventory with the rebound of prices, and pay attention to the recovery of demand. Look at the current price structure to maintain a strong, still support copper price rebound.

4. summary: the United States employment exceeded expectations, recession fears weakened, macro rebound sentiment to maintain, copper to maintain a comprehensive premium structure, copper scrap continued tension to support price rebound. The downstream callback replenishment is obvious, suggesting that demand has strong support before the arrival of the peak season, the recent shock rebound pattern to maintain. Technically above 63000 into the medium term major pressure area, low long rush high change hands, today 61500-60600.