The hottest copper is not the king of nonferrous m

2022-08-11
  • Detail

Is copper not the king of nonferrous metals? It's estimated that it hasn't woken up yet

"if you don't think copper is the king of nonferrous metals, it's just because it hasn't woken up." Even after a month and a half, traders from Pudian circuit to Wall Street are still surprised by this round of subversive concept market. For most of this year, they were almost dismissive of copper, but suddenly, everyone did not hesitate to cut meat to squeeze into the copper market

why did the situation change overnight? A fund manager involved in global commodity investment revealed to the China Securities Journal that at a time when global traders are waiting hard, the tentative beating of a large overseas institution may be the driving force behind this snowball effect

who is the initiator of the snowball of funds

since the sudden outbreak at the end of October, copper prices have risen by about 30%. As of the close of last week, Lun copper was reported at $5830/ton, Shanghai copper (47010, -690.00, -1.45%) was reported at 47520 yuan/ton, and Comex copper was reported at $2.655/pound, all significantly hitting new year highs. But in the previous ten months, Luntong copper remained unmoved in the face of the booming commodity market. Take the Lun copper index as an example. According to the statistics of China Securities News, from January 4 to October 25 this year, Lun copper rose 0.7% in total

don't say up or down, say something that affects the copper price

at present, the net long copper positions held by speculators have reached a record high. Data released by the Commodity Futures Trading Commission (CFTC) on Friday showed that hedge funds and fund managers increased their long positions in Comex copper options for the fifth consecutive week as of the week of December 6. Data showed that as of the week of December 6, speculators increased their net long positions in Comex copper options by 1872 to 82795, the highest since the data were set in 2006

in fact, since the market started on October 25, managed3) users in the copper market, represented by hedge funds, can't enjoy warranty services due to man-made damage. Money's long positions once soared from 56342 to 104367, an increase of 85.2%, and the short positions in the same period plummeted from 72984 to 23399, a decrease of 68%. At the same time, the trading volume of Comex copper in Asia in November more than doubled to more than 57412 hands month on month

a senior fund manager who did not want to be named disclosed to the China Securities Journal the capital game in this round of copper price rise. He pointed out that before October, there were not many bright spots in copper fundamentals, and what traders could do was to wait. In this process, the participation of both ordinary investors and institutional investors is not high, and the trading volume and positions in the copper market are very low

"there is a risk in the downturn, that is, if someone takes aim at this state and takes the lead, there may be a situation: the trading volume and position will increase rapidly, because there are not too many empty orders on the futures disk, whether in LME or Comex." The fund manager said

according to his description, in the OTC market, especially in the OTC market of LME, many domestic smelters have been engaged in arbitrage for a long time, or sold a large number of call options. "The position of selling call options is exposed, especially when they sell a large number of call options of $5000 per ton, because they believe that it is difficult to push the copper price up to $5000 in fundamentals."

the fund manager pointed out that the copper price jumped up to $5000 and instantly broke through many option plates, which led to a sudden lack of liquidity in the market, resulting in a scene of sharp fluctuations in the copper price. In fact, this disrupted the position and transaction structure of the copper market

the mantis catches cicadas, and the Yellow finches are behind. "In the Comex market, a large number of CTA funds and procedural funds have followed up quickly, so the trading volume and position of copper in the past two weeks have reached an unprecedented level in history. Rationally, the speed and range of price fluctuations are too fast. Even if the copper price cannot fall, it can be bullish, but suddenly after a large number of centralized transactions, the increase of more than $1000 is still too fast." He said that some positions have been gradually squeezed out, and now no one is short, so the market needs to digest for a period of time to press the turnover and position back to the normal level

"when the position was so low before, someone must have to fight. If he was moved, he would earn. If he couldn't fight, he wouldn't lose." The above-mentioned fund manager also suggested that the initiator may be a large foreign metal hedge fund that once caused a bloodbath in the global copper market

Xu Meili, director of nonferrous metals research at Everbright futures, pointed out that at present, Shanghai copper has 540000 positions, which is not high compared with previous years; Lun copper has 380000 positions, at the highest level in recent years; US copper has 230000 positions, also at a high level in recent years. "From the position, it can be seen that the external market position increase is the main driver of the rise in copper prices."

"from the position of Shanghai copper and Lun copper, the recent position is lower than the 9 RMB exchange rate, which makes the bulk commodities priced in US dollars more expensive for China. There is an increase in both months and October. Although there is a large gap between the position of Shanghai copper and that of the first half of the year, Lun copper's position has basically reached a relatively high position, and the signs of capital inflow are still obvious, which has a certain pulling effect on the copper price." Caoyanghui, assistant director of Nanhua Futures Research Institute, also said

in the overseas base metal market, there have been many cases of closing positions, resulting in a sharp rise in prices, while the domestic market has operated smoothly. Jing Chuan, deputy general manager of CUHK futures, said that generally speaking, the premise of closing positions is that the large-scale virtual market of one party, especially the short position, is concentrated in one or several months, which leads to the capital predators using the correction mechanism for market operation. At present, this situation is not prominent in the non-ferrous metal market. The rise in copper prices is the result of rotation between plates behind the logic of commodity rise

China factor is indispensable for your reference.

copper is known as the best economist. The sharp rise and fall of copper prices often become the sign of the inflection point of the economic cycle or the arrival of the inflection point of the stock market, which is often called "Dr. copper" in the world, and the market has always regarded copper as closely related to China's macro-economy

in Xu Meili's view, there are three reasons to support the sharp rise in copper prices: first, the overall commodity market this year is full of sentiment, and the copper price in the early stage is depressed, so breaking through the pressure level in the early stage has caused a large number of funds to enter the market for long; Second, the long positions of Luntong and Meitong funds reached a record high, indicating that overseas funds are actively long copper; Third, in the early stage, the end copper consumption enterprises had unproven exposure to raw materials, and were forced to cover their positions at a high level after the upward trend of copper prices was established

the current round of copper price rise is due to China's factors. Fang Senyu, a metal analyst at Nanhua futures, believes that the first is the improvement of China's economic data: domestic GDP growth remained stable, the manufacturing PMI index gradually rose, and the PPI index accelerated upward after more than four years of negative growth, boosting the market's expectations for the trend of copper prices; Secondly, domestic inflation pressure is gradually reflected. Under the background of rising inflation, the financial attribute of copper will become more and more obvious, attracting the attention of speculative funds; Third, the change of exchange rate also made the price of Shanghai copper strong, and brought the price of Lun copper higher, which is the most important fuse of this round of rise. "Based on the above factors, the fundamentals have not yet contributed to the copper price, which is mainly due to the financial attribute of metal copper."

Cao Yanghui also said that the strengthening of copper prices is inseparable from the improvement of macro-economy, especially the rise of inflation expectations again, the change of the atmosphere of the entire commodity market, and the continuous revision of market expectations for asset prices, which have a certain effect on prices. The recent rise of many commodities is first launched from the domestic market. On the one hand, the "China factor" plays a role, on the other hand, it is also related to the fluctuation of the RMB exchange rate

however, Jingchuan said that under the background of China's initial economic stabilization, the supply and demand of copper is still in excess, and the Chinese factor is difficult to support the overall situation in this globally priced commodity

the world Bureau of Metal Statistics (WBMs) reported in October that the global copper market was oversupplied by 90000 tons in 2016. Cru group, a research institution in London, predicted earlier last month that the global refined copper production would exceed 420000 tons next year, the largest surplus in eight years

in addition, sun Kewen, an analyst at zhuochuang information, added that after trump was elected president of the United States, the change in the market's attitude towards his ruling philosophy from bad to good, coupled with the decline in LME copper inventory and the considerable tc/rc cost of copper smelting, also supported the rise in copper prices

however, Richard Adkerson, CEO of Freeport, the world's largest listed copper mining company, believes that Trump's stimulus will boost copper prices in the long run, but to a small extent. The most important thing is that China needs to be in a positive economic growth environment

some analysts believe that the recent rise in copper prices is also related to a large number of Chinese enterprises going to sea to acquire mineral resources. According to Bloomberg News in August, China nonferrous metals mining group may invest up to $2billion to develop the most promising copper mine assets in Congo (DRC), with Baosteel's share expected to increase by 600% to 800% throughout the year

"Dr. copper" leads a new bull market

since this year, the black series has set off a magnificent bull market in the commodity market. As the end of the year approaches, can Dr. copper take over the black line and set off a new round of gains

Jingchuan believes that the logic behind the strong copper price is different from the black surge. Black, as a commodity with independent pricing in China, is greatly affected by domestic monetary factors. At the same time, capacity reduction is very obvious in the black industry, resulting in a phased imbalance between supply and demand of black commodities, and the superposition of monetary factors leads to a sharp rise in prices. Nonferrous metals is different. It has the characteristics of global pricing. Under the background of the recovery of U.S. manufacturing and real estate industry, combined with China's monetary factors and the return of commodity sector basis, copper is expected to continue to rise, but it is different from the rising performance of black series

Citigroup also said in its recent report that with the acceleration of global economic growth, most raw materials will perform strongly in 2017. The bank predicts that the oversupply situation in the commodity market in 2017 is expected to gradually disappear and restore balance. In the coming months, we are optimistic about crude oil, copper, zinc and wheat

however, some insiders pointed out that the rebound in copper prices is a reflection of the short-term recovery of the economy, but it does not mean that it can reverse the weakness of copper demand. Judging from the order reflection of middle and downstream enterprises, there are still concerns about whether the downstream demand can continue to improve, and enterprises are still facing severe survival difficulties

"judging from the trend of commodities as a whole, investors' expectations have changed, and it is almost impossible for commodities to continue to fall." Fang Senyu believes that for copper, the drivers of copper price trend have also changed: currency and inflation may become phased drivers of copper price. Although there will still be a large number of new copper mines in 2017, the market's concern about the surplus of copper concentrate is coming to an end. At the same time, copper prices have been suppressed at a relatively low level by fundamentals, and have become the target of investors. Looking forward to the future of bulk commodities, the overall price focus will gradually rise, and the whole bulk commodity price tends to be optimistic

economic stabilization and recovery are the basic conditions for the substantial strengthening of copper prices. Xu Meili believes that the economic recovery is closely related to China's policy drive this year. At present, the overall contraction of real estate policy is expected to have a certain impact on the economy next year. For bulk commodities

Copyright © 2011 JIN SHI