discordcryptogames| [Construction Investment Nonferrous Metals] Shanghai Copper Weekly| The risk of stagflation rises, and copper prices are consolidating at a high level

Viewpoint: the low growth rate of the US economy, the cooling of the job market, and the reality and expectation of inflation stickinessDiscordcryptogamesThe market reassesses the risk of stagflationDiscordcryptogamesWith repeated risk appetite and no obvious tightening pressure on industrial supply and demand, copper prices are expected to fluctuate mainly, with caution over-optimistic bets on the height of the rebound.

Reason: the risk of stagflation in the United States is heating up, and the market risk preference is in the period of reconstruction. Fed officials release hawks, the job market tends to cool, consumer confidence index falls more than expected, and inflation expectations rise to 3.Discordcryptogames.5%, market risk appetite retreated, waiting for US inflation guidance in April. In the euro zone, economic data stabilized and rebounded, superimposed by the partial stance of the central bank's regulator, as the market waited for the summer interest rate cut boots to land.

The recovery of downstream demand is slow, and the global explicit inventory is only slightly removed by about 0%.Discordcryptogames. 720000 tons. On the supply side, on the raw material side, the Indonesian government approved Freeport to export 50-900000 tons of copper concentrate from June to November, while the Centinela Copper Mine built a concentrator to increase the annual copper production of another 300000 tons, and the production time has yet to be determined. On the smelting side, at least seven domestic smelting enterprises went into overhaul in April, but due to the abundant supply of crude copper anodes, the national output of electrolytic copper in April under the SMM caliber still exceeded expectations of 985000 tons, an increase of 1.5% from January to April, a cumulative increase of 6% over the same period last year. In May, it is estimated that eight domestic crude smelting capacity of about 1.64 million tons will be related to shutdown and maintenance, and the output growth rate may decline. At the demand level, the copper price correction on downstream demand improvement is limited, spot discount continues, most enterprises do not add much new orders, wait-and-see mood is better. During the week, the last period of copper accumulation warehouse 2036 tons to 290000 tons, LME copper warehouse 7850 tons to 103000 tons, global explicit inventory (including bonded ports) slightly reduced to 492300 tons.

Generally speaking, the low growth rate of the macro-US economy, the cooling on the demand side of the job market, the reality and expectation of inflation stickiness, the market risk preference tends to converge, and there is no obvious tightening pressure on industrial supply and demand.

Operation strategy:

-mainly when rebounding, stopping profits and reducing positions.

-upstream enterprises choose the opportunity to actively sell hedging

-downstream hedging enterprises buy hedging positions to continue to hold, spot bargain-seeking rigid demand is the main purchase, and a small amount of replenishment can be considered after falling to 79500 or less.

Risk hints: higher-than-expected US inflation, higher-than-expected recovery of demand, and geo-conflicts

one

Market summary

In the first week after the festival, Luntong V bottomed out at $9820 and rebounded to $10,000, a weekly increase of 1.31%. The main force of Shanghai copper fell back, touching a low of 79410, a weekly decline of 1.55%. At the beginning of the week, the market continued to digest the cooling of US non-agricultural data, superimposed by the intensive release of hawks by Fed officials to dampen market risk appetite, and copper prices fell back. However, as the copper price fell below the $10, 000 / 8000 mark, the willingness to buy low suction superimposed downstream bargain buying, supporting the copper price to stabilize and rebound.

two

Market analysis

(1) Macro data part

1. International macro: cooling of economic data and convergence of market risk preference

In the United States, individual data on the economy and the job market stalled, and Fed officials released eagles intensively to dampen market risk appetite. In terms of economic fundamentals, the initial consumer confidence index of the University of Michigan in May was 67.4, the lowest since November last year, and is expected to end at 77.2 in April. The expected initial one-year inflation rate is 3.5%, the highest since November last year, expected 3.2%, April final value 3.2%, initial value 3.1%; five-year inflation rate expected initial value 3.1%, expected 3.0%, April final value 3.0%, initial value 3.0%. In the job market, the number of initial claims for unemployment benefits in the United States last week was 231000, the highest since the week of August 26 last year, with an expected number of 215000, compared with a four-week average of 215000 and a previous value of 210000. In the week ended April 27, the United States continued to apply for unemployment benefits of 1.785 million, with an estimated 1.785 million, compared with a previous value of 1.774 million. Fed Bostick said that although the timing is uncertain, it still believes that the Fed will cut interest rates this year. Federal Reserve Governor Bowman pointed out that the US economy has sustained momentum and needs to maintain policy stability for a longer period of time. Fed Logan said it was too early to consider cutting interest rates and needed to be flexible in policy. Fed voting committee Kashkari said that the upside down of the yield curve does indicate policy tightening, with the estimate of neutral interest rates moderately raised to 2.5% from 2%. The Fed must make policy based on short-term neutral interest rates. Disagree that the Fed should raise its inflation target; it is still possible to cut interest rates this year. Fed Collins said it may take longer than expected to reach the 2% inflation target; Fed policy is in a good position for the current outlook; there are risks of cutting interest rates too early; slower economic growth is needed to keep inflation on the path to 2%; interest rates should remain unchanged until confidence increases; there is no further progress in inflation in 2024; demand is expected to slow eventually, but the timing is uncertain.

In Europe, the economy has stabilized and inflation has fallen to consolidate expectations of interest rate cuts. Retail sales in the euro zone rose 0.8 per cent month-on-month in March and are expected to rise 0.7 per cent, with the previous value falling 0.5 per cent; year-on-year growth of 0.7 per cent, expected to fall 0.2 per cent, and previous values down 0.7 per cent. In March, PPI fell 7.8% year-on-year and is expected to decline 7.7%. The previous value was revised from 8.3% to 8.5%; month-on-month decline of 0.4%, expected decline of 0.4%, and the previous value was revised from 1.0% to 1.1%. Meanwhile, investor confidence in the eurozone improved for the seventh month in a row, with the Sentix index rising to-3.6 in May, the highest level since February 2022 and above analysts' expectations of minus 5.0. The final value of PMI of service industry is 53.3in April, the expected and initial values are 52.9,51.5 in March, and the final value of comprehensive PMI is 51.7in April, 51.4in both, and 50.3 in March. Lian, chief economist of the European Central Bank, said that confidence in a decline in inflation was rising and that a slowdown in inflation in services in April was an important step; the impact of policy differences between the ECB and the Fed should not be exaggerated. The impact of Fed decisions on the eurozone is manageable. In addition, the ECB's governing committee was biased, with Simkus saying that unless unexpected data were seen, it should not be limited to interest rate cuts in June and the ECB is expected to cut interest rates three times this year.

2. Domestic macro: residents' consumption continues to recover, and real estate policies in hot cities are relaxed.

China's national consumer price (CPI) rose to 0.3 per cent year-on-year in April, while it rose from a decline to 0.1 per cent from a month earlier. Core CPI, excluding food and energy prices, rose 0.2 per cent month-on-month, down 0.6 per cent last month and 0.7 per cent year-on-year, up 0.1 per cent from the previous month. In April, industrial production continued to recover, with demand in some industries falling in stages. The national PPI decline narrowed to 2.5 per cent year-on-year, with an expected decline of 2.3 per cent and a previous drop of 2.8 per cent. In April, Caixin China's service PMI was 52.5, down 0.2 percent from the previous month, while the composite PMI rose 0.1 percent to 52.8, the highest since June 2023, indicating that the overall enterprise production and business activities are accelerating the pace of expansion. Figures released by the China Federation of Logistics and Purchasing show that global manufacturing PMI was 49.9 per cent in April, down 0.4 per cent from a month earlier, near the 50 per cent threshold, slightly higher than in the first quarter.

According to customs statistics, in the first four months of this year, the total value of China's imports and exports of goods was 13.81 trillion yuan, an increase of 5.7 percent over the same period last year, of which exports were 7.81 trillion yuan, up 4.9 percent, imports were 6 trillion yuan, up 6.8 percent, and the trade surplus was 1.81 trillion yuan, narrowing 0.7 percent. In April, imports and exports totaled 3.64 trillion yuan, up 8 percent, of which exports totaled 2.08 trillion yuan, up 5.1 percent, and imports totaled 1.56 trillion yuan, up 12.2 percent.

The real estate policies of Xi'an and Hangzhou two hot cities have been relaxed. Xi'an official notice completely lifted the housing purchase restrictions, residents' families in the city-wide purchase of newly built commercial housing, second-hand housing will no longer check the purchase qualification. During the week, Hangzhou also announced the complete abolition of housing purchase restrictions, and non-registered residents who have obtained legal property rights in Hangzhou can apply for settlement. At present, the provinces or cities that still retain housing purchase restrictions in the country, except for Beijing, Shanghai, Guangzhou and Shenzhen, only Hainan Province and Tianjin are still in a state of partial relaxation of purchase restrictions.

(2) fundamental data charts

1. Supply part

2. Demand part

3. Inventory situation

4. Current data

5. Position information

three

Dynamic tracking of option market