Copper prices have risen to a nine year high, what is the reason for the increase in copper prices?

China is the world's largest copper consumer, but also the world's largest copper importer, in 2006 China's electrolytic copper consumption of 3.9 million tons, foreign dependence of more than 70%.

Personally, I think the reasons for the increase in copper prices are:

First, the factors of short supplyThis was mainly due to the outbreak of the coronavirus pandemic in 2020 around the world, as copper ore was unevenly distributed around the world, mainly in South America and Africa. Many copper mining areas abroad have interrupted the mining and development of many mines after the outbreak of the epidemic. China has significantly brought the epidemic under control, the economy is beginning to recover, and China, the world's factory, is starting to run at full capacity to produce materials for the world, which requires a lot of raw materials, including copper.

China has brought the epidemic under control, but other countries, especially the more backward resource extraction countries, are still struggling with the epidemic and have not resumed production. The mining of copper is less, and the natural consumption of inventories is accelerating, and **continues**, especially the Peruvian copper mine project, which has been greatly hindered by the road blockade of the local people, and the cost has affected the output, so the output attenuation is more obvious.

Second, speculation in the financial investment market is also an important factor

The main reason is that in response to the new crown epidemic, the United States has started a large-scale quantitative easing in 2020, and a large amount of released liquidity has flowed to the financial investment market, which has been speculated, and then when it sees China's economic recovery, it has poured into the commodity market, opening a wave of commodities significantly, almost all commodity varieties have risen sharply, and many have hit record highs in recent years. However, from the macroeconomic level, the large number of commodities is contrary to the downward trend of the fundamentals of the real economy, which is contrary to the laws of the economy, so the essence of the commodity is the distortion caused by a large amount of liquidity, which is a kind of financial speculation, which has caused a significant increase in the upstream cost of production and manufacturing, which will eventually lead to a comprehensive price and a negative impact on the economy. Therefore, in the future, with the control of the new crown epidemic, the economy gradually recovers, and inflation rises, countries will take certain measures to curb this trend and shrink liquidity.

So the current surge in commodities, including copper, is not a cyclical result of the economy, but a lot of bubbles.

It may be because the mining efficiency of copper is not high, and it is in short supply, so it will lead to **.

It is because Biden signed a trillion dollars of money to deal with the downturn in the U.S. economy, which usually leads to the collapse of commodities including oil and non-ferrous metals.

The main reason for the price of copper is that the demand for copper has increased significantly, and many industrial and electronic products need to use copper, but copper ore is found relatively little, and the output of copper is relatively low.

Because the outbreak of the epidemic has led to a lack of productivity, the market is in short supply, so it will lead to price increases.

As far as I know, copper as a raw material for many products, the current market demand is relatively large, such as some of the electrical and electronic products we use, machinery, precision instruments are likely to use copper, so copper is closely related to many industries, in short supply, so many companies may worry that the future copper price will be further ** and buy copper materials in advance.

It is because the price of many stores has tripled now, so it will lead to the increase in the price of copper.

Recently, the price of copper has continued to rise to a nine-year high, which has attracted the attention of many netizens, and many people have discussed the reason why the price of copper has risen so high. Copper prices continue to rise, what impact will it have on enterprises? Let me say a few points:

Clause.

First, the operating costs of enterprises have increased substantially

Anything is best maintained in a state of equilibrium. Copper prices continue to be the first to make a lot of money for raw material merchants, but it is not a good thing for enterprises that produce copper, because their purchase costs have increased, and it takes more money to buy the same copper materials, which will cause great pressure on the operation of enterprises, and the profit margins of enterprises will continue to shrink, in this case, many copper companies will face a huge survival crisis, and it is not impossible to go bankrupt if it is serious, after all, the market is cruel, and the survival of the fittest is an eternal truth. <>

Clause.

Second, the demand of the downstream market is decreasing

Due to the continuous increase in copper prices, in the face of copper, it will have a great inhibitory effect on the demand for copper in the market, at this time, in order to reduce costs, downstream enterprises will definitely begin to use alternative raw materials for copper, because in this way they can keep their profits, and only by keeping profits can they survive.

Clause.

Third, the quality of some products in the market has declined

The price of copper continues, there will definitely be some criminals in order to seek profits, secretly produce some inferior copper products to circulate to the market, and then you can get high profits because of copper, seriously, it will even disrupt the market, causing a lot of accidents. Therefore, in the case of continuous copper prices, there will definitely be inferior copper products. <>

In general, the price of copper rose to the highest in nine years, which is no longer a normal phenomenon, in this case, if the market can not self-regulate, it is necessary for the state and the country to come forward to stabilize the copper price of the fast, after all, the market can not be messed around casually, balanced and stable development is conducive to social progress and economic development.

The impact on enterprises is also very serious, after all, the copper price may affect the goods in the subsequent process, and even lead to serious fluctuations in the economy, which may lead to serious fluctuations in the market, which is not conducive to social stability.

It will have a very big impact on the company, it will reduce the company's revenue, and it will also reduce the sales of products, and the output will also be reduced.

The impact on the enterprise is that it will bring economic income to the enterprise, and it will also have a certain impact on the production of some industries.

From the analysis point of view, the main reason for the copper market is that the market continues to be more optimistic in the United States last week, and more importantly, the United States adopts a quantitative easing monetary policy to trigger a sharp depreciation of the dollar to support the copper market. Last week, the United States rose sharply, financial stocks continued on Monday, Barclays Bank also said that this year has a good start, Citigroup, JPMorgan Chase, Bank of America has made similar statements, the banking industry has rebounded so that investors are encouraged, this Tuesday the United States announced that the February new housing start rate increased sharply month-on-month, which further stimulated the market's expectations that the U.S. economy may improve. On this basis, the quantitative easing monetary policy announced by the Federal Reserve on Wednesday gave more hope for the recovery of the US economy.

On Wednesday, the Federal Reserve announced that interest rates would remain unchanged while providing greater support to the mortgage and housing markets, and the committee decided to expand the Fed's balance sheet by purchasing up to $750 billion in additional agency mortgage-backed loans** (MBS), bringing the total number of such purchases to trillions this year; It will also increase its institutional bond purchases by up to $100 billion this year to $200 billion. In addition, in order to improve the conditions of the private credit market, the committee decided to purchase up to $300 billion in long-term government bonds over the next six months.

This statement indicates the beginning of quantitative easing in the United States, that is, the injection of large amounts of cash into the social and financial system, and the forced injection of liquidity into financial markets and circulation. This not only increased the market's hopes for the recovery of the U.S. economy, but also raised the market's expectation that the U.S. big money printing would trigger a depreciation of the dollar.

3. The U.S. dollar index fell sharply on Thursday, causing the entire commodity market to fall sharply**, and it was also the main driver of copper prices to rise to $4,000. Judging from the current U.S. economy itself, due to long-term low savings and high consumption, the U.S. has accumulated huge fiscal and deficits, and the U.S. is currently mired in a financial crisis, and interest rates are almost ineffective. As an international currency, this move will deplete the credibility of the US dollar and lead to global inflation, so it has become the biggest concern of the market.

If this move comes true, then the entire commodity market will be the best tool to avoid inflation and will lay the foundation for the copper market, which of course could trigger a severe stagflation and the global economy into a Great Depression. Given Obama's recent pledge to secure the more than $700 billion worth of U.S. Treasury bonds purchased by China at a time when Premier Wen expressed concern about U.S. assets, we tend to expect that outcome to not materialize at this time. Back to the market itself, the dollar exchange rate stopped falling over the weekend, indicating that the dollar panic caused by the U.S. quantitative easing monetary policy has eased slightly, and the U.S. ** has also fallen, and in the future, if the U.S. dollar index can return to above 84, then the dollar panic will be declared over, and copper prices will still return to their fundamentals.

Factor 1: Supply and demand.

The supply and demand of copper is the most direct and fundamental factor affecting the change of copper prices. Generally speaking, if there is an oversupply, the price of copper**, and conversely, if the supply exceeds demand, the price of copper**. The main factors influencing supply are:

Copper concentrate supply and demand, smelter capacity and operating rate, imports, by-product income, industry production costs, copper enterprise strikes, etc. Among them, Chile, the world's largest copper producer, has many strikes of copper enterprises, which has a greater impact on it.

Factor 2 is positively correlated with LME copper prices.

The London Metal Exchange (LME) and the New York Mercantile Exchange (COMEX) are the major international copper trading markets, among which, the LME copper price has international authority because it acts as a pricing benchmark in the international point price**, and China is the world's largest copper consumption market, so the domestic copper price has a strong positive correlation with the LME copper price.

Factor 3: Exchange rate.

Copper in the international market is generally priced and settled in US dollars, so the rise and fall of the US dollar usually causes the reverse movement of copper prices. However, the fundamental factor that determines the trend of copper prices lies in the supply and demand of copper, and the exchange rate factor cannot change the basic pattern of the copper market, but only exerts an influence on the rise and fall and rhythm.

The same is a kind of high-quality product, and it is a bulk product, and the change of any product is nothing more than the contradiction between the supply and the other side, and of course there is the possibility of speculation.

Of course, affected by the relationship between supply and demand, the hoarding of bulk non-ferrous metals in resource countries does not meet the international demand, resulting in non-ferrous metals.

Copper prices may not be significant in 2022**. According to the agency, copper prices will remain strong until at least the end of next year, and structural deficits will keep copper prices high in the long term. and the industry's carbon transition efforts ultimately benefit copper production, which has struggled to keep up, including Chile.

within the needs of some regions.

Outlook: On a macro level, the US CPI increased year-on-year in November.

It is a new high in nearly 40 years. At the December interest rate meeting, the Federal Reserve.

Not only has it sharply raised its inflation expectations for this year and tomorrow, but it has also raised its expectations for next year's rate hikes from one to three, with 10 out of 18** supporting three rate hikes. As can be seen from the Fed's statement, high inflation has become the Fed's "number one enemy". Domestic real estate data is down from last year.

Although the financing environment is marginally relaxed, housing is not speculation.

The policy is a long-term direction, and the real estate industry is still not optimistic for a long time. From a macro point of view, the expectation of tightening liquidity and pessimistic consumption in the future is relatively strong. Historically, every bull market has been in monetary policy.

Tightening, the situation of falling demand peaks.

At present, the biggest support for the copper market is low inventory. Domestic inventories fell to a historic low, and the global explicit bonded area copper inventory was only 350,000 tons. We believe that the low inventory is mainly due to structural shortages caused by hidden inventory and logistics issues.

At present, the inventory of LME copper has bottomed out, and it has begun to be stocked, and LME copper is discounted by 0-3 liters.

It has narrowed to normal levels. Low domestic inventories and lower copper imports are an important factor. Due to poor logistics and transportation, it is estimated that 200,000-300,000 tonnes of hidden stocks of refined pyrocopper and blister copper have accumulated in Africa and elsewhere.

Later, we will pay attention to the recovery of logistics after Christmas in North America. Once logistics begins to recover, the pressure on the market outlook will be relatively large. According to our statistics, next year copper mines.

It will increase by more than 1 million tons, and the logistics problem may be significantly improved in the second half of the year. However, domestic real estate and overseas consumption expectations are not optimistic, and in the context of a large surplus of supply and demand expectations, copper is envious of the fundamentals.

There will be a reversal.

From last year to this year, raw materials are bound to be.

** The reason is inflation.

For example, in July and August last year.

The ** of copper is about 30,000 a ton.

Now it's almost doubled.

Of course he doesn't go straight**.

There will be fluctuations. The whole is a top momentum.

It is advisable to be bullish on the market.

Analyse**. Intervene cautiously.