According to the index monitoring model, the monthly 2021 index for China's copper industry was 39.0 in July, down 1.7 points from the previous month and in the "normal" range, while the forward composite index was 107.9, down 6.6 points from the previous month, the decline has widened. The following table shows the monthly index of China's copper industry in the past 13 months

Table 10 monthly prosperity index of China's copper industry for July 2020 to 2021

n July, China's monthly copper industry sentiment index continued its downward trend from June, falling 1.7 points month-on-month to 39.0, in the middle of the normal range. The trend of monthly copper industry sentiment index in China is shown in figure 1.

As can be seen from the monthly business signal lamp of China's Copper Industry (see figure 2) , the main business revenue and total profit of the nine indicators of the monthly business index of China's copper industry were in the "hot" range in 2021 LME Copper settlement price, M2, import volume index, total investment, housing sales area, power cable, Copper Production Index 7 indicators in the "normal" range.

In July, China's copper industry's leading composite index of 107.9, down 6.6 points from the previous month, a decline of 1.6 points. China's Copper Industry Composite Index curve is shown in figure 3. Among the six indices that make up the leading composite index of China's copper industry (after the quarterly adjustment) , the import volume index, the total investment in the copper industry and the sales area of commercial housing dropped by 7.5% , 22.2% and 32.5% respectively Total investment in the copper industry was down 16.9 percent year-on-year.

2021, China's copper industry as a whole has been running smoothly for a period. The supply of raw materials recovered trend, but there were still some disturbing factors, the copper price fluctuated relatively high under the influence of the national Macroeconomic regulation and control policy, the pressure of epidemic prevention and control, and the US monetary policy Consumption by the basic stability of demand, copper prices higher callback, refined waste price gap narrowed, and so on, warmer. Industrial operation has the following three characteristics: first, copper concentrate processing costs continue to rise. At the end of July, copper concentrate spot prices were quoted at $57-$59 a tonne, up $12 a tonne from the end of June. This represents a significant increase from the lowest processing fee of US $30 per ton in recent years. The recent rebound of copper concentrate processing fee is mainly affected by three factors. First, the world's copper concentrate production has gradually resumed, the overseas kamoa-Cacula project has been put into operation, and the second phase of China's Yulong Naxi Autonomous County has gradually reached production, leading to an increase in the world's copper supply. According to ICSG statistics, in the first four months of 2019, the world's output of copper in mines was 6.811 million tons, up 4.2 percent year-on-year, higher than the same period in 2019. Domestic production of copper concentrates continues to grow, according to the National Bureau of Statistics of the People's Republic of China. In June, China produced 166,000 tons of copper in copper concentrates, up 12.0 percent month on month and 6.1 percent year on year. In the first half of 2021, China's cumulative output of copper in copper concentrates was 888,000 tons, up 5.3 percent year on year. 2021's monthly production of copper in copper concentrates is shown in figure 4.

Second, after April, China's copper smelters concentrated maintenance, monthly refined copper production continued to drop month-on-month, smelter copper concentrate raw material demand slowed. China produced 837,000 tonnes of refined copper in June, down 3.3 per cent month-on-month and up 2.6 per cent year-on-year, a sharp drop of 7.6 percentage points from May. In the first half of 2021, China's cumulative output of refined copper was 5.154 million tons, up 12.3 percent from the same period last year. 2021's monthly output of refined copper is shown in figure 5. In July, Jinchuan, Yunnan Tin, Fuye and other smelters still have overhaul plans, but copper smelting overall overhaul efforts were weaker month-on-month.

Finally, China's 15 leading copper smelters have agreed to reduce their copper concentrate purchases by about 1.26 m tonnes and reduce their metal 2021 by about 300,000 tonnes in line with their "double carbon" commitment, providing a good support for the TC upward movement. However, the decision of the ESCONDIDA copper miners to go on strike in late July, the obstruction of the operation of the LasBambas copper mine in Peru as a result of protests against the closure of the road, and the fact that the port of Durban, South Africa, has not yet resumed its operations have disrupted the process of restoring the supply of copper concentrates, the upward trend of copper processing fees may be curbed. Second, consumption has warmed up. In July, refined copper consumption demand pick up, cash premium expansion, enterprise procurement will strengthen, copper inventories dropped more than expected. SHFE copper stocks fell sharply by 48,000 tonnes to 94,000 tonnes at the end of July. The rebound in copper consumption in China in July was mainly influenced by two factors. First, under the combined effect of the National Commodity Macroeconomic Regulation and control policy and the US monetary policy, the high price of copper has dropped, and the pressure on enterprise costs, capital and operations has eased relatively. In July, the average price of SHFE copper for the month and three months was 69,459 Yuan/ton and 69,744 Yuan/ton, up 1.4% and down 1.1% , respectively, and up 35.6% and 36.9% respectively. In July, the trend of Luntong was basically the same as that of Shanghai copper. The average price of copper for the month and three months was $9,434/ton and $9,464/ton, respectively, down 1.9% and 1.8% , respectively, and up 48.5% and 49.1% , respectively. Copper prices inside and outside the trend as shown in figure 6, figure 7.

Second, the gap between refined and scrap prices has narrowed, and the purchasing willingness of refined copper for scrap copper rod making enterprises has increased. In June, the import of recycled copper was restrained due to the epidemic situation in Southeast Asia. In addition, there are still relevant problems to be improved in the implementation of the standards for raw materials of recycled brass and raw materials of recycled copper. The customs has strengthened the selective inspection of imported raw materials of recycled copper, and the return of goods has increased, which has also aggravated the tight supply situation of recycled copper, resulting in a narrow price gap between refined and waste products. In terms of final consumer product output, China's copper production was 1.893 million tonnes in June, up 3.0 per cent month-on-month and down 4.5 per cent year-on-year, a decline of 5.8 points from May. 2021's monthly copper production is shown in figure 8.

The monthly output of power cable, automobile, air conditioner and other products decreased month-on-month due to raw material price, chip supply and other factors, but the decrease narrowed with the relative ease of operating pressure. Third, the pressure of copper industry management structure still exists. In the first half of 2021, companies in the copper sector were generally profitable. In the first six months, copper mining and beneficiation realized a profit of 9.85 billion yuan, up 280.5 percent year on year; copper smelting realized a profit of 10.08 billion yuan, up 136.5 percent year on year; copper calendering realized a profit of 9.53 billion yuan, up 140.5 percent year on year.

First Half year-on-year profit growth, mainly by copper prices rose sharply, the stock of raw materials price differential contribution. In the first six months, the profit margins of the sales of copper mining, copper smelting and copper calendering were 32.0% , 2.3% and 1.4% respectively. Elsewhere, the volume of imports of copper concentrates in June was 1.671 million tons, down 14.1 percent month on month and up 4.8 percent year on year. Imports of scrap copper totaled 150,000 tons, up 7.9 percent month on month and up 118.9 percent year on year, but still below the high of 172,000 tons imported in 2021. Imports of refined copper fell year on year as the 2021's import window was closed in the first half. In June, imports of refined copper totaled 277,000 tons, down 4.8 percent month on month and 43.9 percent year on year. Overall, China's copper industry performed well in July. Although the second batch of 30,000 tons of copper put into the State Reserve Bureau less than the 40,000-50,000 tons expected by the market, it has also played a positive role in ensuring the supply of raw materials to end-consumer enterprises and stabilizing commodity prices. Preliminary forecast, China's copper industry boom index will still be located in the "normal" range. 

Source: Non-ferrous metal