The price of London copper once hit an 11-month high! The shortage of copper may come ahead of schedule, benefiting listed companies
Finance Associated Press, March 24 (edited by Liu Yue) The main London copper futures contract rose above $9,160 per ton on Monday, hitting a new intraday high since April 14, 2023. A recent research report by CITIC Securities pointed out that the current supply shortage of the copper industry chain may have gradually been transmitted from the mine end to the smelting end, and the potential production reduction at the smelting end may lead to the global refined copper supply and demand balance turning from a small surplus to a shortage in advance during the year. Optimistic about the allocation value of the copper sector in the context of continuous interpretation of supply shortage.
According to Wind, as of March 14, 2024, under the condition that global demand has not improved significantly from 23Q4 to 24Q1, the increase in copper supply is lower than expected, and the Fed's expectation of interest rate cuts has prompted London copper to gradually strengthen. Zhang Jiqiang of Huatai Securities and others pointed out in a research report on February 27 that in the long run, copper as an energy metal, energy transition superimposed on the economic growth of emerging markets such as India, long-term demand for copper continues to grow, while long-term capital expenditure is insufficient, the supply chain is unstable, and the increase in copper ore is expected to be limited after 2026, and the long-term supply and demand gap is difficult to make up. In the short term, the domestic actively promote equipment renewal + trade-in, overseas experience of high interest rates continue to go to the warehouse, it is expected that the Federal Reserve interest rate cut will open the replenishment, boost demand, superimposed on the tension of the mine end, optimistic about the copper price to exceed 10,000 US dollars / ton.
According to IWCC and ICA, the global terminal copper demand in 2022 will be mainly equipment (32%), construction (26%), infrastructure (17%), etc. Zhang Jiqiang pointed out that the copper industry chain includes mining and dressing, copper ore smelting, processing of finished products, and terminal consumption. In terms of terminal scenarios, copper is widely used due to its excellent ductility, electrical conductivity and thermal conductivity, mainly in the power industry, followed by home appliances, transportation, construction, electronics and other industries.
Zhang Jiqiang pointed out that new energy and domestic power copper are the main driving forces for refined copper demand. On the supply side, the mainland leads in copper smelting capacity, with China's refined copper output reaching 11.062 million tons in 2022, accounting for 43.1% of the global total. However, copper ore resources are limited and the self-sufficiency rate is low, and Peru and Chile are the main importers.
Li Shuaihua of China Post Securities and others pointed out in a research report on January 6 that looking forward to 2024, tightening supply, interest rate cut cycle, and economic recovery will be the three major logics supporting the upward movement of copper prices, and copper will be one of the non-ferrous metals with the greatest certainty. Li Shuaihua selected a total of 14 domestic A+H share listed companies in the copper industry, and sorted out the companies from three aspects: production proportion, new equity output, and year-on-year growth rate of equity output, the top five companies in terms of output proportion are Zijin Mining, Luoyang Molybdenum, Tongling Nonferrous Metals, Western Mining, and Jin Chengxin; the top five companies in new output are China Molybdenum, Zijin Mining, Tongling Nonferrous Metals, China Gold International, and Zangge Mining; and the top five companies in terms of new output growth are Jin Chengxin, China Gold International, Tongling Nonferrous Metals, Zangge Mining, Hegang Resources.
(Finance Associated Press, Liu Yue)