Demand Shrinks 60% of National Copper Reserve Plans

On June 11, China will consider purchasing and storage policies for some important resource products (such as copper, rare earth, etc.), and news that some rare metals will adopt measures similar to rare earth management measures will spread madly in the non-ferrous metals industry. Li Yusheng, a senior copper analyst at Beijing Antaike, said that copper prices are still high, and there is no need to use storage to boost market prices.

On June 11, China will consider purchasing and storage policies for some important resource products (such as copper, rare earth, etc.), and news that some rare metals will adopt measures similar to rare earth management measures will spread madly in the non-ferrous metals industry.

Stimulated by this good news, Shanghai copper on the Shanghai Futures Exchange reversed the trend of the day. On that day, its main contract 1209 gapped higher and closed up 1320 points to close at 54,350 yuan per ton.

A reporter from China Business Daily learned from the Energy Research Institute of the National Development and Reform Commission that the country has not recently received a plan to store copper.

At the same time, the reporter was also informed that the construction of the reserve mechanism for copper has started preparations. It is expected that a fixed collection and storage mechanism will be established in the future as well as rare earths. In the future, when the copper is stored and stored, the price and quantity of its storage and storage will be conducted in a confidential manner.

"The copper storage and storage plan is still under development. It will not be implemented in the near future. The future storage will focus on national economic security, and at the same time it will focus on market price adjustment functions. However, the specific operational procedures and data for copper storage and storage will be kept confidential." The relevant person of the raw material department of the Ministry of Industry and Information indicated.

The industry generally believes that the news of copper storage and storage shows that the management department is concerned about the domestic economic trend. The current high copper price does not obviously reflect the real demand of the copper market. In the second half of this year, the price of copper will continue to decline.

The timing of the reserve is undetermined. "The reserve mechanism is being studied and it does not mean that it will be implemented soon. Since it is a national reserve, it is not only to regulate the market, but also to consider national economic security. It is believed that the introduction of such reserve measures will be the norm." On June 12th, the above-mentioned officials from the Ministry of Industry and Information Technology of the Ministry of Industry told this reporter that he believed that the timing for the launch of copper storage and storage would be determined by the trend of copper prices and the economic environment.

“The market has always been controversial about storing copper or aluminum. Relative to aluminum, the price of copper has fluctuate more and has a wide range of industrial applications. It has always acted as a benchmark for basic metal raw materials. Therefore, the stability of copper prices is maintained for the entire industrial economy. The impact is far more strategic than the reserve of aluminum," said the official of the raw material department of the Ministry of Industry and Information Technology.

Regarding whether or not copper is being collected and stored, it also implements a policy of purchasing and storing resource products such as rare earths and tungsten. The above-mentioned Ministry of Industry and Information Technology officials revealed that preliminary studies on reserves of several metals such as rare earths and tungsten have already started. Still to be finalized with the NDRC.

“Such as the proposal for the reserve of rare earth was put forward as early as May last year, and the reserve of tungsten was also confirmed at the beginning of this year, but they have not been formally launched until now,” said the MIIT official.

Market participants believe that the timing of purchasing and storage will generally refer to the cost price of the product. Only when the price approaches or falls below the cost price will it be suitable for storage.

At present, domestic copper prices are basically maintained within the range of 50,000 yuan to 60,000 yuan per ton. In terms of cost, the domestic production cost of electrolytic copper is between 30,000 and 40,000 yuan. The price of imported copper is between 25,000 and 30,000 yuan. Compared with the current market price of 50,000 to 60,000 yuan, there are still copper prices. Great down space.

Li Yusheng, a senior copper analyst at Beijing Antaike, said that copper prices are still high, and there is no need to use storage to boost market prices.

“I think that it is not appropriate to store copper now, but from the perspective of institution building, it is certainly necessary to start establishing a mechanism for storing and storing copper.” Li Yusheng believes that when the price is still good, it may also be to respond to the impending economic situation. deterioration.

The latest statistics released by the National Bureau of Statistics on June 9 showed that the consumer price index (CPI) in May increased by 3.0% from the same period last year, which is the lowest point in 23 months since July 2010, and the industrial producer price (PPI) It was down 1.4% year-on-year, of which non-ferrous metals prices fell by 6.2% year-on-year and 0.7% month-on-month, both at low levels in recent years.

Regarding measures that will adopt rare earth-like management measures for some rare metals, a senior industry source told reporters: “Rare-earth management is now managed separately using domestic trade and foreign trade. In China, we implement a mandatory plan for mining and smelting, and adopt quotas for exports. It is expected that the storage and storage of copper will draw on the recovery and storage methods of rare earths, which currently use enterprise reserves, mine reserves, and national reserves in parallel, and copper may use the state reserves and corporate reserves in a simultaneous and secret manner because of the large volume of copper imports. Using mine reserves is not realistic."

The mysterious reserve mechanism According to the reporter's understanding, the State Material Reserve Bureau (the National Development and Reform Commission's National Reserve Bureau), a specialized agency responsible for national material reserves, usually does not disclose its specific time and data when collecting and storing some important raw materials.

On April 16, 2009, the China Nonferrous Metals Association, concerned about copper storage, had publicly stated that “in three years, the country will store and store 1 million tons of aluminum, 400,000 tons of copper, and 400,000 tons of lead and zinc. However, due to the fact that the State Bureau of Material Reserve has not announced any information about the collection and storage of non-ferrous metals, so far, the collection and storage of non-ferrous metals such as aluminum and copper is still a mystery.

As for the upcoming new round of non-ferrous metals purchase and storage, the State Material Reserve Bureau remains silent. At the beginning of this year, the “12th Five-Year Development Plan for Non-ferrous Metals Industry” issued by the Ministry of Industry and Information Technology did not explicitly propose plans for non-ferrous metal reserves.

From the end of 2008 to the beginning of 2009, due to the financial crisis, Shanghai Copper plunged below 27,000 yuan per ton, and a large number of copper producers suffered serious losses. The country began to collect and store urgently. During the process of storing and storing non-ferrous metals such as copper for nearly half a year, an industry veteran told reporters that the amount of copper collected during that time may be much higher than the market expected, because at the beginning of the year There is still the last time that the state reserve copper was sold in the market. The impact of the State Reserve’s copper on copper prices is still on the way.

The above-mentioned person from the China Nonferrous Metals Association told the reporter that the plan for national reserves of non-ferrous metals was studied in 2009. However, due to the impact of the 4 trillion stimulus plan, copper prices have been improving all the time. As a result, the proposal for storage and storage has been temporarily suspended. In his view, the resumption of copper storage plans is largely influenced by the pessimistic expectations of the macro economy and has nothing to do with the current trend of copper prices.

It is reported that the Ministry of Industry and Information Technology and the National Development and Reform Commission are generally divided into two categories when researching raw material reserves: one is raw materials that China is in serious shortage and needs to import, such as petroleum and copper, and the other is that China has abundant reserves and outputs, and exports are large enough to meet international standards. Important raw materials that the market needs: such as rare earths.

Liu Libin, senior copper analyst at Green Futures, said that if it is necessary from the point of view of national security to collect and store some of the important metals, the United States and Japan have such reserves. In addition to crude oil, China has no comprehensive reserve system for basic metal systems. Although copper and aluminum were purchased at the end of 2008, they were only used to boost market prices and were not considered for national economic security.

Due to the economic downturn and adverse downstream demand, this year's domestic copper stocks hit a record high in the history of the decade.

The copper stocks disclosed by the Shanghai Futures Exchange show that as of June 8th, its copper inventories were 132,000 tons. Although it was 95,000 tons less than the peak value on March 16, the stocks in the bonded areas of ports have continued to increase. Sets the highest value of copper inventory history in ten years. On April 18th, the World Economic Outlook Report released by the IMF (the International Monetary Fund) stated that there are 1.78 million tons of copper stocks in addition to bonded warehouse stocks, plus 550,000 tons of stocks in bonded areas. China’s copper stocks will exceed 2.3 million tons, reaching its highest ever.

Financing copper is once again warming yet it is surprising that even with high domestic copper inventories and shrinking demand, imported copper is still being shipped to China.

Data show that China’s copper imports increased by 11.7% in May this year. With regard to the increase in imports, Mr. Guo, a Shanghai copper import trader, told this reporter that the sudden explosion in copper imports was caused by a large increase in the financing of copper. He told reporters that compared with the first four months of this year, the price ratio of imported copper was poor. The ton of 4,000 yuan dropped to 600 yuan per ton. As the domestic loan situation is still severe, the financing of copper has rekindled.

Public data shows that as of June 11th, LME copper stocks totaled 235,200 tons in March. In order to meet China's demand for copper financing, most of the stocks, which are significantly reduced, are shipped to China.

All respondents in the industry pointed out that the current downstream demand for copper is rather poor, even worse than the same period in 2009. According to statistics, in May the copper downstream industries, such as cable and household appliance industries, were generally under-utilized, and the average operating rate of power cable companies was only 73.4%. Although many projects in recent places have been approved, they have not yet been converted into actual demand.

According to data from the National Bureau of Statistics on June 9, China’s industrial added value rose by 9.6% year-on-year in May, and total retail sales of consumer goods increased by 13.8%, which was lower than the expected increase of 9.9% and 14.3% respectively. It also showed data from the previous month. Decline.

Mr. Guo, a copper import trading company in Shanghai, told reporters that most of the funds financed by copper financing are for working capital, and the general loan period is 3 to 6 months. This reporter learned that, in addition to part of corporate finance for their own use, there are also part of the funds financed by copper into the tight real estate industry by means of lending. "The cost of financing copper is about 10% per annum, and the interest on its lending is generally lower than that of private usury (approximately 15% to 20% per annum), and the current financing companies are still profitable."

“According to the situation we understand, the average opening rate of downstream producers of copper is less than 40%. Most of the imported copper is turned in the hands of traders.” Mr. Guo believes that the short-term upswing is not sustainable if the downstream demand With no improvement, the financing of copper is difficult to realize, and this copper financing will also be aborted.