Abstract: overseas supply side disturbance is frequent, copper concentrate and scrap copper supply is still tight, although the demand has marginal improvement, it is still at a low level. In the first eight months, China's copper demand has declined significantly. Under the background of downward pressure on the global economy, copper prices are generally weak this week.

    1、 Trend of domestic spot copper price this week

    Disturbance occurred frequently at the overseas supply side. The transportation of MMG Las bambas copper mine in Peru was blocked due to protests, which affected production, disrupted logistics, and lowered the output forecast for this year; Chile considered closing the Ventanas copper smelter, and the only large copper mine in Ecuador was limited by fuel oil subsidy protest. Cspt team has determined the floor price of TC in the fourth quarter, which is about 20% higher than that of the last quarter. In the short term, TC has a warming up trend, but the supply of copper concentrate and scrap copper is still tight.

      According to the world Bureau of metal statistics, in the first eight months of this year, mine copper production increased slightly by 0.5% year-on-year, while refined copper production decreased by 2% year-on-year. However, copper consumption also fell to 1547 tons from 1579 tons in the same period last year, and China's performance demand decreased by 3.3% year-on-year. In terms of demand, the year-on-year decline of automobile production and sales data in September continued to narrow, showing a significant recovery on a month on month basis, and the overall automobile market was still under pressure; in September, the operating rate of copper enterprises increased month on month, and there was marginal improvement in downstream demand. The global economic situation is not optimistic, the short-term demand is difficult to improve substantially, the demand is still at a low level, and the overall performance of copper prices this week is weak.

    In the week of October 18, the domestic spot copper price was weak this week. The average price of copper in the Yangtze River Nonferrous metal net 1 was 46906 yuan / ton, with a daily average of 70 yuan / ton and a weekly decline of 0.74%; the previous week's average price was 46930 yuan / ton, down 24 yuan / ton compared with last week, and down 0.05% month on month.

       2、 One week trend of copper futures price

    Recently, the economic data released by major global economies are generally poor. The decline in China's import and export data confirms that the global trade activity has slowed down and domestic demand has not improved significantly. The decline of retail sales data in the United States has exacerbated worries about the economic recession. The CPI of the euro zone is lower than expected, which leads to new concerns about the economic situation. The global manufacturing industry has fallen into recession. The IMF has lowered the global economic growth again this year The long-term forecast reached 3% and hit a new low since the financial crisis. Although the prospect of Sino US trade is more optimistic and the positive progress of brexit has boosted market risk sentiment, the downward pressure on the economy makes it difficult for copper prices to rebound.

       CCMN data show that Luntong copper is weak this week. In the first four trading days, the average price of LME copper was $5766.75/t, with a daily average of 13.5/t; last week, the average price of copper was 5732.8/t, up 0.59% month on month.

     Data from Changjiang nonferrous metal network show that Shanghai copper is in a weak position this week. In the current month, the average weekly settlement price of 1911 contract was 46798 yuan / ton, with a daily average decrease of 106 yuan / ton; the previous week's average price was 46762.5 yuan / ton, up 0.08% month on month. This week, Shanghai copper inventory continued to rise, increasing 17990 tons to 152499 tons, an increase of 13.37%. In the past three weeks, the total inventory has increased by 29.84%.

 3、 Inventory situation of Luntong copper week

As shown in the figure, the overall de stocking of lungcang this week decreased by 13925 tons to 268400 tons, a cumulative decrease of 4.93%.

4、 Hot finance at home and abroad

In China:

1. China's PPI in September was - 1.2% year-on-year, with an expected - 1.2% and a pre value of - 0.8%. According to the data of the National Bureau of statistics, in September 2019, the factory price of industrial producers in China decreased by 1.2% year-on-year, and rose by 0.1% month on month; the purchase price of industrial producers decreased by 1.7% year-on-year and increased by 0.2% month on month. From January to September, the ex factory prices of industrial producers remained the same as that of the same period last year, and the purchase prices of industrial producers decreased by 0.3%.

2. According to the data of the National Bureau of statistics, the GDP of the first three quarters was 69779.8 billion yuan, a year-on-year increase of 6.2% at comparable prices. Quarter wise, the growth rate was 6.4% in the first quarter, 6.2% in the second quarter and 6.0% in the third quarter. In terms of industries, the added value of the primary industry was 430.5 billion yuan, an increase of 2.9%; the added value of the secondary industry was 27786.9 billion yuan, an increase of 5.6%; the added value of the tertiary industry was 37692.5 billion yuan, an increase of 7.0%. The overall operation of the national economy has been stable and the economic structure has been continuously optimized.

International:

1. Retail sales fell by an unexpected 0.3% in September, the first drop in seven months, according to data released by the commerce department on Wednesday. Retail sales were dragged down by factors such as falling auto and online shopping spending. As the US manufacturing industry shrank and signs of economic slowdown piled up, unexpected falls in consumer data further exacerbated the market's worries about the recession.

2. Affected by low oil prices, the euro zone's adjusted CPI rose by 0.8% in September from a year earlier, which was lower than the previous forecast low of 0.9% in recent three years and also lower than 1% of the previous value. Analysts believe this could trigger new concerns about the state of the euro zone's economy and reignite the debate within the European Central Bank about achieving the 2% inflation target in the medium term.

5、 News of copper market in a week

1. Since September 22, the access road of MMG Las bambas copper mine in Peru has been blocked. On October 15, the Peruvian government declared a state of emergency on some sections of the road, and the authorities have begun to clean up the roads. Assuming full recovery of traffic in the next few days, copper production in 2019 is expected to be slightly below the guidance range of 385000 to 405000 tons.

2. Codelco has announced a plan to sell "green cathode copper" to consumers at premium prices, using more sustainable practices such as renewable energy and recycled water to reduce its carbon emissions. Recently, insiders and an executive said the project had run aground because the mining company realized it would be difficult to guarantee the "sustainability" of its copper once it was melted and put on the market.

6、 Outlook of copper price

There is still uncertainty about whether the new brexit agreement can be passed through the British Parliament with highly divergent views. If it is passed by the parliament, the pound will rise, causing certain pressure on the US dollar, but the economy will also suffer. In addition, the market hopes to reach a trade agreement between China and the United States, and the two sides are trying to reach a phased agreement as soon as possible. At present, in the face of the downward pressure of the global economy, interest rate reduction has become the main policy option of various countries. The latest data from the United States show that its economy is under increasing pressure. Although several Fed officials are skeptical about further rate cuts, the expected rate cut is still as high as 83%.

Domestic financial experts say that the overall probability of interest rate cut is not good in three years. According to the National Bureau of statistics, China's economic growth further slowed down in the third quarter, but it was still high in the global perspective; despite the downward pressure on the economy, the main macro indicators remained in a reasonable range. In terms of fundamentals, although the short-term TC has a rebound trend, it is still at a low level, and the tight supply of copper concentrate and scrap copper has not changed; there is marginal improvement in downstream demand, and the market still has some expectations for grid investment in the fourth quarter, and the demand needs to be further strengthened; after the festival, the domestic copper inventory in the previous period continued to rise, which may cause some pressure on copper prices, and copper prices are expected to fluctuate next week.