Futures Daily reported on December 10: In the case of considerable profits, the domestic smelter production is less likely

The last two weeks, LME copper around 4580 US dollars / ton in a narrow range. Copper rebound encountered blocking, but the pressure was significantly weakened short, the price volatility gradually narrowed. Short-term, the market long and short message intertwined, investors cautious. From the medium and long term, copper supply surplus pattern remains unchanged, copper prices will remain weak. Investors should be the main operation of wet storage interval, waiting for a breakthrough price.

Fed rate hike boots before landing investors remain cautious

US November non-farm employment growth of 21.1 million, better than expected growth of 20 million people, while the unemployment rate in November was 5.0%, in line with the previous value and expectations, which means that the Federal Reserve in December to raise interest rates close to 100% Market interest rates are widely expected to range between 0.25% -0.5%.

Since 1980, the US interest rate increase in the past, the United States into the interest rate cycle, the global economy began to recover, the performance of copper prices for the oscillation up. At present, in addition to the United States outside the country's economic recovery power is not enough, China, India and other emerging economies and the US economic cycle away from the US interest rate increase may lead to capital outflows in these emerging countries intensified, thereby affecting their economic recovery progress.

In the non-farm payrolls data, the dollar and LME copper performance is relatively stable, mostly cautious investors.

Excess supply of copper concentrate, smelter production difficult

Chinese copper enterprises and foreign mining enterprises in the 2016-year long single-bargaining negotiations slow progress, the larger differences between the two, but the final TC / TC finalized at 100 US dollars / ton and 10.0 cents / lb near the possibility of a larger, reflecting the future Copper concentrate is still over-supply within one year. BHP, Codelco and other mining companies said the future will reduce the cost of copper production, which, BHP said it would increase production. From the data, Peru in October copper production reached 158,900 tons, an increase of 32%. With the production of large copper mines such as Lars Barnes in 2016, the country's copper output is expected to surpass China in the next two years to become the world's second largest producer of copper.

Smelter, the backbone of domestic enterprises on December 1 joint initiative, "2016 cut 350,000 tons," but we believe that significant profits in the case of imported copper concentrate, the smelter is less likely to cut.

In addition, with 500,000 tons of smelting capacity in normal operation, is expected in 2016 China's refined copper production will increase by 4.70% year on year.

Downstream consumption weakness

Wire and cable industry is the focus of the current market focus. National Bureau of Statistics data show that 6-10 month continuous negative growth in power cable, cable companies in November is expected to average operating rate will continue to decline year on year. Some large enterprises operating rate is high, but due to consumption off-season and the country network orders need to pay capital and so on, corporate financial pressure is heavier, the proportion of the country net bid is expected to decline. Orders for small and medium enterprises continue to drain, facing a large area out of the risk. In the real estate sector, the total investment in real estate development totaled 7.88 trillion yuan, an increase of 2% over the same period of last year, and the growth rate narrowed continuously. In the first 10 months, the newly started housing construction area totaled 1.27 billion square meters, down 13.9% year on year; 7.07 billion square meters, an increase slowed to 2.3%. A weaker real estate market will continue to weigh on cable demand, and cable usage is expected to decline in the next three months.

From a technical point of view, copper prices rebounded after the fall, the overall around 34,900 yuan / ton narrow range oscillation. Total volume fell from 1.952 million hands to 79.2 million, but hand positions increased from 752,000 to 808,000. We believe that after the price break after the emergence of a larger level of market prices.

To sum up, we believe that the pattern of excess copper supply is difficult to change in the short term, copper prices in the medium and long term will continue to remain weak. The current long and short sides to raise interest rates in the Fed boots before landing to be cautious, but the increase in open interest indicates a large market later the possibility of large. Investors should do a good job of fund management, when the price break down admission admission short. If the price choice to break up, you need to wait for the price weakness when the admission short. Short-term price is not clear before the investors can be wet storage high throw low suction.