Copper price all about ChinaMarket analyse are not sold on the current price pop in Copper staying in the near term.
We need to watch the inventory to see if the reduction in smelter capacity feeds through to a deficit in the refined market.
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LME inventory down 6,000 tons friday
| Stocks | Amount |
| Opening Stock | 107300 |
| Live Warrants | 93500 |
| Cancelled Warrants | 13800 |
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Shanghai up 8,000 tons
China Warehouse Stock: Shanghai Future Exchange: Copper data was reported at 186,201.000 Ton in 14 Mar 2024. This records an increase from the previous number of 178,224.000 Ton for 13 Mar 2024. China Warehouse Stock: Shanghai Future Exchange: Copper data is updated daily, averaging 44,936.500 Ton from Oct 2008 to 14 Mar 2024, with 3755 observations. The data reached an all-time high of 246,870.000 Ton in 17 Mar 2020 and a record low of 753.000 Ton in 07 Nov 2023. China Warehouse Stock: Shanghai Future Exchange: Copper data remains active status in CEIC and is reported by Shanghai Futures Exchange. The data is categorized under China Premium Database’s Financial Market – Table CN.ZB: Shanghai Futures Exchange: Commodity Futures: Stock.
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A couple articles around that thesis for those interested.
Looks like the China reduction in refined metal will happen in Q2 2024.
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https://www.mining.com/web/column-raw-materials-squeeze-jolts-copper-out-of-its-torpor/
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https://news.metal.com/newscontent/102661115/SMM-Morning-Comment-For-SHFE-Base-Metals-On-Mar-14
SHANGHAI, Mar 14(SMM) –
Copper
LME copper prices opened at $8670.5/mt and closed at $8920/mt last evening, up 3.14%, with the highest of $8950/mt and the lowest of $8638.5/mt.Trading volume was 48,000 lots, and open interest stood at 289,000 lots. The most active SHFE 2405 copper contract prices opened at 71200 yuan/mt and finished at 71950 yuan/mt overnight, with the high-end of 72200 yuan/mt and the low-end of 71080 yuan/mt, up 2.74%. Trading volume was 105,000 lots, and open interest stood at 205,000 lots. On the macro front, as the recent TCs dropped to an ultra-low level in 10 years, the China Nonferrous Metals Association yesterday convened a meeting of domestic mainstream refineries to discuss countermeasures. Sources revealed that smelters may have plans to reduce production. Therefore, copper prices were significantly boosted to the highest level in 11 months. In addition, the State Council issued the "Action Plan for Promoting Large-Scale Equipment Updates and Trade-in of Consumer Goods" to promote consumption, stimulate investment and increase advanced production capacity. That supported copper prices. In terms of fundamentals, from the supply side, arrivals have decreased, warehouse receipts held by sellers have increased, and spot supply has been compressed to a certain extent. In terms of consumption, copper prices surged, and downstream purchases were on demand. The seasonal recovery pace is slow. Overall, inventories have declined, but supply remains loose. Taken together, the news of domestic refinery production cuts has significantly boosted copper prices. It is expected that copper prices will have support.
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https://news.metal.com/newscontent/102658029/SMM-Exclusive:-China-Metals-Output-In-February-And-Forecast-For-March
SMM Exclusive: China Metals Output In February And Forecast For March
Copper cathode
SMM data showed that China's copper cathode output in February was 950,300 mt, a month-on-month decrease of 19,500 mt or 2.01%, but a year-on-year increase of 4.68%. Output decreased 9,100 mt from the expected 959,400 mt. The cumulative output from January to February was 1.9201 million mt, an increase of 159,000 mt or 9.03% year-on-year.
There are several reasons for the unexpected decline in output in February: 1. Affected by the continued decline in copper concentrate TCs (as of March 1, the SMM imported copper concentrate TC index (weekly) was reported at $16.41/mt, a decrease of $7.09/mt from a week earlier, a new low in recent years. If the smelters purchase spot copper concentrate for production, the current loss is 1,417 yuan/mt; if the smelters use copper concentrate under long-term contracts for production, the current profit is 918 yuan/mt). Some smelters have lowered the input amount, reducing output. 2. A smelter in south-west China began to relocate, causing its output to drop significantly; 3. Some smelters reduced their operating rates during the Chinese New Year holiday. We believe that the average operating rate of copper cathode industry fell 1.38 percentage points month on month to 83.80% in February.
In March, only one smelter has overhaul plan, and another has postponed its overhaul until April. According to our survey, as of the beginning of March, eight smelters had reduced their raw material inputs, but that had not affected their output for the time being. Despite this, the total output in March still increased slightly compared with February. The main reasons are as follows: 1. In March, various smelters increased their production after the Chinese New Year holiday, and the number of production days also increased; 2. The two smelters that were put into operation at the end of last year continued to yield output; 3. After a smelter completely stopped production, most of its blister copper and anode plates were sold, which to a certain extent alleviated the shortage of raw materials for other smelters.
Based on the production schedules of various companies, SMM estimates that domestic copper cathode output in March will be 970,200 mt, a month-on-month increase of 19,900 mt or 2.09%, and a year-on-year increase of 18,800 mt or 1.98%. The cumulative output from January to March is expected to be 2.89 million mt, a year-on-year increase of 6.55% or 177,800 mt. However, this data should be the highest value in the first half of the year. In the second quarter, smelters will enter a period of intensive maintenance. According to our current survey, 7 smelters will be overhauled in April, involving a smelting capacity of 1.21 million mt. There are 8 smelters that need to be overhauled, involving a rough refining capacity of 1.84 million mt. In June, there will be 8 smelters that need to be overhauled, involving a smelting capacity of 1.56 million mt.