The Zhitong Finance App learned that Huafu Securities released a research report saying that copper ore imports in October were 2.31 million tons (Chile 65.1 + Peru 64.2), -0.121 million tons/ -5.0% month-on-month; in January-October, copper imports were 23.385 million tons (Chile 746.9 + Peru 589.4), +0.777 million tons/ +3.4% year on year. On the processing side, in October 2024, China's copper production was 1.967 million tons, -0.3% year-on-year, and -2.3% month-on-month; in January-October, the cumulative copper output was 18.274 million tons, cumulative year-on-year. Looking ahead to the future market, the direction of interest rate cuts by the Federal Reserve is determined, and the tight balance between copper supply and demand forms a strong support for copper prices; in the medium to long term, boosting investment and consumption as the Fed cuts deepens, while opening up space for domestic monetary policy. Combined with the rebound in inflation brought about by monetary easing and fiscal easing after the US election, it will support the upward movement of copper prices.

The main views of Huafu Securities are as follows:

Raw material side: Copper ore imports declined month-on-month, and copper waste imports increased month-on-month

1) Copper imports and exports: October copper imports were 2.31 million tons (Chile 65.1 + Peru 64.2), -0.121 million tons/ -5.0% month on month; January-October copper imports were 23.385 million tons (Chile 746.9+Peru 589.4), +0.777 million tons/ +3.4% year on year.

2) Copper scrap: 1) Import and export: In October, China's copper scrap import volume was 0.183 million tons, +0.028 million tons/ +17.9% year on year, and +0.023 million tons/ +14.2% month on month. From January to October 2024, copper scrap imports were 1.857 million tons, up +0.254 million tons/ +15.8% year on year; 2) Profit: In October, the fine waste price difference fell slightly from month to month. The average monthly average of fine waste margin this month was 1311.9 yuan/ton, compared with -214.2 yuan/ton (decrease of 14.0%) and +512.5 yuan/ton (increase of 64.1%) year over year.

Supply side: Cathode copper production declined in October, imports picked up

1) Production: October production was 0.9798 million tons, -1.2% year-on-year, -2.4% month-on-month, with a capacity utilization rate of 79.61%. From January to October '24, the cumulative production of electrolytic copper was 9.844 million tons, +36.0 tons/ +3.3% year on year; 2) Import and export: October cathode copper import volume was 0.359 million tons (Congo 14.5+Chile 4.8), +0.026 million tons/ +7.7% year on year, +0.037 million tons/ +11.4% month on month; the cumulative amount of cathode copper imported from January to October 2024 was 3.007 million tons, year on year +0.187 Million tons/ +6.6%; 3) Profit: The average price of spot copper refining and processing costs this month was 10.5 US dollars/ton, -77 US dollars/ton or -88% year over year, +5.07 US dollars/ton or +93.37% month on month; the price of sulfuric acid in October was 377.93 yuan/ton, -3.14 yuan/ton.

Processing side: copper production declined month-on-month, and exports remained flat

1) Production: In October 2024, China's copper production was 1.967 million tons, -0.3% YoY, -2.3% month-on-month; in January-October, the cumulative copper output was 18.274 million tons, or -1.1% YoY. 2) Import and export: Copper exports in October were 0.0801 million tons, +0.0107 million tons/ +15.4% year on year, and +24.67 million tons/ +3.2% month on month. From January to October, China's cumulative copper export volume was 1.1118 million tons, a cumulative year-on-year increase of 29.6%.

Terminal demand: The apparent demand in October was 1.329 million tons, +1.4% month-on-month

Terminal demand: Air conditioning production in October was 16.202 million units, +14% year over year; 8.971 million refrigerators in October '24, +6.8%; cumulative housing construction area in January-October '24 was -22.6%, cumulative total completed area was -23.9%; in October '24, production of new energy vehicles was 1.428 million units, +44.5% YoY; cumulative PV output in January-October '24 was 543.43 million kilowatt-hours, cumulative YoY +15.5%.

Macro analysis

The US recorded an unseasonally adjusted CPI annual rate of 2.6% in October, slightly higher than 2.4% in the previous month, in line with market expectations; the monthly core CPI rate for October was the same as last month, at 3.3%. Overall, the Federal Reserve's interest rate cut cycle began, and the Trump deal successfully elected president. The temporary suppression of copper prices around the “Trump deal” suppressed copper prices, but the long-term trend of US monetary easing and fiscal leniency did not change.

Investment advice

On the supply side, spot TC for copper concentrate remained stable and low this week. We need to pay attention to the 25-year long-term processing fee negotiations at the end of the year. On the demand side, after copper prices weakened, terminal demand stimulated a marked improvement in new orders from many cable companies. Demand orders for copper enameled wire continued to be strong for transformers, and demand orders for copper enameled wire for home appliances picked up; trade-in and export demand increased production schedules for air conditioners, refrigerators, and washing machines in November and December, leading to an increase in demand for copper pipes. The direction of the Federal Reserve's interest rate cut is determined, and the tight balance between copper supply and demand provides strong support for copper prices; in the medium to long term, boosting investment and consumption as the Federal Reserve's interest rate cut deepens, while opening up space for domestic monetary policy. Combined with the rebound in inflation brought about by monetary easing and fiscal easing after the US election, it will support the upward movement of copper prices.

Aspect of the target

A shares: Leading companies are the first to promote Zijin (601899.SH), with flexible focus on Zangge (000408.SZ); others focus on Luo Molybdenum (603993.SH), Jin Chengxin (603979.SH), Tongling (000630.SZ), West Mining (), North Copper (000737.SZ), and Jiangtong (US); 601168.SH 600362.SH

Hong Kong stocks: Focus on Minmetals (01208), China Ore (08306), etc.

Risk warning: Downstream demand falls short of expectations, and the US economy has a hard landing.