On the macro level, the current global economic recovery is on the wane, consumer confidence in Europe and the United States is declining, China's exports are showing signs of peaking, investment growth is low, and bulk demand will fall back. On the supply and demand side, LME inventories continue to accumulate, in line with the changes in the overseas economic situation, the domestic side, due to the mismatch between supply and demand, is still in a tight state, so it continues to go to the Treasury; from the global total explicit inventory level, it is still in a state of going to the Treasury; from the market point of view, the dollar and other safe haven assets are expected to remain strong, suppressing the financial nature of copper as markets fret about the global economic downturn and Lower Risk Appetite; technically, support below $66,000 and around $9,000 in copper is now confirmed once again, it is expected to be the bottom line for a longer period of volatility in the future. In general, we are neutral to the September trend of copper prices. Strategic Recommendations: The main range operation, in 69000 below the layout of the lower single, in 69000 above the top every high-cut positions stop surplus. The risk of uncertainty: The global economic recovery is slowing, demand is falling short of expectations, and Delta contagion is exceeding expectations. In 2021, copper prices were weak, with the biggest drop of more than 6,000 yuan per ton during the period. The main contract fell as low as 66,000 yuan per ton. This week, copper prices continued to rebound and have now recovered to around 69,000 yuan per ton. In addition, the term structure of the copper market has been shifted to the Back structure. Price Impact Factor Analysis 1. The global epidemic situation continues to spread in China, the spread of mutant strains of the virus accelerated, to a certain extent, suppress economic prospects. The Fed's taper is expected to intensify, with Powell saying he may scale back purchases by the end of the year, though he said the cuts do not signal a rise in interest rates. US inflation is peaking and economic data has weakened slightly, but fiscal policy advances are expected to give the economy a further boost. The EU Recovery Fund is in its final stage, while the dovish stance on currency continues and European policy support remains strong. Overall, the spread of the global epidemic situation is still out of control, especially the mutant strain of the virus on the economic disturbance continued, and the Federal Reserve's monetary policy shift has also caused concerns to the market, commodity rally has slowed. 2. Foreign Macro on August 27, the Ministry of Finance issued the report on the implementation of China's fiscal policy in the first half of the 2021, which defines the next steps to implement macro policies accurately and enhance the effectiveness of the proactive fiscal policy. We will accelerate budgetary expenditures and the issuance of local debt in the second half of the year, strengthen financial resources for the country's major strategic tasks, and actively guard against and defuse risks in key areas. A series of measures will provide strong support for consolidating economic stability and moving forward. The third batch of copper, aluminum and zinc was put into the state reserve by the 2021:30,000 tons of copper, 70,000 tons of aluminum, and 50,000 tons of zinc. National Bureau of Statistics of the People's Republic of China: Overall, the profits of industrial enterprises above the size of July maintained a steady growth trend, but to see that the improvement of industrial enterprise benefits of the imbalanced uncertainty still exists. In the next stage, we need to ensure and stabilize the supply and price of commodities, help enterprises to solve their difficulties, and constantly promote high-quality development of the industrial economy. Profits of industrial enterprises above the scale increased by 16.4% in July from a year earlier, down 3.4 percentage points from the previous month. This reflected a significant slowdown in the growth rate of profits of industrial enterprises, particularly in the light of the drop in the base figure for the same period last year, the main reason is that the rising prices of raw materials and other commodities have eroded the profits of some industries in the lower reaches of the river, and the imbalance of economic benefits among industries is prominent Power, heating, gas and water production supply (- 34.8%) , industrial enterprises in July mainly by the upstream mining sector, and power, heating, gas and water production and supply sector profit decline widened for the second consecutive month.

Fundamentals 3.1 domestic production maintained a relatively high growth rate

For the january-july period, production totaled 5.999 million tons, up 12.1 percent from a year earlier, according to the National Bureau of Statistics of the People's Republic of China. The rate of growth is down from previous months but at a higher level than in previous years, or for the full year. Smelting costs for copper concentrates have recovered significantly from the beginning of the year and are now at the same level as in April 2020, higher than the low level in 2019, reflecting a positive recovery in copper supply. 3.2. Low import growth from January to July, imports of copper concentrates increased by 5.94% , which was the median growth rate compared with the previous years, and imports of refined copper fell sharply for two consecutive months, with the single-month import volume at the lowest level in recent years and a cumulative decrease of 18.8% from January to July; Imports of copper products also decreased significantly from a year earlier, with a cumulative decrease of 10.7% in the january-july period. As for copper scrap, due to the impact of policy changes and strong domestic demand, imports of copper scrap continued to increase significantly, with a cumulative increase of 91.8% in the january-july period, growth continues to pick up. Considering the current state of strong and weak inside and outside continued to exist, spot import window opened, Shanghai bonded port inventory is expected to maintain inflow. The high demand for copper scrap promotes the copper scrap price to maintain the high level, has formed to the fine copper price support.

For the january-july period, production totaled 5.999 million tons, up 12.1 percent from a year earlier, according to the National Bureau of Statistics of the People's Republic of China. The rate of growth is down from previous months but at a higher level than in previous years, or for the full year. Smelting costs for copper concentrates have recovered significantly from the beginning of the year and are now at the same level as in April 2020, higher than the low level in 2019, reflecting a positive recovery in copper supply. 3.2. Low import growth from January to July, imports of copper concentrates increased by 5.94% , which was the median growth rate compared with the previous years, and imports of refined copper fell sharply for two consecutive months, with the single-month import volume at the lowest level in recent years and a cumulative decrease of 18.8% from January to July; Imports of copper products also decreased significantly from a year earlier, with a cumulative decrease of 10.7% in the january-july period. As for copper scrap, due to the impact of policy changes and strong domestic demand, imports of copper scrap continued to increase significantly, with a cumulative increase of 91.8% in the january-july period, growth continues to pick up. Considering the current state of strong and weak inside and outside continued to exist, spot import window opened, Shanghai bonded port inventory is expected to maintain inflow. The high demand for copper scrap promotes the copper scrap price to maintain the high level, has formed to the fine copper price support.

3.3 further build-up of foreign inventories LME inventories have been in a cumulative state overall since March and are now less than 20,000 tonnes below their May 2020 peak. Currently, the decline in consumer confidence in Europe and the United States, PMI index, coupled with the spread of the Delta epidemic, the short-term macroeconomic outlook is not optimistic, LME inventory inflection point is expected to wait. On the domestic side, the Stock Exchange continued to decline, and led to bonded port inventory to go, reflecting the tight domestic supply and demand.

3.4 The lack of bright spot in demand remains a concern, with the real estate investment data of local bond issuance falling further in July, with growth of only 12.7% from January to July, down 2.3 percentage points from the first half of the year. Growth is expected to slow further as property controls remain tight. Household appliances, although january-july also maintained a high growth rate, but also a significant drop in the phenomenon, and the actual situation is internal and external differentiation, weak domestic sales, strong exports. Considering the tightening of real estate control, real estate after the cycle of consumer goods is expected to make a big difference. Investment in grid infrastructure continued to decline, turning negative by 1.17 per cent in July. Infrastructure Investment has also maintained a low growth rate, which makes it difficult to drive up effective demand. Car, July into the second consecutive month of negative growth, cumulative sales only close to 2019, the impact of car lack of core still exists, the remaining four months of this year's car consumption is still not optimistic. However, in the medium to long term, the new energy industry and re-electrification will bring a positive view of demand growth, and local special bond issuance is expected to contribute to maintaining investment and infrastructure stability.

Source: CITIC CCI Futures