Recently, copper prices by macro factors, breaking through the original range of shocks. Chile's copper miners'union has rejected the company's pay offer and will go on strike. China's economic statistics continue to recover, production has risen steadily, demand has gradually picked up. Since the third quarter, the automobile industry data performance good upward trend, in which, the new energy automobile production and sales have a larger increase, and is expected to continue to the end of the year. Copper Price fundamentals are not too big contradictions, macro-prices are still short-term dominant key factors.

1.Leading the signing of RCEP and building the world's largest economic circle

November 15, the Fourth Regional Comprehensive Economic Partnership Agreement (RCEP) leaders meeting held by video. The signing of the RCEP by the 10-member Association of Southeast Asian Nations and 15 other countries, including China, Japan, South Korea, Australia and New Zealand, marks the conclusion of the world's largest free trade agreement.

Facing the headwinds of the global economy, China has promoted and signed the agreement of RCEP, which has effectively promoted the economic cooperation among asia-pacific countries. The policy orientation this year is to expand domestic demand and promote consumption, but external economic exchanges are just as important. There are three major economic centers in the world, namely, the North American economic center represented by the United States, and the European economic center represented by the European Union, and the asia-pacific economic center represented by China and Japan. RCEP reintegrates the loose asia-pacific economies, and makes the trade chain smoother.

2.Greater uncertainty remains in the producer countries

On November 17th the Candelaria copper mine in Chile, part of Lundin Mining Corp, which produced 111,400 tonnes of copper in 2019, rejected a pay offer and confirmed that the strike would continue. Candelaria Union President Evelyn Walter said the Union voted 366 to 159 to reject the proposal.

Chile's state-owned codelco, the world's largest copper producer, said on the 17th that it had struck pay deals with two small unions at the El Teniente mine. The company said that the 36-month agreement with the Seventh Union of El Teniente and the Union of San Lorenzo included bonuses worth approximately $4,600 and that salaries would remain unchanged.

In the face of the impact of the epidemic, supply risks are still on the rise, with strikes in the fourth quarter due to disputes over pay agreements likely to continue, helping to spur copper prices.

3.Industrial production gradually resumed and copper prices remained firm

On November 16, the National Bureau of Statistics of the People's Republic of China released the National Economic Data for October, showing a steady rise in overall production, a steady pick up in demand, continued improvement in employment, an overall stable price level, and good market expectations. The national economy continued its steady recovery.

Of these, industrial value added above the scale increased by 6.9 per cent year-on-year in real terms (the following are real price-adjusted growth rates) , the same as in September. On a month-on-month basis, industrial output in October was 0.78 per cent higher than in September. From January to October, the value added of industries above the scale increased by 1.8 percent year-on-year, while the non-ferrous smelting and calendering industries increased by 4.7 percent. In October, the output of refined copper (electrolytic copper) increased by 5.4 percent year-on-year to 914,000 tons, just shy of the record high of 930,000 tonnes set in December. From January to October, domestic refined copper (electrolytic copper) output increased 6.1 percent year-on-year to 8.362 million tons. With the good control of domestic epidemic and expansion of domestic demand, under the policy guidance of promotion fee, domestic copper demand gradually recovered, which has a greater role in supporting copper prices.

Source: Non-ferrous Metal, EDITOR IN CHIEF: Arthur Waldron, Liang Xueping