This year, China is poised to leave a significant mark on the history of the global metals market. —— China’s role in the copper market has shifted from being primarily driven by fundamentals to becoming a genuine price driver. Shanghai copper has taken center stage, while international copper prices have been relegated to a supporting role.

　　So far this year, just... 6 Over the past month, the asset-selling storm sweeping through China has twice impacted developed markets across the ocean. International copper futures traders are closely monitoring fluctuations in Shanghai copper prices, which have been particularly active during Asian trading hours.

　　In a research report released last week, Macquarie detailed the correlated performance of two markets: During the daytime trading session on the Shanghai Futures Exchange, international copper futures opened lower. After the close of Shanghai’s daytime session, international copper prices stabilized amid volatile trading. However, in the pre-market overseas trading session—just before the night session on the Shanghai Futures Exchange began—the price of international copper futures continued to decline further. Within just one and a half hours after the start of the Shanghai Futures Exchange’s night session, Shanghai copper was already being hammered. 6% On the limit-down board.

　　As for the underlying reasons behind this sell-off, Reuters columnist... Andy Home The statement said that, just like this year... 1 Like the moon, the actions of put option sellers have intensified the sell-off in international copper futures. This contrasts with the Shanghai Futures Exchange, where no copper options products are available in China.

　　As international copper prices plummeted, a large influx of capital entered the put options market. This trend is also reflected in the open interest of copper futures on overseas exchanges. Positions in the over-the-counter options market may be even larger.

　　Of course, the two-way nature of options is precisely what characterizes options products. Therefore, when SHFE copper prices fell on Wednesday afternoon last week, it triggered option liquidations, thereby increasing market volatility.

　　This time and 1 The difference between the two periods lies in this: Back then, Chinese funds were shorting the copper market, triggering a sell-off. Now, this round of selling is more closely linked to the dramatic volatility in China’s stock market.

　　Affected by factors such as the sharp fluctuations in China's financial markets, U.S. copper prices have fallen to... 6 At the year's low, this spurred more active trading, boosting Shanghai copper... COMEX Arbitrage activities between domestic and international copper markets frequently occurred during the night trading session at the Shanghai Futures Exchange, thereby boosting U.S. copper trading volume. As of... 6 At the end of the month, COMEX Copper (HG) The share of trading volume in the Asian session has risen to... 30% , even surpassing gold contracts. (GC) becoming the most closely watched metal product in this segment.

　　However, although history may not repeat itself exactly, it often bears a striking resemblance to past events. No matter who takes center stage in the copper market, the fundamental supply-and-demand dynamics always remain at the heart of the matter. Yet today, this core issue has taken on a slightly different twist: the market’s focus seems to have shifted—from demand, which has dominated for most of the time in the past, to supply.

　　Since the beginning of this year, Shanghai copper prices have remained relatively strong compared to international copper prices, as domestic supply has been somewhat tight. However, this is not due to a recovery in domestic industrial demand; rather, it is largely attributable to refined copper producers... 5 Moon to 7 The result of the summer shutdown and maintenance carried out during the month.

　　A Singapore-based commodity trader said: “ For several months now, the quantity of cathode copper imported by China has been very limited, and smelters have been relying on their own resources. 4 Since last month, the market has entered a maintenance period, and inventory levels at the Shanghai Futures Exchange are very low. …… All of this has led to a tight market supply. ”

　　4 Since last month, copper inventories at the Shanghai Futures Exchange have fallen by more than half. Domestic spot copper premiums once reached their highest level of the year, while bonded warehouse copper premiums hit a one-month high this week.

　　However, in the short term, China is still expected to import more copper over the next few months, driven primarily by the price differential between domestic and international copper markets. Currently, the price spread between Shanghai copper and international copper prices has reached its most attractive level in several years, which could encourage domestic buyers to step in and purchase copper in the near future, thereby supporting international copper prices.

　　Citibank analyst based in Hong Kong Ivan Szpakowski It was noted that international copper prices have fallen significantly, while Shanghai copper prices remain relatively strong, opening up an import arbitrage window. As a result, everyone is now planning to make purchases.

　　The aforementioned Singaporean trader said: “ The arbitrage ratio for imports is very attractive—something we haven't seen in years. ”

　　In a recent research report, Barclays stated that copper mine production will be the key driver behind the rise in copper prices. Although China’s seasonal peak purchasing period has not yet led to a significant improvement in copper consumption, from the supply side, capacity has already begun to decline, which will provide some support for copper prices. Metal inventories started adjusting early in the summer, which likely signals that copper prices will rise in the second half of the year.

　　Citigroup analyst Edward Morse At 7 Moon 8 The research report released today argues that the new copper mines have failed to fully offset the impact of declining ore grades, which will lead to a smaller scale of copper supply surplus. 2016 This year, copper production will fall below consumption. 10.9 Ten thousand tons. International Copper Study Group (International Council for Science and Geology) Last month, it was reported that... 3 Monthly copper production exceeds demand only. 6000 ton, compared to 2 Monthly surplus 12.6 A substantial reduction of 10,000 tons.

　　 Loomis Sayles Fund company Alpha Commodity Analyst, Strategy Group Harish Sundaresh It is believed that mining will take a long time, the grade of ore in existing mines is declining, and production from mature mining regions is also on the decline. There are no truly large-scale mining projects available to offset these trends. Overall, prices are expected to... 3-5 The figure shows an upward trend.

　　In the first half of this year, Chile 4 Among the mines producing clean-grade copper concentrate, two mines experienced a slow production pace in the first half of the year. Among them, the world’s largest copper mine... Hidden We have been unable to provide excess supply for several months.

　　However, not all international investment banks share the same view on the outlook for the copper market.

　　Wall Street Insights reported that Goldman Sachs said last week that commodities, including copper, have entered... “ Negative feedback loop ” , prices will continue to decline. The spot benchmark copper futures are expected to... 12 The average monthly price will be per ton. 5200 The U.S. dollar—this means that international copper prices will fall further. 7% Left and right.

　　In addition, there’s another factor that could significantly influence copper prices and shouldn’t be overlooked: the potential shift in the interest rate differential between China and the U.S. As the Federal Reserve gets closer to raising interest rates, the market generally expects China to still have a probability of raising rates within the year, which could affect the demand for copper financing.