After experiencing a two-month high oscillation, copper prices have entered a downward trajectory in a general decline in the commodity market. The author believes that under the premise of lack of upward momentum, the rebound of the US dollar and the drop in oil prices will drastically reduce the price of copper.
I. The period of Chinese gold growth may be over, and the consumption of copper will reduce the number of countries in the "12th Five-Year Plan" to put "enhanced national income" instead of "economic growth" for the first time. Under this development goal, the country has successively introduced a series of policies including economic restructuring, real estate regulation and energy conservation and emission reduction. This to a certain extent shows that in the future China will increase its spending power while reducing its investment. In the short and medium term, the economic growth driven by investment will inevitably be subject to decline. At the same time, under the premise of imperfect consumption channels, increasing national income may increase inflation risks. In the future, China's high-growth, low-inflationary golden growth period may end. As for the impact of copper consumption, some insights can be gained from the analysis of the relationship between economic development and copper consumption in the United States. The United States experienced a period of high-growth, low-inflation gold growth during the 1960s, during which time the apparent consumption of copper by the United States increased by 53%. After the end of the golden period of growth, the United States moved from the industrialization stage to the consumption stage, and copper consumption no longer increased significantly, but remained stable for a long time. If it is followed by analogy, China will experience a significant slowdown in the consumption of copper after a decade of high growth and low inflation.
Secondly, hot money flows back and forth in Europe and the United States, and the lack of power for copper price rises from a macro perspective. In the future, international funds will continue to flow out of emerging markets. On the one hand, the worst period in Europe and the United States has passed. The current economic recovery has a good momentum and attracts hot money. On the other hand, emerging market countries represented by China are generally faced with high inflation, and monetary policy tightening has led to slower economic growth. The rate of return on capital continues to fall. In addition, the unreasonable economic structure of emerging market countries and the initial bubble of some industries are also important reasons for hot money flowing out of emerging market countries. Under the premise that emerging market countries gradually lose their attractiveness, the metal varieties that mainly rely on China’s demand, especially copper, will continue to lose momentum in the future.
Third, the sharp drop in oil prices caused copper prices to lose their support. In comparison, as capital flows back and forth in Europe and America, crude oil is more likely to be chased by funds. The author believes that the early period of copper prices can still maintain a high level of oscillation in the absence of rising power. The main reason for the decline is that the continuous rise in crude oil, promote the production and transportation costs of copper and other metals, and thus have a certain role in supporting the price of copper. . However, the fact that the price of oil has fallen so badly that the support factor for copper prices no longer exists, and the decline in copper prices has become inevitable.
Fourth, the dollar bottomed out in a bid to push down the price of copper Recently, after the ECB’s wording was less than market expectations, the U.S.’s non-agricultural employment in April increased significantly, Greece’s recurrence of euro zone rumors and other risky events were released, the U.S. dollar experienced a long period of time. After four months of continuous decline, there have been signs of stabilization and recovery. The fact that the ECB kept interest rates unchanged has exceeded market expectations, and the sudden suspension of hot money throwing the dollar to buy the euro was the main factor driving the rise of the dollar. From a technical point of view, the U.S. dollar has seen four consecutive cross stars in the low position, followed by two long yangs. It also shows that this round has a relatively strong rebound. Based on the above analysis, the author believes that the current round of dollar rally will last at least one month, and the corresponding copper price will also have a larger correction.
V. A sharp decline will be observed throughout the copper market in May. In the absence of upward momentum, the rebound of the US dollar and falling oil prices are the main reasons for the current round of copper price declines. In the near future, the entire commodity market is filled with air. It is expected that the copper price will fall in a larger range this time, or it will be adjusted back to 60,000. In addition, the seasonal characteristics show that copper prices often have phased inflection points in April and May, and they have stabilized and rebounded in June. On the whole, a sharp drop will permeate the May price of copper.
I. The period of Chinese gold growth may be over, and the consumption of copper will reduce the number of countries in the "12th Five-Year Plan" to put "enhanced national income" instead of "economic growth" for the first time. Under this development goal, the country has successively introduced a series of policies including economic restructuring, real estate regulation and energy conservation and emission reduction. This to a certain extent shows that in the future China will increase its spending power while reducing its investment. In the short and medium term, the economic growth driven by investment will inevitably be subject to decline. At the same time, under the premise of imperfect consumption channels, increasing national income may increase inflation risks. In the future, China's high-growth, low-inflationary golden growth period may end. As for the impact of copper consumption, some insights can be gained from the analysis of the relationship between economic development and copper consumption in the United States. The United States experienced a period of high-growth, low-inflation gold growth during the 1960s, during which time the apparent consumption of copper by the United States increased by 53%. After the end of the golden period of growth, the United States moved from the industrialization stage to the consumption stage, and copper consumption no longer increased significantly, but remained stable for a long time. If it is followed by analogy, China will experience a significant slowdown in the consumption of copper after a decade of high growth and low inflation.
Secondly, hot money flows back and forth in Europe and the United States, and the lack of power for copper price rises from a macro perspective. In the future, international funds will continue to flow out of emerging markets. On the one hand, the worst period in Europe and the United States has passed. The current economic recovery has a good momentum and attracts hot money. On the other hand, emerging market countries represented by China are generally faced with high inflation, and monetary policy tightening has led to slower economic growth. The rate of return on capital continues to fall. In addition, the unreasonable economic structure of emerging market countries and the initial bubble of some industries are also important reasons for hot money flowing out of emerging market countries. Under the premise that emerging market countries gradually lose their attractiveness, the metal varieties that mainly rely on China’s demand, especially copper, will continue to lose momentum in the future.
Third, the sharp drop in oil prices caused copper prices to lose their support. In comparison, as capital flows back and forth in Europe and America, crude oil is more likely to be chased by funds. The author believes that the early period of copper prices can still maintain a high level of oscillation in the absence of rising power. The main reason for the decline is that the continuous rise in crude oil, promote the production and transportation costs of copper and other metals, and thus have a certain role in supporting the price of copper. . However, the fact that the price of oil has fallen so badly that the support factor for copper prices no longer exists, and the decline in copper prices has become inevitable.
Fourth, the dollar bottomed out in a bid to push down the price of copper Recently, after the ECB’s wording was less than market expectations, the U.S.’s non-agricultural employment in April increased significantly, Greece’s recurrence of euro zone rumors and other risky events were released, the U.S. dollar experienced a long period of time. After four months of continuous decline, there have been signs of stabilization and recovery. The fact that the ECB kept interest rates unchanged has exceeded market expectations, and the sudden suspension of hot money throwing the dollar to buy the euro was the main factor driving the rise of the dollar. From a technical point of view, the U.S. dollar has seen four consecutive cross stars in the low position, followed by two long yangs. It also shows that this round has a relatively strong rebound. Based on the above analysis, the author believes that the current round of dollar rally will last at least one month, and the corresponding copper price will also have a larger correction.
V. A sharp decline will be observed throughout the copper market in May. In the absence of upward momentum, the rebound of the US dollar and falling oil prices are the main reasons for the current round of copper price declines. In the near future, the entire commodity market is filled with air. It is expected that the copper price will fall in a larger range this time, or it will be adjusted back to 60,000. In addition, the seasonal characteristics show that copper prices often have phased inflection points in April and May, and they have stabilized and rebounded in June. On the whole, a sharp drop will permeate the May price of copper.
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