The global copper inventory is showing a clear downward trend. From the data, since 2018, except for 2020 when the inventory did not decrease due to the interference of the epidemic, copper inventory has fallen in all other years. In 2018, 2019, and 2021, inventory decreased by 260000 tons, 180000 tons, and 31000 tons respectively, and in 2020, inventory increased by 140000 tons. The global explicit copper inventory from January to November 2022 decreased by about 180000 tons to a low of 246000 tons compared to the end of 2021.

From the global supply and demand situation, the supply and demand gap of refined copper worldwide from January to August 2022 has widened compared to 2021, and it is expected that consumption will increase this yearRefined copperMore than 500000 tons last year.

In terms of production, global copper production increased by about 430000 tons from January to August, of which domestic production only increased by less than 20000 tons. Based on the expected growth rate from January to August, the overseas refined copper production for the whole year of 2022 is expected to increase by 640000 tons, while domestic electrolytic copper has already increased by about 220000 tons in September and October compared to the same period last year. The production may continue to expand at the end of the year, with an expected increase of over 100000 tons compared to the same period last year. Ultimately, the global refined copper gap in 2022 may fall below 100000 tons.

At that time, the global explicit inventory level of refined copper may rebound to around 350000 tons, mainly driven by domestic supply growth. In the first quarter of 2023, the global inventory level may further rise to 700000 tons due to traditional seasonal factors in China. At that time, the inventory level will be higher than the average level in 2022, which will significantly improve the tense situation in the second half of 2022.Considering that we expect the main increase in supply to come from domestic production, we anticipate that the previously high profits from bonded imports will decline, and the domestic and international futures prices may also decrease.

From the domestic and international copper futures prices as of November 14th, it can be seen that after experiencing a significant increase in copper prices during the week of November 11th, the domestic and international copper prices have fallen sharply, and the premium of futures contracts in recent months has also decreased significantly. However, the current decline in price comparison and recent month's weakness do not yet prove that spot supply has eased. The main problem is that the absolute level of global inventory is still relatively low. The changes in market structure this round may be more due to the release of implicit inventory in smelters and downstream areas under the high absolute price situation, which is a one-time supplement to current spot. Whether it can continue to improve in the future still needs to pay attention to the changes in domestic smelting production.