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Copper metal belongs to the strong linkage with the international market varieties. From March last year to May this year, the domestic copper price from about 35,000 yuan per ton, all the way up to 75,000 yuan per ton. What kind of pressure has the rising copper price brought to the downstream processing enterprises? How will the enterprises respond to it?
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Copper prices are running high and processing companies are compressing production capacity
Transcript: Economic Information Link: Concerned about the rising prices of raw materials.
Copper prices are running high, processing enterprises compress production capacity.
In the production workshop of a cable enterprise in Yangzhou, Jiangsu Province, the person in charge of the enterprise is checking the operation of each production line. He told reporters that as copper prices reached a high point in the past 15 years, the cost of raw materials purchased by the enterprise is increasing every day. They have to save costs in the production process. Due to the high price, the enterprise is afraid to purchase raw materials. In the whole workshop, except for the finished cables, almost no raw material copper can be seen. At present, the enterprise has compressed the production capacity to reduce the risk caused by the high price of copper.
Transcript: Economic Information Link: Concerned about the rising prices of raw materials.
Copper prices are running high, processing enterprises to compress production capacity.
The person in charge of the enterprise told reporters that the company’s products mainly supply domestic power plants and nuclear power projects. Orders are the purchase price set in advance. The current copper price is rising too fast, production costs have increased by at least 50%. As the contract has been signed in the early stage, the enterprise wants to adjust the price with the end customer is very difficult. At present, the person in charge of the company is busy every day to discuss with downstream customers floating pricing mechanism.
Jiangsu an electrical company general manager Dai Yongtuo: this core raw material price increases, any processing enterprises can not afford.
Industry sources told reporters that the highest copper prices in history was in 2006. At that time, copper prices reached about 80,000 yuan per ton. In the following 15 years, copper prices have always been between 40,000 and 60,000 yuan. Last year, due to the epidemic sweeping the world, followed by the expansion of the world’s major economies, the money supply to stimulate the economy. Copper prices soared all the way to the current more than 70,000 yuan, a new high in nearly 15 years. Reporters visited a number of enterprises found that since May this year, copper processing enterprises have seen a reduction in production. In sharp contrast to the production scene in full swing during the same period in previous years, production was forced to slow down and shipments fell significantly, resulting in a high level of finished goods inventory.
Che Hongyun, chief non-ferrous metals analyst at the China Investment & Security Futures Research Institute: According to tradition, when the consumption season is in full swing, the inventory should be falling. But we have not seen a decline in inventories until now, instead, inventories are increasing. This indicates that the overall supply of copper is still very adequate.
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Qinghai: copper enterprises are producing at full capacity, copper and tin ore inventory is sufficient
Copper prices are running high, so that downstream enterprises face enormous pressure from rising raw materials. But upstream raw material producers are seeing lucrative profits, with major domestic mines working at full capacity.
Transcripts: Qinghai: Copper enterprises are producing at full capacity, and there are sufficient stocks of copper and tin ore.
In the electrolytic workshop of Qinghai Copper, the reporter learned that the current production line of the enterprise is already at full capacity, working overtime to increase production. The person in charge of the enterprise told the reporter that the existing production lines are being put into operation one after another, and the company’s annual output has increased to the current 100,000 tons.
Transcripts: Qinghai: Copper enterprises are producing at full capacity, and there are sufficient stocks of copper and tin ore.
Then the reporter visited the main domestic copper mining enterprises in the western mining industry. At the site, the reporter saw that the operation’s vehicles kept going in and out. They are working in three shifts every day, and the start-up rate has reached the highest level in history. Western Mining has China’s largest single copper mine “Yulong Copper Mine”, retaining reserves of 6.07 million tons. The company started production ahead of schedule, and the market supply has been rising.
Transcripts: Qinghai: Copper enterprises are producing at full capacity, and there are sufficient stocks of copper and tin ore.
After this year’s Spring Festival, global copper inventories increased by 200,000 tons year-on-year, the same period in previous years the customary inventory is down 200,000-300,000 tons, the rapid rise in copper prices suppressed the downstream processing demand.
Che Hongyun, chief non-ferrous metals analyst at the National Investment and Security Futures Institute: the consumption of the spot market is very bad, it is difficult to ship. Since this year, the import window is closed, we basically no one needs to import copper. Traders are very difficult to do, reflecting the rise in copper prices are not supported by the fundamentals.
Transcripts: Industry insiders: the suspicion of lobbyists coaxing copper prices is very high, the industry should make concessions to the downstream.
Industry insiders said that right now copper supply is greater than demand, but the market price of copper is increasing instead of decreasing. The current domestic economy is basically back to the level before the epidemic, but the copper price is far beyond the price at that time. Do not rule out the suspicion of lobbyists with the help of inflationary expectations to speculate on copper prices.
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Zhejiang Yiwu: copper price increases affect exports
Enterprises to explore the domestic market
Rising copper prices not only to the downstream enterprises to bring the cost of pressure, but also to the business of the relevant operators in Yiwu International Trade City has brought the impact.
Transcripts: Economic Information Link: Concerned about the rising prices of raw materials.
Is a price increase of nearly 80%, like stainless steel slightly less.
In Yiwu International Trade City, a bathroom store, the buyer Alashan is communicating with the operator price and product information. Alashan told reporters that he has been doing foreign trade business in Yiwu for more than a decade. Last year’s epidemic caused a great impact on his foreign trade business, and this year’s continuing price increases are making him scream.
Buyers: some customers should be a month can order more than one million yuan of goods, and now only take two hundred thousand three hundred thousand yuan. Because of the price issue, they do not want to order.
Transcripts: Economic Information Link: Concerned about the rising prices of raw materials.
Zhejiang Yiwu: copper price rise affects exports, enterprises explore the domestic market.
The increase in the price of raw materials, coupled with the exchange rate and freight costs, has led to a significant increase in the price of some products. Buyers are also actively working on ideas for customers to save transportation costs through methods such as sea freight splitting.
For the operator Liu Junming, almost 70% of his sanitary products using copper materials, copper prices vary so that he feels the pressure.
Yiwu International Trade City operators Liu Junming: Since 13 years, the price increase is the largest fluctuations, the impact of foreign trade is certainly inevitable. For example, I received a single, today the copper price is 70,000 yuan, the day after is 73,000 yuan, nearly up more than 4 points. This will appear raw material procurement losses.
In order to alleviate the pressure, the operators through advance bulk purchase, storage of raw materials and other ways to reduce the impact of rising raw materials. At the same time, actively explore the domestic market, the domestic market share from the original 10% to the current share of 50%.
Today, in Yiwu International Trade City, diversified sales channels, to a certain extent, enhanced product sales, but also reduced the pressure brought about by factors such as rising raw materials.