Summary of the Copper Industry Conference Call Industry Overview - The copper industry is currently experiencing price fluctuations between $8,700 and $10,000 due to weak supply and demand constraints, with 90% of total costs distributed around $8,000, and market sentiment bottoming at $8,700 [1][2][4] - Global manufacturing has been at a low since mid-2022, with expectations for recovery driven by potential interest rate cuts from the Federal Reserve [1][2] Key Points Supply and Demand Dynamics - Global copper mine growth expectations for 2025 have decreased from 700,000 tons to over 300,000 tons, maintaining a tight supply-demand balance [1][4][5] - Supply-side challenges include aging mines and political/economic constraints, leading to actual production falling short of expectations [1][5] - Global copper inventories have been declining since Q2, currently at the second-lowest level in five years, influenced by the U.S. 232 security investigation [1][5][6] Impact of U.S. 232 Security Investigation - The U.S. 232 investigation has raised expectations for tariffs on imported copper, increasing U.S. product premiums by approximately 14% [1][7] - U.S. imports of copper surged by 200% year-on-year in the first four months, leading to a depletion of non-U.S. inventories and a strengthening of LME prices [1][7] Investment Strategy - The copper industry is viewed as having good mid-term allocation value, with low current valuations and potential for significant returns as interest rates decline and manufacturing cycles recover [2][3] - Key factors influencing copper price volatility in the short term include U.S. economic performance, Federal Reserve rate cut timing, U.S.-China trade negotiations, and Chinese stimulus policies [3][8] Company-Specific Insights - Zijin Mining and Luoyang Molybdenum's PE valuations are at their lowest in three years, with potential for recovery as risk appetite increases [3][10] - Zijin Mining is expected to increase production by over 40% in the coming years, with potential returns exceeding 50% post-Fed rate cuts [3][12] - Luoyang Molybdenum is projected to improve operational performance significantly, with plans to reduce costs by 5% while other companies face rising costs [13] Long-Term Outlook - The copper price is expected to trend upwards in the long term due to stable demand driven by increased electricity consumption and constrained supply [16][17] - Factors such as copper's steep cost curve and resource distribution contribute to its long-term price resilience [17][18] Conclusion - The copper industry presents a compelling investment opportunity, with significant potential for growth driven by supply constraints and recovering demand, particularly in the context of macroeconomic developments and company-specific performance metrics [10][12][13]

Core Viewpoint - The article highlights a continued weakening in demand for copper, with potential risks of short squeezes persisting in the market, suggesting that while copper prices may remain strong in the short term, they could revert to a more volatile state after any short squeeze ends [3]. Inventory - As of July 4, 2025, domestic copper social inventory increased by 1.3%, while LME copper inventory rose by 5.1% [4]. - Domestic port copper concentrate inventory reached 666,000 tons, up 6.8% from the previous week [4]. - Global electrolytic copper inventory totaled 381,000 tons as of June 30, 2025, down 4.1% [4]. Raw Materials - The price difference between refined copper and scrap copper decreased by 260 yuan/ton this week [5]. - In March 2025, China's refined copper output was 157,000 tons, up 25.4% month-on-month and 6.9% year-on-year [5]. - Global refined copper output in April 2025 was 1.969 million tons, up 5.6% year-on-year [5]. Smelting - In June 2025, China's electrolytic copper output was 1.1349 million tons, down 0.3% month-on-month but up 12.9% year-on-year [6]. - The TC spot price as of July 4, 2025, was -43.31 USD/ton, reflecting a slight increase of 0.3 USD/ton from June 27, 2025, but still at a low level since September 2007 [6]. Demand - The cable industry's operating rate decreased by 2.4 percentage points to 67.81% as of July 3, 2025, with cables accounting for approximately 31% of domestic copper demand [7]. - Air conditioning production is expected to decline year-on-year by 1.9%, 4.6%, and 12.8% from July to September 2025 [7]. - The operating rate for brass rods was 50.6% in May 2025, down 4.4 percentage points month-on-month but up 0.05 percentage points year-on-year [7]. Futures - As of July 4, 2025, the open interest for SHFE copper contracts increased by 1.3% to 216,000 lots, placing it at the 64th percentile since 1995 [8]. - Non-commercial net long positions on COMEX rose by 23.7% to 29,000 lots, also at the 64th percentile since 1990 [8].

Investment Rating - The report maintains an "Accumulate" rating for the non-ferrous metals sector [6]. Core Viewpoints - The report indicates that copper prices are expected to rise in 2025 due to tightening supply and improving demand [4]. - The report highlights a continued weakening in demand, particularly in the cable sector, with risks of further declines in production rates for air conditioning units [1][3]. - The report notes that the short-term risk of warehouse squeezing remains, suggesting that copper prices may continue to show strength before returning to a more volatile state [1]. Supply and Demand Summary - **Production**: In June 2025, China's electrolytic copper production was 1.1349 million tons, a decrease of 0.3% month-on-month but an increase of 12.9% year-on-year [3][65]. - **Demand**: The cable industry's operating rate decreased by 2.4 percentage points, with the operating rate for cable enterprises at 67.81% as of July 3, 2025 [3][75]. - **Inventory**: Domestic copper social inventory increased by 1.3%, while LME copper inventory rose by 5.1% [2][24]. Raw Material Insights - **Copper Concentrate**: Domestic copper concentrate inventory at major ports was 666,000 tons, up 6.8% week-on-week as of July 4, 2025 [2][49]. - **Scrap Copper**: The price difference between refined copper and scrap copper decreased by 260 RMB/ton, indicating a tighter supply of scrap copper [2][54]. Futures Market Overview - The active contract position for SHFE copper increased by 1.3% week-on-week, with a total position of 216,000 lots as of July 4, 2025 [4][33]. Company Profit Forecasts and Valuations - **Western Mining**: Stock price at 17.10 RMB, with EPS forecasts of 1.67 RMB for 2025, and a PE ratio of 10 [5]. - **Zijin Mining**: Stock price at 20.05 RMB, with EPS forecasts of 1.60 RMB for 2025, and a PE ratio of 13 [5]. - **Luoyang Molybdenum**: Stock price at 8.54 RMB, with EPS forecasts of 0.62 RMB for 2025, and a PE ratio of 14 [5]. - **Jincheng Mining**: Stock price at 45.42 RMB, with EPS forecasts of 3.61 RMB for 2025, and a PE ratio of 13 [5].

Group 1 - Copper prices have surged unexpectedly, driven by rising expectations of interest rate cuts and improving demand sentiment, alongside a declining US dollar index which benefits global commodities, particularly copper and aluminum [1] - The price difference between Comex copper and LME has widened to $1,400, indicating market speculation around the potential removal of Section 232 tariffs [1] - Global copper inventory levels are low, with LME copper stocks decreasing from 270,000 tons at the beginning of the year to 90,000 tons currently, leading to a significant increase in LME copper's backwardation to $320, indicating tightness in the spot market [1] Group 2 - In the copper sector, companies had previously priced in copper prices of $9,000 to $9,500, and the recent price surge is expected to lead to earnings upgrades for these companies [2] - Recommended copper stocks with alpha attributes include Jincheng Mining, Luoyang Molybdenum, Zijin Mining, China Nonferrous Mining, and Minmetals Resources, which are expected to benefit from improved performance and high profit elasticity [2] - In the aluminum sector, while some stocks like China Hongqiao and Zhongfu have shown strong performance, concerns about demand from the photovoltaic sector have led to weaker performance in other aluminum stocks, despite strong underlying demand [2]

Report Overview - The report is the Commodity Research Morning Report - Precious Metals and Base Metals by Guotai Junan Futures on July 4, 2025, covering copper, tin, nickel, and stainless steel [1][2] Core Views - Copper: The rise of the US dollar restricts price increases [2] - Tin: The macro - environment drives the price up [2] - Nickel: The support from the ore end is loosening, and the smelting end limits the upside potential [2] - Stainless steel: Inventory is slightly decreasing marginally, and the steel price is recovering but with limited elasticity [2] Copper Fundamental Data - **Futures**: The closing price of the Shanghai Copper main contract was 80,560 with a daily increase of 0.02%, and the night - session closing price was 80,540 with a decline of - 0.02%. The LME Copper 3M electronic disk closed at 9,952 with a decline of - 0.58% [4] - **Inventory**: Shanghai Copper futures inventory was 24,103, a decrease of 994; LME Copper inventory was 94,325, an increase of 1,075 [4] - **Spreads**: The LME copper ascension discount was 87.61, a decrease of 8.59 compared to the previous day [4] Macro and Industry News - US non - farm payrolls in June increased by 147,000, exceeding expectations, and the unemployment rate unexpectedly dropped to 4.1% [4] - Western Mining's Yulong Copper Mine Phase III project was approved, with the production scale increasing to 30 million tons/year [4] - The TC/RC negotiation result between Antofagasta and Chinese smelters in mid - 2025 was set at 0.0 US dollars/kiloton and 0.0 US cents/pound [4] Trend Intensity - Copper trend intensity is 0, indicating a neutral view [6] Tin Fundamental Data - **Futures**: The closing price of the Shanghai Tin main contract was 268,420 with a decline of - 0.04%, and the night - session closing price was 269,130 with an increase of 0.04%. The LME Tin 3M electronic disk closed at 33,805 with an increase of 0.66% [8] - **Inventory**: Shanghai Tin futures inventory was 6,882, a decrease of 6; LME Tin inventory was 2,165, a decrease of 50 [8] - **Spreads**: The SMM 1 tin ingot price was 266,500, a decrease of 700 compared to the previous day [8] Macro and Industry News - The "Big Beautiful" bill passed in the US House of Representatives by a narrow margin, bringing a deficit of 3.4 trillion [9] - The US non - farm payroll report was unexpectedly strong, and the market abandoned the bet on a rate cut in July [9] Trend Intensity - Tin trend intensity is 0, indicating a neutral view [10] Nickel and Stainless Steel Fundamental Data - **Futures**: The closing price of the Shanghai Nickel main contract was 121,790, and the stainless - steel main contract was 12,710 [11] - **Spreads**: The 8 - 12% high - nickel pig iron (ex - factory price) was 909, a decrease of 2 compared to the previous day [11] Macro and Industry News - The governor of Ontario, Canada, proposed to stop exporting nickel to the US in response to US tariff threats [11] - The CNI nickel - iron RKEF Phase I project in Indonesia entered the trial production stage [12] - An important nickel smelter in Indonesia resumed production, and the capacity of PT QMB New Energy Materials has recovered to 70% - 80% [13][14] Trend Intensity - Nickel trend intensity is 0, and stainless - steel trend intensity is 0, both indicating a neutral view [16]

1. Report Industry Investment Ratings - No specific industry investment ratings are provided in the report. 2. Core Views of the Report - The report provides daily analysis and forecasts for various commodities in the futures market, including metals, energy, agricultural products, etc. Each commodity's trend is influenced by different factors such as macro - environment, supply - demand balance, and industry news [2][5]. 3. Summaries According to Commodity Categories Metals Copper - Core view: The rise of the US dollar restricts the price increase [6]. - Fundamental data: Shanghai copper main contract closed at 80,560 yuan with a daily increase of 0.02%; LME copper 3M electronic disk closed at 9,952 dollars with a decrease of 0.58% [6]. - News: The US June non - farm payrolls exceeded expectations, and several copper - related projects and production data were reported [6][8]. Tin - Core view: Driven by the macro - environment, the price goes up [9]. - Fundamental data: Shanghai tin main contract closed at 268,420 yuan with a daily decrease of 0.04%; LME tin 3M electronic disk closed at 33,805 dollars with an increase of 0.66% [10]. - News: A series of macro - economic news from the US and other countries was reported [11]. Nickel and Stainless Steel - Core view: For nickel, the support from the ore end has loosened, and the smelting end limits the upside elasticity; for stainless steel, the inventory has slightly decreased marginally, and the steel price has recovered but with limited elasticity [13]. - Fundamental data: Various price and trading volume data of nickel and stainless steel futures and spot are provided [13]. - News: There are news about potential export restrictions, new production projects, and production resumptions in the nickel industry [13][14][15]. Lithium Carbonate - Core view: The inventory accumulation pattern continues, and attention should be paid to the upside space [19]. - Fundamental data: A large amount of data on lithium carbonate futures and spot prices, trading volumes, and inventories are presented [20]. - News: The index price of battery - grade lithium carbonate increased, and there were rumors about lithium salt factory overhauls [21][22]. Industrial Silicon and Polysilicon - Core view: For industrial silicon, the sentiment is fermenting, and the disk fluctuation is magnified; for polysilicon, market news is fermenting, and the disk fluctuation intensifies [23][24]. - Fundamental data: A wide range of data on industrial silicon and polysilicon futures and spot prices, trading volumes, and inventories are provided [24]. - News: Tongwei Co., Ltd.'s subsidiary completed a strategic capital increase [26]. Iron and Steel Products - Core view: Both rebar and hot - rolled coils are boosted by macro - sentiment and are in a strong - side shock [28][29]. - Fundamental data: Price, trading volume, and other data of rebar and hot - rolled coil futures and spot are given [29]. - News: Steel production, inventory, and demand data, as well as relevant economic policies, are reported [30][31]. Ferrosilicon and Manganese Silicon - Core view: Both are in wide - range shocks [32]. - Fundamental data: Futures and spot price data of ferrosilicon and manganese silicon are provided [32]. - News: Price quotes and production reduction news of ferrosilicon and manganese silicon are reported [33]. Coke and Coking Coal - Core view: The anti - involution signal is fermenting, and both are in a strong - side shock [35]. - Fundamental data: Futures and spot price data of coke and coking coal are provided [35]. - News: Quotes of coking coal in northern ports and CCI metallurgical coal index data are reported [35][36]. Power Coal - Core view: The daily consumption recovers, and the price stabilizes in a shock [39]. - Fundamental data: The previous trading data of power coal futures are provided [40]. - News: Quotes of power coal in southern ports and domestic production areas, as well as position - holding data, are reported [41]. Energy and Chemicals Paraxylene, PTA, and MEG - Core view: Paraxylene is in a tight supply - demand balance, and it is recommended to do positive spreads on dips; for PTA, go long on PX and short on PTA; MEG is in a single - side shock market [43]. - Fundamental data: A large amount of data on futures and spot prices, trading volumes, and processing fees of PX, PTA, and MEG are provided [44]. - News: Market price and production - related news of PX, PTA, and MEG are reported [45][47]. Rubber and Synthetic Rubber - Core view: Rubber is in a shock operation; synthetic rubber's shock operation pattern continues [49][54]. - Fundamental data: Futures and spot price data of rubber and synthetic rubber are provided [50][54]. - News: Order data of tire enterprises and inventory data of synthetic rubber - related products are reported [51][55]. Asphalt - Core view: Temporarily in a shock, pay attention to geopolitical factors [57]. - Fundamental data: Futures and spot price data, as well as inventory and production rate data of asphalt, are provided [57]. - News: Weekly production, factory inventory, and social inventory data of asphalt are reported [69]. LLDPE - Core view: In the short term, it is in a strong - side shock [70]. - Fundamental data: Futures and spot price data of LLDPE are provided [70]. - News: There was an accident at a polyethylene plant, and supply - demand analysis and inventory data are reported [71]. PP - Core view: The spot is in a shock, and the trading is dull [74]. - Fundamental data: Futures and spot price data of PP are provided [74]. - News: The PP futures had a limited impact on the spot market, and trading was weak [75]. Caustic Soda - Core view: Pay attention to the impact of liquid chlorine [77]. - Fundamental data: Futures and spot price data of caustic soda are provided [77]. - News: Supply and demand, cost, and potential production reduction news of caustic soda are reported [78]. Agricultural Products Palm Oil, Soybean Oil, and Related Products - Core view: Palm oil rises due to the positive sentiment of US soybean oil; soybean oil lacks driving force due to insufficient weather speculation of US soybeans; soybean meal may fluctuate; soybean No.1 is in a spot - stable and disk - shock state [5][55]. - Fundamental data: No detailed fundamental data are provided in the given text. - News: No specific news is provided in the given text. Corn, Sugar, Cotton, etc. - Core view: Corn is in a shock operation; sugar is in a range consolidation; cotton's futures price is supported by the market's optimistic sentiment [59][61][62]. - Fundamental data: No detailed fundamental data are provided in the given text. - News: No specific news is provided in the given text. Eggs, Pigs, and Peanuts - Core view: For eggs, the peak season is approaching, and it is difficult to increase the culling; for pigs, the short - term sentiment is strong; for peanuts, there is support at the bottom [64][65][66]. - Fundamental data: No detailed fundamental data are provided in the given text. - News: No specific news is provided in the given text.

Investment Rating - The report maintains a "Buy" investment rating for the company [8] Core Views - The approval of the third phase expansion project of the Yulong Copper Mine opens up growth potential for copper production, increasing the production scale from 19.89 million tons per year to 30 million tons per year [5][6] - The Yulong Copper Mine is the company's main source of revenue and profit, with a net profit of 5.41 billion yuan in 2024, contributing 3.14 billion yuan to the parent company [6] - The company expects to produce 18-20 thousand tons of copper metal annually after the completion of the expansion project, further enhancing its profitability [6] Summary by Sections Market Performance - The report includes a comparative performance analysis of the company against the CSI 300 index [3] Investment Highlights - The Yulong Copper Mine expansion project includes the construction of a new 11 million tons per year concentrator and an increase in hydrometallurgical capacity from 300,000 tons per year to 1 million tons per year, with a total estimated investment of 4.794 billion yuan [5] - The mine's service life is projected to extend to 23 years post-expansion [5] Financial Forecast - The company forecasts revenues of 57.472 billion yuan, 60.229 billion yuan, and 63.043 billion yuan for 2025, 2026, and 2027 respectively, with net profits of 3.616 billion yuan, 3.902 billion yuan, and 4.208 billion yuan for the same years [7][10] - The current stock price corresponds to a price-to-earnings ratio (PE) of 11.4, 10.6, and 9.8 for the years 2025, 2026, and 2027 respectively [7][10]

Summary of Conference Call on Copper Sector Investment Opportunities Industry Overview - The focus is on the copper sector, highlighting significant changes in global copper inventory and supply dynamics [1][4] - Global copper inventory has decreased to below 300,000 tons, down from over 600,000 tons in the same period last year [1][4] - Supply growth is significantly lower than last year, increasing the risk of a short squeeze in copper prices [1][4] Key Points and Arguments Supply Dynamics - The Congo's Kamoto mine production has decreased, leading to a downward revision of annual copper supply growth expectations from 500,000-600,000 tons to 300,000-400,000 tons, with actual growth potentially below 200,000 tons [1][6] - Domestic smelters in China are unlikely to reduce production despite zero processing fees due to profitable by-product sulfuric acid revenues [1][10] - The overall supply situation is tighter compared to last year, which is a significant factor driving copper prices upward [1][6] Demand Expectations - Demand is expected to weaken in the second half of the year, particularly in electricity and home appliance sectors, although demand from the new energy vehicle sector remains strong [1][11] - Overall copper demand is projected to increase by approximately 4% for the year, with a potential recovery in the fourth quarter [1][12] Price Influences - Recent copper price increases are attributed to improved macro expectations, a weaker dollar, and potential U.S. tariffs on copper, which have led to global inventory movements [2][5] - The risk of a short squeeze is higher this year compared to last year, with speculative positions relatively low, indicating potential for increased buying [3][16] Future Projections - The U.S. tariff policy is expected to impact copper prices, with inventory movements likely to continue until specific measures are implemented [5][17] - The overall market sentiment suggests that even if prices rise significantly, the impact on downstream demand will be limited [16] Additional Insights - The performance of various sectors, including home appliances and transportation, is mixed, with the new energy vehicle sector expected to grow over 20% this year [14] - Companies like Tongling Nonferrous and Western Mining are identified as having low valuations and potential for price recovery, with production estimates for 2025 indicating significant output [19][20] - The overall performance of Hong Kong resource stocks has been strong, outperforming A-shares, indicating a favorable investment environment in the copper sector [20]

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Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the copper and aluminum sectors, highlighting the ongoing value reassessment driven by interest rate cut expectations and inflows from insurance capital [1][2]. Core Insights and Arguments - **Interest Rate Impact**: Enhanced expectations for interest rate cuts are expected to lead to a resonance of value and cyclical capital inflows in the copper and aluminum sectors, improving marginal pricing power [3][4]. - **Supply Constraints**: The copper supply side remains tight, with a projected increase of only 370,000 tons in 2025, significantly lower than previous forecasts. This includes reductions from major mines, exacerbated by U.S. investigations affecting global inventory movements [6][7]. - **Valuation Levels**: The copper sector is currently valued below historical averages, with companies like Zijin Mining showing recovery from lows but still reflecting market concerns about demand and macroeconomic expectations [9][10]. - **Aluminum Sector Attributes**: The aluminum sector is characterized by high dividends and low valuations, with leading companies like Hongqiao seeing gradual increases in valuation centers. The sector's overall PB and PE ratios are low, with high dividend yields indicating strong long-term growth potential [13][14]. Additional Important Insights - **Investment Opportunities**: Recommended companies for investment include Zijin Mining and Luoyang Molybdenum, with a focus on undervalued stocks in the Hong Kong market. Other notable mentions include China Nonferrous Mining, Minmetals Resources, and China Gold International, which are expected to see significant volume increases [12][17]. - **Market Trends**: The copper and aluminum markets are in a stable rebound phase, with strong demand resilience despite short-term fluctuations in solar photovoltaic orders. Long-term aluminum demand growth is projected to outpace that of copper and steel [15][16]. - **Insurance Capital Inflows**: Insurance capital is projected to flow into the copper and aluminum sectors, with estimates of annual inflows around 700 to 800 billion, indicating strong confidence in price stability [5][8]. Conclusion - The copper and aluminum sectors present significant investment opportunities due to favorable macroeconomic conditions, supply constraints, and attractive valuations. Investors are encouraged to focus on long-term growth potential while being mindful of short-term market fluctuations.