Copper pressure on stock prices dropped in 2013

Since 2003, copper prices have been firm for most of the time, and the market has been optimistic about copper prices. But with the plunge of copper prices, this pattern seems to be about to be broken. Three major risks in the industry chain: high stocks, large amounts of copper, and hedging are now the “three mountains” on the head of copper companies. The latter has suffered heavy losses. This is not a gospel for a listed company.

Yesterday, the Shanghai copper contract 1308 fell again 2.83%, to close at 49,040 yuan / ton. Since April 10, the Shanghai copper futures price has fallen by 11.6%. Compared with the February high, the Shanghai copper price has fallen by nearly 20%. Yesterday's investigation found that the bearish trend of copper prices in 2013 has gradually become an industry consensus.

According to An Ling, a copper analyst at Anxin, China’s copper consumption accounts for 30% of the world’s total. However, in 2012, the demand for wire and cable with the highest share of consumption was 20% lower than in 2009; consumption of air-conditioner refrigerators that lost support from home appliances (markets) to the countryside was also depressed; in addition, the high copper prices have resulted in rapid expansion of mine production, 2013 The oversupply of copper in the industry was basically established. From the market point of view, the spot copper price fell faster than the period of copper, the copper industry has completed the CBBC conversion, establishing a downward trend.

Ye Xin, another analyst at Essence Securities, believes that it is difficult for China's economic growth to maintain, and copper prices have not yet reached the bottom.

At the same time, many companies have been caught off guard by the unexpected sudden drop in the copper market, which is mainly reflected in three aspects: high inventory, multiple copper, and aggressive speculative speculation.

The lack of China’s copper resources has caused imports and hedging to become a prominent feature of the copper industry. The data shows that China’s copper consumption is 7 million tons and only 2 million tons is produced.

Previously, Yunnan Copper, Jingcheng Copper and Jingyi Copper's three copper companies reported a loss in their quarterly results. Among them, leading Yunnan Copper pre-loss of 148.8 million yuan, the first quarter of last year, profit of 2762.1 million yuan.

Since the three companies have not released a quarterly report, I do not know the status of destocking in the first quarter. However, the inventory of copper companies at the end of 2012 is obviously not low. From the ratio of inventory to total operating revenue, Yunnan Copper and Tongling Nonferrous Metals (shares trading point) accounted for the highest proportion of the ratio, the remaining generally accounted for about 10% up and down.

The Yunnan Copper Annual Report shows that the company had inventory of 12.99 billion yuan at the end of 2012, accounting for 40.89% of total assets. In 2012, Yunnan Copper's provision for inventory was that the final book value was 13.119 billion yuan and the provision for falling prices was 129 million yuan.

According to yesterday's closing price, Shanghai copper prices have fallen by 17% compared to the end of last year. If it is fully accrued, the inventory price pressure this year will be even greater.

The Tongling Nonferrous Colored Annual Report showed that inventory at the end of 2012 was 10.87 billion yuan, accounting for 27.25% of total assets.

However, Tongling Nonferrous Metals Co., Ltd. and Yunnan Copper Co., Ltd. have all claimed to have made hedging, so the risk is small. According to Yunnan Copper, all positions have physical counterparts. However, one person in the slogan said that China's 70% copper raw materials are imported, and import companies will do hedging, and there are a lot of people whose positions exceed their output. With the market falling sharply, the risk of speculation will naturally increase.

Not only that, **copper is also a great potential risk. Data show that ** copper once exceeded 1 million tons, accounting for 15% of the annual demand for copper. Once ** copper is in a violent position, even if only traders are involved in the ** copper trading, the impact of the copper industry chain ecological environment on the copper listed companies will still be very large. Last year, listed companies such as China Steel Tianyuan and many other steel companies were involved in the “black hole” of repeated pledges and false warehouse receipts.