The world's hottest copper market is oversupplied,

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The global copper market is oversupplied, and smelting and processing fees continue to rise.

Wei Jianghong, chairman of Tongling Nonferrous Metals, said in an interview with the securities times a few days ago that because large-scale new mines and existing copper mine expansion projects are put into operation this year and next, the global copper market is developing in the direction of oversupply, putting pressure on copper prices, but oversupply will continue to increase smelting and processing fees, which will benefit China's processing enterprises. Weijianghong, chairman of Tongling Nonferrous Metals, said in an interview with the securities times a few days ago that because large new mines and existing copper mine expansion projects have been put into operation this year and next, the global copper market is developing in the direction of oversupply, putting pressure on copper prices, but oversupply will continue to increase smelting and processing fees, which will benefit China's processing enterprises

the non-ferrous industry should develop healthily for a long time. From the external environment, the state should increase its support for the weak links of the non-ferrous industry. From the internal perspective of enterprises, the focus is on technological innovation and management mode innovation

copper consumption demand may rebound

Securities Times: how about copper consumption demand in the next two years? Can the copper smelting industry get out of the trough

Wei Jiang has always been unable to adjust the macro: China's copper consumption demand may rebound in the next few years. China is the largest copper consumer in the world, and the demand of the power sector accounts for about half of the total consumption. Infrastructure construction such as electricity transformation and urbanization will be the highlights of China's copper consumption in the next few years. Specifically, shanty town transformation, railway investment, urban infrastructure construction (4G, energy conservation and environmental protection, rail transit) are the main driving forces for the growth of copper consumption. We expect China's refined copper consumption to increase by 5% to 8.5 million tons in 2014

According to ICSG, since large new mines and existing mines after expansion were put into operation in 2013 and 2014, the global copper production is expected to increase by about 5.5% to 17.6 million tons and 18.5 million tons respectively in 2013 and 2014 after the quarterly adjustment, with the growth rate higher than the average annual growth rate of 1.5% in the previous five years. In 2013, the global refined copper production will increase by 4.3% to 20.98 million tons; It is expected that the global refined copper production will further increase by 5.1% in 2014, and the output may reach 22.05 million tons. The global demand for refined copper in 2013 will increase by 0.3% over 2012 to 20.6 million tons. ICSG said that due to the good global economic outlook in 2014, the global copper consumption is expected to increase significantly. It predicts that copper usage in other parts of the world may increase by 1.9%. The prediction of the authority is basically the same as the market analysis of the company's business department. We believe that the excess supply of copper concentrate will continue to increase the smelting and processing fees, which is good for China's copper smelting industry as a whole

Securities Times: you once said that the reduction of scrap copper production will aggravate the tight supply of electrolytic copper in the market, and its impact on copper prices will be greater and greater. How to understand

Wei Jianghong: at present, China is still in the process of industrialization and urbanization. As an important copper resource, scrap copper is an important supplement to imported refined copper and copper concentrate, accounting for 1/3 of China's copper raw materials. At present, the annual supply of domestic scrap copper is about 1million tons, mainly relying on imports. At the beginning of this year, the import volume of scrap copper decreased due to the reluctance of suppliers and the hedge action of China Customs. In June, China imported 2.065 million tons of scrap copper (physical quantity), a decrease of 7.0% over the same period in 2012

the shortage of scrap copper first affected the output of refined copper and promoted the short-term popularity of the domestic spot market. In May, 2013, due to the shortage of scrap copper, three copper smelters of Jiangxi copper (17.81,0.35,2.00%), Jinchuan Group and Yunnan Copper (10.59,0.68,6.86%) closed a total of 400000 tons/year of refined copper production capacity. Some copper processing enterprises using high-grade scrap copper as raw materials turned to purchasing refined copper, resulting in tight spot supply; Secondly, due to the tight supply of refined copper, copper spot showed strong resistance to decline in the process of price decline, and the price spread structure changed to positive

in recent years, China's waste copper recovery has gradually increased, but due to the late start of China's industry, there was a major breakthrough in copper consumption until 1985. According to the life cycle of copper products (30 years), the copper consumed in 1985 will be recycled in 2015, and the recovery of copper scrap in China will enter the peak period from 2015. However, as the largest copper consumer, the growth rate of copper consumption continued to increase. The national copper consumption in the 30 years from 1960 to 1990 was 12.57 million tons, and the 10-year copper consumption from 1991 to 2000 was 12.08 million tons, basically the same as the previous 30 years. The total consumption from 2001 to 2011 was 48.77 million tons, four times that of the 30 years from 1960 to 1990 and the 10 years from 1991 to 2000. Therefore, for at least 20 years, China's copper scrap recovery can not meet the demand for copper scrap, and copper scrap is still dependent on imports; If China's consumption growth slows down after 20 years, the waste copper recovery can make up for the shortage of raw materials

it is worth noting that the shortage of scrap copper supports the copper price, but it is not the decisive factor driving the copper price. Environmental protection, cost, economic benefits and copper raw materials are the decisive factors limiting the release of refined copper production capacity, among which copper raw materials have the greatest impact on the release of refined copper production capacity. The recycling rate of copper products is as high as 79%. With the increase of copper consumption accumulation in the early stage, the amount of waste copper available for recycling increases, while new mines are gradually put into operation and reach production capacity, and the growth of raw material supply will also promote the release of production capacity. In the long run, the shortage of refined copper will be improved, but the impact of scrap copper on copper prices is increasing

future investment expenditure of 32.3 billion

Securities Times: the company said that the future development direction is to control resources in the upstream, improve resource security and improve the ability of economic efficiency. The downstream focuses on developing high-end copper base alloy products to replace imports. How is the current progress

Wei Jianghong: in terms of resource development and control, Tongling Nonferrous Metals adheres to the resource development strategy of basing itself on Anhui, expanding domestic and overseas resources, and developing both at home and abroad, focusing on the global allocation of resources. In terms of strategy, the group company will first intervene in risky resources, and then inject them into the listed company according to the conditions after the risk is released. In recent years, in addition to focusing on the integration of non-ferrous mineral resources in the surrounding areas and within the province, the group has successively established strategic cooperative relations with dozens of organizations and geological exploration units, such as Baosteel Group, Zhangye City, Gansu Province, Inner Mongolia non ferrous Geological Exploration Bureau, and carried out resource investigation, mineral rights cooperation, and fund project cooperation in multiple places. In terms of international strategy, the group company has actively promoted the exploration process of the achia lead and zinc project in Canada, and the risk exploration projects in Chile and other countries, becoming the cornerstone investor of Chalco international in the Hong Kong market, and participating in its Toromocho copper mine project in Peru. At the same time, the company actively improves the comprehensive utilization level of smelting waste copper and promotes the development of renewable metal industry. At present, a comprehensive utilization project of 400000 tons of scrap copper dismantling resources is under construction, and the first phase of the project has not been completed in the second half of this year

accounts for 19% of the total revenue of polymer 3D printing

in the downstream processing, the company focuses on developing high-end copper based alloy products that can replace imports. At present, Tongling Nonferrous Metals' high value-added copper production capacity has reached the first in China. Since 2011, the company has launched a total of 6 new products of copper based materials, and has successively built key projects such as enameled wire, phosphor copper material, copper strip, electronic copper foil, high conductivity copper material, and most of the products have been imported instead. In order to further strengthen the research and development of copper based materials, on April 26 this year, Anhui copper based new material industry technology innovation strategic alliance was established in Tongling. The alliance was initiated by Tongling Nonferrous Metals and jointly formed by 13 enterprises such as Tongling Nonferrous Metals and 5 universities and institutes such as Hefei University of technology

Securities Times: what is the development goal of the company in the next three years? Where does the development fund come from

Wei Jianghong: according to the 12th Five Year Plan, the strategic goal of listed companies is to achieve six doubles, specifically to strive to double the amount of resource control, the output of main products, sales revenue, profits and taxes, the number of scientific and technological achievements and patents, and the per capita annual income of employees on the basis of the end of 2010. During the 12th Five Year Plan period, the investment expenditure arranged by the company was 32.3 billion yuan, mainly from the retention of its own profits and depreciation of 7billion yuan, financing 6billion yuan in the capital market through equity, creditor's rights and other means, and bank loans of 19.3 billion yuan to ensure the development needs of the company

Securities Times: as an important company in the industry, what advice and suggestions does the company have for the long-term benign development of the industry

Wei Jianghong: the nonferrous metal industry has developed rapidly in the past decade. The enterprise has not only rapidly expanded its production capacity, but also significantly improved its equipment and technology level, and the overseas resource development has achieved initial results. However, there are also prominent structural contradictions, mainly manifested in the lack of resource protection capacity, the rapid growth of smelting capacity, the weak development capacity of high-end materials and other contradictions

the non-ferrous industry should develop healthily for a long time. Externally, the state should increase its support for the weak links of the non-ferrous industry. Internally, enterprises should enhance their awareness of independent innovation, focusing on technological innovation and management model innovation

from the perspective of resource guarantee capacity, China is a copper poor country in terms of resource volume, with small resource holdings, low copper grade and small metallogenic scale. To solve this problem, domestic enterprises must be encouraged to go global, and the state should provide policy support. For example, the tax policy should avoid double taxation, the exploration should allow the establishment of risk exploration funds, and the listed companies engaged in the main industry of copper processing should allow overseas companies to spin off and list, so as to provide convenience for enterprises to develop resources overseas through multiple channels, so that resource enterprises can improve resource protection

from the perspective of the rapid growth of copper smelting capacity, the copper smelting capacity has increased by 2.3 million tons in recent years. At this rate, the excess copper smelting capacity is not far away. On the one hand, China's copper resources are seriously insufficient. On the other hand, the rapid expansion of smelting capacity will inevitably lead to overcapacity and waste of resources. The state should limit the excessive growth of copper smelting capacity. In this regard, I believe that in terms of industrial technology upgrading, we should further increase support for backbone enterprises, reflect the policy of maintaining the large and suppressing the small, give full play to the scale and experience advantages of existing enterprises, adopt advanced technology for leading enterprises to transform existing backward production processes, and do not allow enterprises without copper mines to build new copper smelters to improve industrial concentration

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