Business Community Monitoring: Chinese Enterprises Need To Be Cautious About International Copper Price Shocks.

Guide: today, supported by the US economic data, the price of non-ferrous metals remained stable overnight, and the price rebounded slightly in the LME (London Metal Exchange).

The smooth movement of copper prices has relieved many Zhejiang enterprises.

Because this year, the domestic copper price has gone through two peaks, two valley bottom, and the difference between peak and valley price is more than 20%.

Copper is widely used in the construction of steel pipes and cables, electronic products, automobiles and household appliances all over the world.

Copper price wide shock, for copper as the main raw material for enterprises, has a greater impact.

Reporters interviewed a number of copper related enterprises in Zhejiang, and found that they are responding cautiously.

Hedging caution

According to www.31metals.com monitoring of "nonferrous metals business" of business treasure (002095), the domestic copper price has dropped by 10% since the beginning of April this year.

It fell from 61630 yuan / ton in early April to 58180 yuan / ton in early May, and dropped to 10.76% near the 55000 yuan / ton this week.

Sun Lijin, chairman of Shangyu Jinying Copper Industry Co., Ltd., specializing in the production of brass tubes and large diameter water (gas) pipes, told reporters today that the current fluctuations are not too bad.

2 years ago, when copper prices were relatively volatile, he made a big jump in inventory and lost money when copper prices fell rapidly.

After that lesson, he became very cautious, trying not to risk his inventory, and hedging through futures market hedging.

In the Shangyu Tong Pu Industrial Area, there are many copper processing enterprises like "Golden Eagle".

For most enterprises, copper prices occupy almost 85% to 90% of the cost of the enterprise. If we can not grasp the trend of copper prices, the losses will be quite heavy.

Sun Ligang, chairman of Shangyu Jinlai Copper Industry Co., Ltd. is also more in favor of the "Golden Eagle" approach.

In terms of the real economy, the monthly inventory remains between 350 and 500 tons, and it is not easy to increase or decrease to protect cash flow.

He told reporters that unless the copper price dropped to about 30 thousand yuan a ton, he would consider increasing inventory.

Otherwise, hedge risk will be avoided by hedging.

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Coincidentally, Qiu Wenhai, chairman of Fuyang Zhong Wang Copper Industry Co., Ltd., which understands Guangzhou's market, has adopted this strategy.

He called it "what price to enter, what price to sell".

As a professional production and processing enterprise of copper, nickel, gold, silver and other products, part of the scrap copper he needed came from Guangzhou, and he was slightly more generous when he saw that the supply was normal.

Compared with copper enterprises, Yuhuan's plumbing valve manufacturers are more cautious about the inventory strategy in the first half of the year. Affected by the financial crisis, in addition to the expansion of the domestic market, some enterprises have increased the market distribution and expanded their memory. Most enterprises have entered the raw materials according to the average monthly production volume.

Chen Fangren, general manager of Zhejiang Wan de Kai Copper Co., Ltd., said that the fluctuation of copper prices in the first half of the year has not been affected by "Wan Kai Kai", "how many copper products we sell every month, and how many copper products we sell each month. For those who do not want to speculate on the raw materials, the order is on the same day as the copper price. Our profits are in the manufacturing process, and copper prices have little impact on us."

Long term concern about copper prices, so that some Zhejiang manufacturing enterprises head of the industry has become an analyst of copper prices.

They believe that the impact of Chile's earthquake on copper prices is not large at the beginning of this year, but recently, economies such as Europe and the United States may not be able to suppress copper prices to a certain extent.

Although the domestic economy is getting warmer, the weakening of the domestic property market will also affect the related industries such as household appliances, cables and so on, making the trend of copper price increase uncertainty.

They will continue to pay attention to the rise and fall of copper prices next.