Tracking of Hong Kong stock concepts | Copper prices continue to rise, institutions believe the second quarter is the time point for large-scale production shut-downs at smelters (with concept stocks)

Exchange data shows that the total trading volume of options has soared to over 52,000 contracts. Implied volatility and skewness of call options have jumped, indicating an increase in bets on higher prices. Due to possible supply shortages, copper prices have increased to their highest level in over 16 months. Earlier reports stated that Chinese smelters were discussing possible production cuts to cope with a sharp drop in processing profit margins. Copper smelting and processing fees have hit a historical low, and copper smelting is about to undergo large-scale shutdowns: Copper smelting and processing fees (Tc/Rc) have hit a historical low (falling from $80/ton to $11/ton). The decline in processing fees is a sign of copper ore shortages, with copper smelters losing around 2000 yuan per ton of copper smelted. Analysts believe that the second quarter is a time for large-scale shutdowns of smelters, leading to a significant decrease in cathode copper production and an increase in copper prices to over $9500 per ton. Expectations of a supply shortage for copper come from reductions in production at old mines: Research on new mines is already very comprehensive; the expected shortages come from old mines, where a high probability of problems exists. The instability of mine production due to resource endowment means that copper prices only have the possibility of rising. Institutions are focusing on CNMC's annual report, which may lead to significant downward revisions in copper and cobalt production. Currently, there is strong demand for copper from the electrical equipment and copper tube sectors, closely related to overseas demand. In addition, the construction of domestic and foreign power distribution networks will be a key focus in the future. Leading research company S&P Global recently predicted that copper consumption will double by 2035, reaching 50 million tons. Copper prices are expected to reach a peak of $13,000 per ton this year. Some analysts estimate that copper prices could rise by 75% in the next two years, with demand from the renewable energy industry being a major driving force. Fitch Solutions' subsidiary BMI stated that a weakening US dollar and growth in clean energy demand will drive a strong increase in copper prices in the second half of this year. According to reports, Citigroup also looks favorably on copper, which will benefit from the growth of renewable energy. By 2030, copper demand will increase by 4.2 million tons, potentially pushing copper prices up to $23,000 per ton in 2025. Hong Kong-listed companies related to the copper industry include: CMOC Group Limited (03993): Released a performance bulletin for 2023, with total operating income of approximately RMB 186.269 billion, a year-on-year increase of 7.68%; net profit attributable to shareholders of the listed company was RMB 8.25 billion, a year-on-year increase of 35.98%, mainly due to increased sales of copper and cobalt products and investment income from disposing of Australian businesses. MMG (01208): Zinc production in the first three quarters of 2023 was 139,700 tons, with copper production increasing by 22% year-on-year. The acquisition of the South African Botswana Khoemacau copper mine has been approved by the government. JIANGXI COPPER (00358): Jiangxi Copper owns the largest open-pit copper mine in China - the Dexing copper mine. In addition to Dexing copper mine, there are four wholly-owned mines including Yongping copper mine, Chengmenshan copper mine, Wushan copper mine, and Yinshan copper mine, with a total copper resource reserve of 7.30 million tons, an average remaining mining period of 37 years, and the copper reserves of the five major mines accounting for approximately 21% of the national reserves. Zijin Mining Group (02899): The company has abundant resource reserves, with 73.72 million tons of copper resources, 3117 tons of gold resources, 11.18 million tons of zinc (lead) resources, and 12.15 million tons of lithium carbonate equivalent. The copper equity reserves account for approximately 92% of China's total reserves, gold equity reserves account for approximately 40% of China's total reserves, and lithium carbonate equivalent equity reserves account for approximately 43% of China's total reserves. In recent years, the company's copper mining capacity has shown explosive growth, gold mining capacity continued to increase, zinc mining has a leading domestic advantage, and lithium carbonate equivalent production capacity is expected to be put into operation in a relatively short period of time. A diversified portfolio can effectively mitigate the risks of price swings in different metals.