I. Analysis of Market Operation (I) The domestic copper concentrate output is high, and the production and consumption of refined copper continues to grow. According to statistics from the China Nonferrous Metals Industry Association, the output of major copper products in China jumped to a new level in 2010, in which copper concentrate output It was 1.156 million tons, a year-on-year increase of 20.2%, a record high; refined copper production continued to grow, reaching 4.573 million tons, an increase of 11.3%; copper production reached 1009.3 million tons, an increase of 13.6%.

As the price of copper in domestic and foreign markets oscillated upwards, the processing fees for imported copper concentrates fluctuate greatly, which stimulated the production enthusiasm of domestic copper mines. This is the main reason for the significant increase in copper concentrate production in China. In addition, factors such as the successive production of newly-built mines in Inner Mongolia, Yunnan, and other regions are important reasons for the significant increase in domestic copper concentrate production in 2010.

In 2010, domestic refined copper production continued to grow steadily under the influence of continued growth in demand. The capacity expansion momentum continued unabated. The new copper smelting and refining capacity was respectively 230,000 tons/year and 590,000 tons/year, and the total annual production capacity reached 3.47 million. Tons/year and 5.88 million tons/year support the continuous increase of China's refined copper production.

Although investment in the domestic power industry declined in 2010, the significant increase in investment in 2009 still has an effect in 2010, which continues to provide support for the growth in copper demand. The air-conditioning and refrigeration industry also exceeded expectations in 2010. Domestic demand and exports have performed well. In particular, strong exports have led to indirect exports of copper products. According to data from the National Bureau of Statistics, in 2010, China's major copper products such as automobiles, AC motors, refrigerators, air conditioners, power cables and other products have increased significantly. This shows that domestic copper demand is in good shape.

(II) Imports of copper concentrates and scrap copper increased, and imports of refined copper remained at a high level. According to customs statistics, China’s refined copper imports in 2010 were 2.92 million tons, down 8.3% year-on-year, but it was still the second historical importer. The peak year. The main reason for the decrease in imports was the excessive import volume last year, ample social stocks and excessive market supply. In addition, since the second half of 2010, domestic copper prices have been weaker than the international market, resulting in more serious import losses. However, although there is a surplus of domestic copper supply, many of them are private stocks or remain in bonded warehouses, and they are not directly reflected in the spot market. In addition, in the second half of 2010, copper prices in the domestic and overseas markets continued to improve. Under the background of limited investment channels in the domestic real economy, real estate investment by the state, general performance of the stock market, and strong inflation expectations, investors continued to see positive factors for the market outlook. The relatively low purchase price of antimony copper is also an important factor in promoting the import of refined copper.

In 2010, China’s copper raw material imports continued to grow steadily, with 4.364 million tons of physical copper imported, up 9.2% year-on-year; copper concentrate imports 6.468 million tons, a year-on-year increase of 5.5%. After the third quarter of 2010, the sharp rebound in spot processing fees for imported copper concentrates played an important supporting role in supporting the import of copper concentrates. Combined with the comprehensive analysis of domestic copper concentrate production, there was a slight surplus of domestic copper concentrate supply in 2010.

(III) Copper price volatility in domestic and overseas markets The international market copper price hit a record high. In the first half of 2010, copper prices in the international market showed a sharp decline, and there was greater pressure near 8,000 US dollars/ton. In addition to certain fluctuations in August and November in the second half of the year, the rest of the year saw almost a unilateral upward trend. The record high, the end of the year closed at 9660 US dollars / ton, compared with the closing price on December 31, 2009, rose 31%. The three-month minimum price of copper on the London Metal Exchange (LME) in 2010 was $6,038/tonne on June 7, and the highest point was $9687/tonne on December 31. The average price of copper for the month of London and the three months of the London Metal Exchange in 2010 was US$ 7534/ton and US$ 7550/ton, up 46.3% and 46% respectively year-on-year.

The domestic copper price trend is weaker than the international market. In 2010, the overall copper price trend in the domestic market was basically the same as that in the international market. However, in the second half of the year, the price of copper in the international market reached a record high, and the domestic price stagflation was obvious. Although this is related to the appreciation of ***, it also shows that market confidence is obviously inferior to the international market. At the end of the year, the Shanghai ** Exchange's three-month closing price of copper was RMB 71,850/ton, which was 19.9% higher than the closing price on December 31, 2009. The lowest price of three-month copper prices on the Shanghai Metal Exchange was 48,800 yuan/ton on June 8, with the highest point being 71,970 yuan/ton on December 31. The average prices of the Shanghai Metal Exchange's current and three-month copper prices in 2010 were 59,225 yuan / ton and 59,296 yuan / ton, up 41.4% and 43.3% year-on-year respectively.

Second, the market forecast China's monetary policy in 2011 will shift from "moderately loose" to "steady," and will put upward pressure on global copper prices. However, the global economy continues to maintain its positive trend and it is expected to continue to maintain in 2011, making the supply and demand fundamentals of domestic and international markets a good copper. It is expected that the growth rate of global copper consumption will continue to outstrip supply in 2011, and there will be a shortage of about 300,000 tons of supply in the refined copper market, which will provide strong support to the trend of copper prices. In addition, the introduction of international market copper ETF transactions will also trigger the rise in copper prices. Under the background of tight copper market supply and a large number of China's imports, it is expected that the domestic and foreign market copper prices will be higher than the 2010 level in 2011, and the trend will show highs and lows. Domestic prices are expected to increase.

The current market copper price is much higher than the production cost, and its trend is more affected by factors such as monetary policy. The introduction of the ETF transaction ** has made the financial attributes of copper commodities more prominent. A series of new listing deals** investors provided new investment tools, which further stimulated the enthusiasm of investors and continued to support copper prices.

The rise in prices will drive the development of copper production. However, due to the lack of large-scale project production, the decline in grade of ore mining, and the impact of **, the development of copper mines will limit the growth of production, and will inevitably lead to the global shortage of copper concentrate supply. In 2011, China's new copper smelting project began its peak production period, but due to raw material supply constraints, capacity utilization rate will decline.

With the gradual recovery of the global economy, refined copper consumption is expected to continue to maintain growth, but high copper prices will also have a certain inhibitory effect on consumption. China's copper consumption growth in 2011 faces some unfavorable factors. First, the shrinking investment in the power industry is expected to have an adverse impact on copper consumption in 2011. Second, the continued appreciation of *** will exert pressure on the export of mechanical and electrical products and affect domestic copper consumption. Overall analysis, China's copper consumption will continue to grow in 2011, but the increase will decline.

In 2011, the supply gap for refined copper in China will increase from the previous year and is expected to be about 2.44 million tons, which needs to be compensated by imports. Although domestic copper supply has been surplus for several consecutive years, but in the market's bullish outlook for copper prices, the excess amount is not fully reflected in the spot market. In particular, the financial properties of copper have become increasingly apparent and have attracted investors. In this way, it is expected that China's refined copper imports will remain high in 2011.

In addition, due to the high external dependence of raw materials, the long-term processing fees for imported copper concentrates have increased, and it is expected that China's copper concentrate imports will still have a certain increase in 2011.