In the RMB devaluation and copper trading enterprises capital chain is often broken background, the domestic financing of copper began large-scale "tide back", copper prices suffered a blow and accelerated decline. Shanghai Futures Exchange copper futures prices in just over a month's time fell more than 7,000 yuan / ton, 40,000 yuan / ton mark was easily broken, the market believes that the current copper price has been open "naked swimming" mode.

The impact of the devaluation of the renminbi

Financing copper has long been recognized by the market, but long-term financing mode of copper has been running so I, even last year, "Qingdao storm" after the banks to increase the intensity of the fight against commodity financing, copper financing in the country is still prevalent.

Simply speaking, the financing of copper is to buy credit to the bank, and then quickly use the resale of funds, the most well-known way is the letter of credit model. This approach is mainly the use of bank letters of credit and re-export trade to achieve.

To domestic copper trading A, for example, the company from the hands of foreign companies B to buy a number of copper, apply to the bank to issue letters of credit as a payment instrument and postponed for 90 days or 180 days to pay; then A copper discount sales to C Company, to obtain US dollars and carry-over to the yuan. Finally, C and then sell copper to B, the entire financing process is complete. In this process, copper as the subject of the transaction did not really flow to the real economy, copper warehouse receipts in the three parties after the transaction is completed, the copper is generally stacked in the bonded area. If this model continues, the financing of copper will actually lock a considerable part of the inventory, the scale of 700,000 tons to 100 million tons.

It is noteworthy that the financing of copper in terms of the RMB exchange rate movements greater impact. Because in the process of financing the last part of copper, A company needs to use the RMB to buy the dollar to return the previous "credit." If the yuan appreciates during this period, the financing copper model will also receive additional revenue. In the past for a long period of time the appreciation of the RMB against the US dollar, the market most people are optimistic about the long-term trend of the RMB, copper traders in this period of profitable.

But the RMB exchange rate last week, a substantial depreciation of the RMB exchange rate of five trading days close to four times the limit, the foreign exchange market volatility did not lead to as before, "Mother" help, further depreciation of the RMB is expected to begin diffuse, this Means that the financing of copper to more dollars to buy dollars, short-term rapid decline in the exchange rate so that the financing of copper original model unsustainable, many traders began to give up this mode of operation. The old model locked inventory of about 100 million tons, once the flow of copper into the market short-term copper spot prices will significantly impact. Recently, this effect has been reflected in the spot price began to reflect. Shanghai Futures Exchange copper futures prices fell below 40,000 yuan last week / ton mark.

Copper trading industry reshuffle

Compared to the steel, coal industry, copper trade industry, "winter" to come later. In the past, the copper trading industry can use low-cost arbitrage. An industry source said that early business investment in real estate, betting on the futures market behavior in the second half of 2014 has been relatively rare in the domestic market interest rates higher, a lot of money to do financing copper began to invest in agreement deposits and financial products.

Some banks in order to pull deposits and even encourage such arbitrage, but it also brought risks to banks, after all, the pattern of financing copper is not arbitrage "perpetual motion machine." In the regulatory tightening gradually, the copper market downturn, the RMB exchange rate depreciation of the triple impact, copper financing profit space lost.

It is reported that a large copper traders in Guangzhou last year, funding strand breaks, is still in the disposal stage, the reason for the closure of the enterprise is the use of financing copper funds to invest in other financial products eventually collapsed.

2009 to 2012 is the golden period of traders financing copper arbitrage, when the letter of credit arbitrage a single income of about 2%, while the operating cycle is only a short period of 2 to 4 days, some do better traders of the Yield even above 100%. From 2013 to 2014, although regulators have stepped up regulation of commodity trade financing, copper spreads have narrowed significantly, with the average annualized return for copper traders falling below 30%. Some traders' risk events are beginning to be exposed.

According to the survey, the past two years not only financing copper arbitrage space reduction, the operation process has become increasingly difficult. In order to control the amount of funds and avoid regulatory review, many traders choose to register another shell company to operate, some small and medium traders have been difficult to trade finance to easily obtain profits.

Since the beginning of 2015, the RMB exchange rate down further risk exposure to further financing of copper. Guangzhou, a share of commercial banks have said that the current non-ferrous metals with the steel, the coal industry as a restrictive industry, banks can not easily lend, the next period of time the copper industry, especially traders will be very sad day, while a new round The reshuffle has begun.

When the price of copper to the downturn

Copper financing model has now begun to expose its drawbacks, the bonded area of copper stocks or will flow into the market. This expectation has begun to make copper futures investors to respond. Copper prices are already in the "naked swimming", a number of copper producers have said the beginning of copper fell to 40,000 yuan / ton below is not thought of. Can be expected that, with the industry reshuffle, false trade will be hit, the distribution channels will gradually focus on the entity trade enterprises, but inevitably, copper prices fell too quickly will affect the health of the copper market.

In the doldrums of the environment in the market will hope in the State Reserve. Last week, Reuters said China's State Reserve in 2015 at least from the international market to buy 200,000 tons of copper, but the news has not been officially confirmed. Analysts believe that purchasing and storage is expected to stabilize the short term only copper, if the State Reserve does not have the corresponding action, the market will fear a new wave of decline. Free trade zone for the copper stocks, the intensity of 20 million tons is not great. In any case, the era of high copper has ended, it will be with rebar, iron ore, like a long time hovering at historic lows.