Since March 2022, under the combined influence of several factors such as the Federal Reserve’s multiple interest rate hikes,
the conflict between Russia and Ukraine, and the repeated domestic epidemics,
the prices of raw materials and commodities that have been rising since March 2020 have gradually declined,
and iron, aluminum, nickel, and zinc prices have gradually declined.
The price of industrial metals such as copper and copper fell by more than 20%.
As one of the main raw materials of magnetic components,
the price of copper fell from a high of 77,000 yuan/ton in March to 54,000 yuan/ton,
a drop of nearly 30%.
The cost of raw materials is the main cost for the production of magnetic components.
Copper is one of the essential raw materials for the production of electronic transformers,
inductors and other magnetic components,
accounting for more than 30% of the manufacturing costs of magnetic components.
The drop in copper prices will directly affect all aspects of the operation of magnetic component companies,
and the magnetic component wire companies are the first to be impacted by the drop in copper prices.
In this issue of market interpretation,
we will discuss the reasons behind the decline in copper prices, the future trend,
the impact on magnetic component wire companies and countermeasures.Reasons for the drop in copper prices
Monetary policy shrinks Global recession fears intensify.
After the epidemic, the unlimited QE issuance in the United States exceeded US$20 trillion.
In just one year, the excess currency issued exceeded the total amount since the founding of the country,
which is the main culprit in pushing up the prices of various commodities and raw materials.
As the so-called rise and fall comes from the same source,
after the end of unlimited QE in the United States, in fact, copper prices have peaked since May 2021,
and have never broken this high since.