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[SMM Metal Breakfast] LME copper inventory continues to decline overseas consumption recovery * Rio Tinto may close Icelandic aluminum smelter * the market price of electrolytic manganese is obviously strong
Jul 24,2020 07:30CST
translation
Source:SMM
[SMM Metal Breakfast] LME copper inventory continues to decline overseas consumption recovery recently there are goods arriving in Hong Kong, rising discounts and temporary pressure * increased delivery slightly decreased aluminum rod inventory increased by 3600 tons to 68600 tons last Thursday * low inventory + higher-than-expected consumption aluminum prices are difficult to be dragged down by off-season effects * lead market under the epidemic of war-expected surplus consumption in the second half of the year is expected to recover in the second half of the year * the oversupply of mines has narrowed. Consumption recovery superimposed global currency water release zinc price may continue to be revised * hot volume accumulation for 5 consecutive weeks is also difficult to stop the rising price momentum * the Eurasian Economic Union has made a final anti-dumping ruling on China-related aluminum strip products.
The content below was translated by Tencent automatically for reference.

"[overnight] the weak US dollar metals market is up more than 1%. Us oil is down nearly 2%. Gold futures are up more than 1%.

"Forecast of Today's Financial data: focus on afternoon PMI data of US and German Manufacturing Industry

Today's focus

[SMM analysis: LME copper inventory continues to decline overseas consumption recovery recent arrival of goods in Hong Kong to rise discount pressure] since mid-May, LME inventory has continued to decline. The space for destocking in Asia has been reduced to a historical position, and the amount of deliverable in the short term is very limited. Recently, supply problems have been simmering in major copper-producing countries in South America, a strike by copper miners in Chile is still simmering, and protesters in Peru recently attacked a convoy at the Las Bambas copper mine. SMM expects imports of copper to decrease month-on-month in August, and import parity may open up opportunities. "View details

[SMM analysis: crude and refining processing fees deviate from the tense situation of raw materials.] in June, the SMM copper concentrate index (month) reached 51.71 US dollars / ton, down 1.76 US dollars / ton from the previous month, which was the third consecutive month of decline; while in June, the domestic crude copper processing fee was 1100l200 yuan / ton, with an average price up 150 yuan / ton; in June, the imported CIF crude copper processing fee was 125,135 US dollars / ton, up 5 US dollars / ton from the previous month. "View details

[SMM data: increase in arrival and warehouse delivery slightly decreased aluminum rod inventory increased by 3600 tons to 68600 tons compared with last Thursday] aluminum rod inventory increased slightly by 3600 tons to 68600 tons compared with last Thursday. Inventory in Foshan, Wuxi, Huzhou and Nanchang all increased in varying degrees, while inventory in Changzhou decreased slightly. "View details

[SMM brief Review: low inventory + exceeding expected consumption aluminum price is difficult to be dragged down by the off-season effect] fundamentals, downstream demand is higher than expected, profile-based enterprise orders are still abundant. And the current inventory is still low, and the latest data show that inventory continued to decline on July 23, SMM statistics domestic electrolytic aluminum social inventory weekly to 6000 tons to 702000 tons, aluminum prices still maintain a strong trend. On the whole, aluminum prices are still supported by fundamentals, and it is expected that aluminum prices will fall less in the short term in the future. As for the nodes that open the downward channel of aluminum prices, they mainly focus on three factors, namely, the inflection point of absolute inventory, the continuous discount on spot and the occurrence of substantially exceeding the average profit. "View details

[SMM data: inventory reduced weekly electrolytic aluminum inventory 6000 tons to 702000 tons] July 23, inventory continued to decline, SMM statistics domestic electrolytic aluminum social inventory weekly to 6000 tons to 702000 tons. "View details

[lead and Zinc Summit] Xia Wenming, a senior analyst for the lead industry at SMM, said that lead concentrate imports from January to May 2020 were 461000 physical tons, down 22% from the same period last year, while mine imports gradually recovered after June, and TC rose again. The mines in the high altitude areas of China have resumed production seasonally, and the output of Q3 lead concentrate has entered the state of output climbing. On the whole, the import of ore is relaxed, and the tight supply of lead concentrate is improved.

[lead city under the SMM: war epidemic-expected to remain surplus throughout the year and hope for a recovery in consumption in the second half of the year] SMM believes that, on the whole, under the background of the epidemic, the global supply and demand of lead has fallen, but the tone of surplus has continued throughout the year, and Q3-Q4 expects consumption to recover. Whether the peak consumption season in the third quarter comes as promised has become a key factor in the subsequent rise in lead prices. At the same time, the addition of recycled lead will continue to interfere with the pace of lead price increases in stages, and the environmental protection factor in previous years has become a marginal factor.

From the fundamental point of view, starting from April 2019, with the breakthrough of the bottleneck of refined zinc production, from the perspective of supply and demand, there is a substantial surplus in the mainstream balance sheet both in the near and long term, and zinc has become the preferred variety for short sellers from the point of view of SMM: mine supply oversupply, consumption recovery, superimposition of global currency water discharge zinc price and global currency water discharge zinc price. From a macro point of view, zinc long-cycle fundamentals are expected to be short, and when mainstream market funds choose to hedge against the global macroeconomic recession, zinc naturally becomes the first long-hedged variety in non-ferrous metals. Looking ahead, SMM believes that zinc prices may continue to be revised upwards as consumption recovers and global currencies release water. "View details

[mining quarterly report: BHP: nickel production in the second quarter increased by 14% compared with the previous quarter] recently, BHP Billiton released its second-quarter results, of which nickel production in the second quarter was 24kt. Nickel West nickel production fell 8% to 80 kt, in fiscal year 2020 due to major four-year maintenance closures at the Kwinana refinery and Kalgoorlie smelter, as well as the mineral processing plant's planned routine maintenance in December 2019. The operation returned to full capacity in the first quarter of 2020 and reached full capacity in the second quarter of 2020. "View details

[WBMS report: global nickel market oversupply 33300 tons from January to May 2020] the World Bureau of Metals Statistics (WBMS) released a report on Wednesday showing that the global nickel market was in oversupply from January to May 2020, with output 33300 tons higher than apparent demand. For the whole of 2019, there was a shortage of 29100 tons in the global nickel market. At the end of May 2020, LME's reported nickel stocks were 80200 tonnes higher than at the end of 2019. From January to May 2020, the global refined nickel production totaled 890600 tons and the demand was 857300 tons. "View details

[WBMS report: global tin market supply shortage from January to May 2020 17500 tons] the World Bureau of Metals Statistics (WBMS) released a report on Wednesday showing a global tin market supply shortage of 17500 tons from January to May 2020. Total inventories are reported to be 9200 tons below the level at the end of 2019. From January to May 2020, it was reported that the output of refined tin decreased by 7700 tons compared with the same period last year. China's apparent demand increased by 7% compared with the same period last year. "View details

[SMM Analysis: July Metal Manganese Steel recruitment and Mining pricing maintains stable Electrolytic Manganese Market Price] as of Thursday, the mainstream tax-included ex-factory price in the spot resource market in the manganese triangle region was concentrated at 10000 yuan / ton; the Guangxi price was quoted at 10,000 million yuan per ton; in addition, the taxable distribution price of trade in the Yangtze River Delta region was basically adjusted to 10300 yuan 10400 yuan per ton. Compared with the average market prices in various regions last week, the spot price of electrolytic manganese remains strong as a whole this week, with a small probe into 100 yuan / ton negotiations. it can be seen that at present, most manganese factories are willing to increase, but the actual high price of retail supply is not smooth, and the buyer's market wait-and-see mood increases. "View details

[SMM thread: "water wall" blocking, accumulating library accelerating ing] as of July 23, the national total inventory of building materials was 10.9298 million tons, with a month-on-month ratio of + 1.8%, and a year-on-year increase of + 28.1%. This year's precipitation seems to be more violent than in previous years, spread more widely, in the past half a month, almost all the areas along the Yangtze River have fallen, and the release of demand has been greatly restricted, so that the current thread inventory is still accumulating. "View details

[SMM hot volume: hot volume accumulated for 5 consecutive weeks is also difficult to stop the momentum of price increases! According to SMM Steel on July 23, the total inventory of hot-rolled coil this week is 3.8553 million tons, with a month-on-month ratio of + 2.30% and + 12.78% compared with the same period last year. Total inventories continue to grow this week, but the growth rate has narrowed and the short-term disturbance to fundamentals is relatively limited. "View details

Important news of metals and industry

[Antofagasta and Zaldivar copper mine workers extend government mediation to avoid strike] on Wednesday night, workers at Antofagasta and its Zaldivar copper mine decided to extend government-mediated new union contract negotiations to avoid a strike, according to the union. On July 15th workers at the Zaldivar copper mine entered into government mediation over negotiations on wages and benefits with Antofagasta. At present, Antofagasta has not responded to this. In addition, Centinela, another mine owned by Antofagasta, is currently in the process of government mediation to avoid a strike plan voted by the supervisor. "View details

[WBMS: global primary aluminum market oversupply 908000 tons from January to May 2020] the global primary aluminum market has an oversupply of 908000 tons from January to May 2020 and 780000 tons in 2019, according to a report released by the World Bureau of Metals Statistics (WBMS) on Wednesday. The demand for primary aluminum from January to May 2020 was 26.33 million tons, an increase of 285000 tons over the same period in 2019. Demand is measured on an apparent basis, and the full impact of the national blockade imposed to contain the Xinguan pneumonia epidemic may not be fully reflected in trade statistics. "View details

[Eurasian Economic Union makes final Anti-dumping judgement on China-related Aluminum Strip products] on July 20, 2020, the Internal Market Protection Department of the Eurasian Economic Commission issued notice No. 2020 / 223/AD28 on the official website of the Eurasian Economic Union, making a final anti-dumping adjudication on aluminum strip products originating in China and Azerbaijan (in Russian: aluminum products originating in China and Azerbaijan. It is suggested that an anti-dumping duty of 13.14% should be levied on all Chinese enterprises involved in the case, including China Nantong Hengjin Composite Co., Ltd. (Nantong Hengjin Composite Material Co., Ltd.). 16.18% anti-dumping duty will be levied on the enterprises involved in the case in Azerbaijan, which will be valid for 5 years. The product is aluminum strip with or without coating (except for aluminum strip for aluminum can products) with a thickness of more than 0.2 mm but less than 3 mm. This case involves products under tax numbers 7606119100, 7606122009 and 7606129209. "View details

[notice on soliciting practical techniques for Technical Specification for pollution Control of Aluminum Ash and Secondary Aluminum Ash] the second consultation of the National Hazardous waste list (revised version) has been completed and will soon enter the release process. According to the National Hazardous waste list (revised version) (the second draft for soliciting opinions), the salt slag and aluminum ash produced in the process of aluminum recovery will be classified as hazardous waste. In order to prevent environmental risks and environmental violations, entrusted by the Ministry of Ecological Environment, together with the Chinese Academy of Environmental Sciences and the solid waste and Chemicals Management Center of the Ministry of Ecological Environment, I will carry out the compilation of technical specifications for pollution control of typical solid waste in the aluminum industry, and propose to exempt aluminum ash and secondary aluminum ash in the process of metal extraction and utilization in the shortest possible time and be adopted by the Ministry of Ecological Environment. In other words, the process of metal aluminum recovery for aluminum ash and secondary aluminum ash is not managed as hazardous waste, and enterprises do not need to apply for hazardous waste operation license. "View details

[large luxury aluminum alloy catamaran high-speed passenger ship successfully delivered] on July 13, the first domestic 70-meter-class, 1200-seat large luxury aluminum alloy high-speed passenger ship "Beiyou 26", built by the joint venture brand of Jianglong Boat, Aolong Boat Technology Co., Ltd. (hereinafter referred to as "Aolong Boat"), was successfully delivered. "Journey to the North 26" is designed with a total length of 70.6m, a width of 17m, a maximum speed of 34 knots (55.8km / h) and a capacity of 1200 passengers. It has set a number of records for the construction of luxury aluminum alloy high-speed passenger ships with the largest main scale, the highest number of passengers, the fastest speed under the same number of passengers and the highest wind resistance in China.

[in the face of power supply problems, Rio Tinto may close the Icelandic aluminum smelter] Rio Tinto said that unless power suppliers change the terms of the energy agreement, it may close the Icelandic aluminum smelter. Rio Tinto considers the terms of the energy agreement "discriminatory". Rio Tinto has 100 per cent ownership of the ISAL aluminium smelter in Iceland with a total capacity of 212000 tonnes and has been operating since 1969 and employs about 390 people. In 2019, the smelter produced 184000 tons of aluminum. It is reported that Rio Tinto has filed a formal complaint with the Icelandic Competition Authority, accusing Landsvirkjun, the energy supplier of the country's ISAL aluminium smelter, of "abusing its market dominance". "View details

[India's largest zinc and silver producer benefits from rising global precious metal prices] India's largest zinc producer and silver producer-Hindustan Zinc Ltd. Shares soared as much as 13% on Wednesday, the biggest intraday gain since October 2016. Deputy CEO Arun Misra told analysts Tuesday that the company's silver production has more than quadrupled in the past decade to more than 600 tons, or about 13% of total revenue. "View details

[700000 tons of lithium power new energy and materials integration industrial base project started today] on the morning of July 23, the 700000 tons lithium power new energy materials integration industrial base project (phase I) held a construction ceremony in Baiping Industrial Park, Bobai County, Yulin City, Guangxi. This is by far the largest investment project introduced by Yulin City. "View details

[Russian TMK: steel pipe shipments fell 8 per cent month-on-month to 666000 tons in the second quarter] Russian steel pipe maker TMK Zhou said steel pipe shipments were 666000 tons in the second quarter of this year, down 8 per cent from 727000 tons in the first quarter. Shipments of large-diameter pipes decreased month-on-month, down 42% in the second quarter compared with the previous quarter. The company said this was mainly due to a decline in demand due to a difficult macroeconomic environment. Steel pipe shipments in the first half of this year were 1.39 million tons, down 13% from the same period last year.

[the average daily output of crude steel of key steel enterprises increased by 0.36% month on month in mid-July] according to statistics of the China Iron and Steel Association, in mid-July, iron and steel enterprises produced a total of 21.384 million tons of crude steel, 19.0916 million tons of pig iron, 20.3936 million tons of steel and 3.1671 million tons of coke. The average daily output of crude steel in this decade was 2.1384 million tons, up 0.36% from the previous month and 5.99% over the same period last year; pig iron was 1.9092 million tons, down 0.42% from the previous month, up 6.29% from the same period last year; and steel was 2.0394 million tons, up 3.00% from the previous month and 6.88% over the same period last year.

[China's steel exports fell 31.1% in June compared with the same period last year] according to the latest data from the General Administration of Customs, China exported 2.2 million tons of steel plates in June 2020, down 31.1% from January to June, down 14.9% from the same period last year. In June, China exported 400000 tons of iron and steel bars, down 42.3 percent from the same period last year. From January to June, exports totaled 3.95 million tons, down 28.7 percent from the same period last year.

Macro focus

Domestic:

Ministry of Finance: on July 23, 70 billion yuan of special anti-epidemic treasury bonds were successfully issued. so far, 790 billion yuan of special anti-epidemic treasury bonds have been issued, and the remaining quota will be completed by the end of July. After the funds are in place, all the central finance will be transferred to the local governments for infrastructure construction and anti-epidemic related expenditure. The Ministry of Finance has made it clear that funds are forbidden to be invested in four areas, to be used in land reserves and shantytown renovation projects, to be used in government buildings and halls, and in the construction of performance projects and image projects. it is strictly prohibited to be used to pay off the accounts of private enterprises and small and medium-sized enterprises owed by the government, and shall not be allocated to local government financing platform companies.

Bancassurance Regulatory Commission: firmly adhere to the bottom line of systemic financial risks. Plan ahead to deal with the substantial increase in non-performing assets in the banking industry. We will resolutely prevent the resurgence of shadow banking, the resurgence of real estate loans and the resurgence of blind expansion and extensive operation. To deal with illegal financial groups and major risk events in accordance with the law.

The head of the Trade Relief investigation Bureau of the Ministry of Commerce made a statement on the first investigation of the so-called "undervalued RMB exchange rate" project by the United States in the anti-subsidy case against Huazha Belt. The person in charge said that the exchange rate issue is beyond the authority of a member to conduct countervailing investigations in accordance with WTO rules. In February this year, the United States amended its laws and regulations to conduct countervailing investigations on the exchange rates of other countries, which has been suspected of violating WTO rules and has been opposed by many parties. Even in accordance with US regulations, there are a large number of errors in the content of the applicant's complaint, which does not have the necessary countervailing elements such as financial assistance, benefit grant and specificity. China urges the US to abide by existing international rules and stop countervailing investigations into the so-called "undervaluation of the RMB exchange rate".

Abroad:

According to Johns Hopkins University statistics, as of 17:33 Eastern time on July 23, the United States had a total of 4021053 confirmed cases of new crown pneumonia and a total of 143967 deaths. In the past 24 hours, there have been 79312 new confirmed cases and 1211 new deaths in the United States.

According to CME Fed Watch, the probability of the Fed keeping interest rates in the 0% won 0.25% range in July is 100%, and the probability of raising interest rates by 25 basis points to 0.25% is 0%. The probability of keeping interest rates in the 0% won 0.25% range in September is 100%, and the probability of raising interest rates by 25 basis points is 0%.

The ECB said on Thursday that banks were not well prepared for benchmark interest rate reform, ignoring the fact that euro interbank lending rate (Euribor) is currently the most commonly used benchmark interest rate for euro zone contracts, and ignoring the risks associated with Euribor adjustment, focusing more on the transition to euro short-term interest rate ESTR, but the benchmark interest rate reform is closely related to 180 trillion euros ($209 trillion) of financial products.

Terminal information

Since July, many hot cities in the property market, such as Shenzhen, Hangzhou, Dongguan, Ningbo, Nanjing, and so on, have issued strict regulation and control policies, and this trend continues. However, the "focus" of regulation and control in these cities is directed towards the "just-in-need group". Industry insiders generally believe that the hot real estate market drama is still staged in many cities, and the tightening of regulation and control this time is far from over, but support just needs should be more prominent and become a new focus of local regulation and control. However, the core policies that have a big impact on the market should be credit tightening, reducing arbitrage space and increasing supply.

[chip] Intel announced that the production time of the 7nm process CPU has been delayed by about six months than originally planned, and now the production trend of the 7nm processor is about 12 million units behind the original target. Intel shares fell more than 6 per cent in after-hours trading, while rival AMD rose 4 per cent.

Ministry of Industry and Information Technology: the Ministry of Industry and Information Technology will continue to vigorously promote the construction of charging and recharging infrastructure, further improve relevant technical standards and management policies, and encourage enterprises to develop power-changing models according to their use scenarios. It will also support pilot promotion in places such as Beijing and Hainan to promote the high-quality development of the new energy vehicle industry. In addition, more than 100 billion integrated circuits were produced in China in the first half of the year, especially an increase of 16.4 percent over the same period last year, which is still very considerable.

[Brazil puts some solar energy equipment on the zero tariff list] the Brazilian government recently issued an official statement adding some imported solar energy equipment to the zero tariff list, with a duty-free period until the end of 2021. Pakistan's solar power technology and equipment are mainly imported from China. The recent sharp devaluation of the real has increased costs, a measure that can promote the sense of competition among local manufacturers.

Related market

[coal] Energy Bureau: issue the notice on the task of phasing out backward production capacity in the coal and power industry in 2020. In 2020, the country plans to phase out backward production capacity totaling 7.3335 million kilowatts. Among the phase-out units, all units that have not been built and have no operation record after January 1, 2015 shall not be included in the target task of eliminating backward production capacity in the coal and power industry. Release the notice on the target task of phasing out backward production capacity in the coal and power industry in 2020. In 2020, the country plans to phase out backward production capacity totaling 7.3335 million kilowatts. Among the phase-out units, all units that have not been built and have no operation record after January 1, 2015 shall not be included in the target task of eliminating backward production capacity in the coal and power industry.

[treasury bonds] the main contract for 5-year treasury bond futures, TF2009, fell 0.06% to 101.200%, and T2009, the main contract for 10-year treasury bond futures, fell 0.02% to 99.655. The interest rate on the 10-year Treasury note rose 2.03BP to 2.91 per cent, while the interest rate on the 10-year bond rose 5.25bp to 3.38 per cent.

[interest rate] overnight shibor was 1.8580%, up 52.20 basis points. Seven-day shibor was at 2.2070%, up 19.90bp. Three-month shibor was 2.5410%, up 4.00bp.

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