Content summary

In terms of precious metals, precious metals continued to fluctuate in London last week. At the macro level, long-short factors are intertwined. On the one hand, market expectations of further loose stimulus policies in Europe and the United States have failed, putting pressure on gold, on the other hand, safe-haven demand for short-term support gold prices. At the meso level, the investment demand of overseas gold ETF has been basically saturated, and the follow-up support for gold is limited. At the micro level, a number of technical indicators are in the middle, suggesting that it is difficult for gold to get out of the trend market in the short term, and the high probability will continue to fluctuate within the range. Multi-level factor analysis shows that the precious metal shock city is not over yet. Gold is still expected to fluctuate in a wide range of $1910 to $2000 an ounce this week.

All base metals fell, led by lun lead. In recent weeks, the non-ferrous sector is mainly affected by global macro sentiment and related assets, the overall high shock, combined with the fundamental situation, the current price level is relatively high, may face a pullback in the short term. Macroscopically, there is no essential change in the whole, and the tone of global loose water release remains unchanged. Lun copper last week weak shock, the original mine end of the disturbance weakened, the end of domestic refinery maintenance, the supply tension has been alleviated. However, it is reported that the price of 21-year long single TC will be further reduced compared with this year, which has a certain support for copper prices. On the consumer side, although China has entered the peak season of Jinjiu traditional consumption, the actual order is still relatively light. Follow-up can focus on LME inventory changes and macro policy development, medium-and long-term strong operation, short-term recommendations wait-and-see.

In terms of energy, with the superposition of internal and external factors, international oil prices plummeted again last week. Internally, there has been a lack of bright spots on both ends of supply and demand in the oil market since August, the monthly gap structure has been weakening, and market confidence has been relatively fragile for a long time. Callback pressure is highlighted. The external factors are the stabilization of the US dollar and the rebound of US stocks' highs, triggering a sharp fall in oil prices. Saudi Aramco cut its official price of light crude oil exports to Asia and the United States in October for the first time since June, reflecting a decline in crude oil purchases worldwide. Although the supply side can be controlled as a whole, the implementation of compensatory production reduction is still worrying. The discount on crude oil futures continues to expand in recent months, and traders' floating warehouses are hoarding oil again. In terms of fundamentals alone, oil prices are expected to remain weak in the short term, but there is no logic for further substantial downward revision. If US stocks can stop falling in the short term and risk sentiment can stabilize, there is a good chance that oil prices will return to volatility around $40 a barrel.

01 precious metal market

Precious metals continued to fluctuate in London last week. London gold rose 0.30 per cent last week. The one-year gold smile curve shifted downward by about 0.5 per cent. The vol,25Delta risk reversal index fell from 3.8 to 3.74, reflecting a decline in gold price volatility and weaker bullish interest in gold.

At the macro level, long-short factors are intertwined, which makes the performance of gold prices glued. On the one hand, market expectations of further loose stimulus policies in Europe and the United States were dashed, putting pressure on gold. This week's ECB interest rate resolution and Lagarde's speech after the policy meeting were more hawkish and did not send a signal to expand stimulus on the basis of novel coronavirus's emergency bond purchase plan of 135,000,000,000 yuan, (PEPP); the US Senate also vetoed the Republican Party's $300 billion "slimming version" anti-epidemic aid bill. This week, the Bank of Japan, the Bank of England and the Federal Reserve will also release interest rate decisions, which are expected to maintain current interest rates, focusing on the Fed's further elaboration of the average inflation target.

On the other hand, the demand for risk aversion supports the gold price in the short term. Novel coronavirus vaccine research and development process suffered a setback to the market confidence, once again reminded the market to fight the epidemic is a long-term work, the economic outlook is still depressed, boosting gold risk aversion to buy demand. AstraZeneca (AstraZeneca) and the University of Oxford collaborated on the novel coronavirus vaccine in a phase III clinical trial in which one of the subjects had a severe adverse reaction, causing the trial to be suspended. In addition, the sharp fall in US stocks last Tuesday night stimulated risk aversion, triggering a short-term rally of more than $30 in gold. However, the market reaction to geopolitical risks such as the Anglo-European trade negotiations and the border conflict between China and India was relatively calm and had no significant impact on gold prices.

At the meso level, the investment demand of overseas gold ETF has been basically saturated, and the follow-up support for gold is limited. Net inflows of global gold ETF in August were the lowest since 2020, with an increase of just 31.4 tonnes. Judging from the current situation in September, as of 11, the net inflow of global gold ETF was 19.9t. If the growth rate continues until the end of the month, the net inflow of gold ETF in September will be higher than that in August, but it will still be the second lowest for the year.

At the micro level, a number of technical indicators are in the middle, suggesting that it is difficult for gold to get out of the trend market in the short term, and the high probability will continue to fluctuate within the range. The width of the Bollinger belt narrowed further, and gold prices fluctuated around the middle rail 1947 of the Bollinger belt this week; the relative strength index of RSI remained around the 50 equilibrium level.

Overall, multi-level factor analysis shows that the precious metal shock city is not over yet. Gold is still expected to fluctuate in a wide range of $1910 to $2000 an ounce this week.

02 basic metal market

Last week, the non-ferrous sector continued to pull back, with all LME varieties falling to varying degrees, with Lun lead leading a decline of 4.37 per cent to US $1891.50 per tonne, while other varieties fell between 1 and 1.5 per cent. Lunni, Lunzn Zinc, Lunxi, Lunchu and Lun Aluminum fell 1.44%, 1.42%, 1.07%, 0.96 and 0.95%, respectively.

Recently, the non-ferrous metal plate has been driven by global macro expectations, and most varieties have been substantially adjusted back than at the beginning of the year, especially the strong financial attributes of Lun Copper and Lun Nickel. In recent weeks, the non-ferrous sector is mainly affected by global macro sentiment and related assets, the overall high shock, combined with the fundamental situation, the current price level is relatively high, may face a pullback in the short term, the follow-up need to pay attention to the global macro policy adjustment and the further development of the demand side.

Macroscopically, there is no essential change in the whole, and the tone of global loose water release remains unchanged. Last week, the US index continued to recover slightly, and the non-ferrous plate was under pressure. On the data side, the number of initial jobless claims in the United States increased for the first time after five consecutive weeks of decline, dampening market sentiment. However, the decline in US PPI data for August was narrower than expected and consistent with previous manufacturing data, indicating that the US economy was in the process of recovery from a manufacturing perspective. In addition, China's export data have continued to grow since May, reflecting the recovery of overseas demand. for China, the sustained stability of import and export trade volume also has a strong effect on the stability of China's economy. At this stage, the overall pace of overseas economic recovery is better than that of China, mainly because China has reached a mid-post-stable period of economic recovery, while overseas is still in the trend of month-on-month recovery, boosting demand in the non-ferrous sector.

With regard to the epidemic, according to the data of the Worldometer website, as of 06:30 on September 13 in Beijing, Jian had a cumulative total of 28.92 million confirmed cases and 920000 deaths, with more than 10,000 confirmed cases in 92 countries. In the Americas, although the epidemic in Brazil has slowed down, the United States is still serious. Studies have shown that the number of confirmed cases in the United States is restricted by inadequate testing, and the number of confirmed cases is greatly underestimated. The epidemic in Britain and France in Europe has rebounded, and the epidemic in India in Asian countries can not be ignored. However, considering that multiple vaccines have entered the third phase of the clinical phase, the impact of the epidemic on the global economy is expected to diminish with the progress of its research and development. Recently, there have been a number of "re-positive" and "re-confirmed" cases, causing concerns about the immunity of novel coronavirus and the effectiveness of the vaccine. In addition, with the advent of autumn, if the vaccine has not been successfully launched or the antibody effect is limited at the time of a new round of epidemic outbreak, it will bring negative interference to the development of the global economy.

In terms of international relations, there is news that the United States will ban the import of cotton and tomato products from Xinjiang, indicating continued tension between China and the United States; in China and India, the overall tension remains unchanged and is expected to remain disturbed in the short term in the future. in the long run, there is not much negative news, and the follow-up should focus on the development of Sino-US relations and guard against the negative impact of geopolitical risks on the non-ferrous sector.

[copper]

Last week, Lun Copper was weak and fluctuated. On Tuesday, it was relatively stable in Asia, while prices fell sharply in London due to the collapse in US stocks and crude oil prices, hitting as low as $6640 per tonne. It followed the stock market again on Thursday and moved broadly. Friday's pullback closed at 6715 US dollars per tonne.

On the supply side, there has been no particular interference recently, although there have been protests at the Chilean copper mine, but it is still in the early stage of communication and has not caused substantial interference to mine-end production. After September this year, the disturbance at the original mine end of the copper city has weakened, the maintenance of domestic refineries has been completed, and the supply tension has eased somewhat. Imports to China are expected to fall as Chilean copper exports fell in August, but TC fees rose 15 cents a tonne to $48.93 a tonne last week, given that domestic refineries have resumed production and production has increased, easing supply constraints. In addition, it is reported that the 21-year long single TC price will be further reduced compared with this year, which shows that the tight situation of the mine end will not be effectively alleviated in a short period of time, and the copper price has a certain support.

In terms of terminal consumption, China has entered the peak season of Jinjiu traditional consumption, but from the current understanding of the spot market, the actual order is still relatively light. Copper pipe, copper wire enterprises reflect that orders in September did not improve compared with August, the off-season market may continue to October. According to SMM research, the operating rate of copper pipe enterprises is expected to be 75.60% in September, both month-on-month and year-on-year decline, copper pipe consumption off-season will be prolonged, "Golden Nine" expectations failed. In terms of industrial data, the automobile production and sales figures released by the China Automobile Association in August increased by 6.3% and 11.6% respectively over the same period last year, showing positive growth for five consecutive months. Considering the supplementary consumption under the influence of the epidemic, if the production and sales data in September and October can still maintain positive growth, it will be a more obvious benefit on the demand side.

In terms of inventory, LME decreased by 6900 tons month-on-month, SHFE increased by 100 tons, COMEX decreased by 1800 tons, inventory in the superimposed bonded area increased by 15500 tons, and global inventories in the four places increased slightly by 6700 tons compared with last week. Last Thursday, under the trend of LME going out of inventory for a long time, there was a stock of more than 2000 tons, but considering that under such a low level of inventory, only one day of accumulation does not mean anything, we need to pay attention to whether the accumulation will continue to occur. In addition, it is not clear whether the continued de-stocking of LME in the early period is caused by overseas consumption that has been boosted, or whether it is caused by the collection of copper by the State Reserve in the early stage of the country.

Futures positions, COMEX copper speculative net bulls announced last week is still at nearly two-year high, the market is still bullish sentiment is still strong, still need to beware of the market correction after bulls are crowded. At the same time, from the Lun Copper option volatility smile curve, we can see that the far end, especially three months later, the market short sentiment is still strong. In terms of the forward curve, spot compared with three months of rising water has widened compared with last week, closing at 31.25 US dollars / ton on Friday, which may be further expanded.

Overall, the overall operation logic of the copper market has not changed significantly than before, copper prices are more affected by macro sentiment and the trend of related assets, follow-up can focus on LME inventory changes and macro policy development, medium-and long-term strong operation, short-term recommendations wait and see.

03 energy market

With the superposition of internal and external factors, international oil prices plummeted again last week. WTI crude oil hit as low as 36.13 US dollars per barrel, while Brent crude once fell to 39.31 US dollars per barrel. From the perspective of internal factors, since August, the supply and demand of the oil market has been lack of bright spots, the monthly difference structure continues to weaken, coupled with a long period of horizontal trading, market confidence is already fragile, and the pullback pressure is prominent. The external factor is that the US dollar has recently stabilized and rebounded, US stocks have fallen back, and the reversal of the biggest bullish factors supporting oil prices has triggered a sharp fall in oil prices. It can be said that this round of oil price correction is the result of panic selling caused by the sharp fall in US stocks, which resonates with the weak fundamentals of crude oil itself. Brent crude oil futures closed last week at $39.83 a barrel, while WTI crude oil futures closed at $37.33 a barrel last week, down 6.6 per cent and 6.1 per cent respectively from the previous week's close.

The bearish pressure on the demand side is highlighted, and the market pessimism spreads. The peak season for traditional driving in the United States begins in June and ends with Labor Day in early September. During this year's peak season, the average daily gasoline demand in the United States was 8.584 million barrels per day, which is still less than 90 percent of that in the same period last year, although it has recovered significantly compared with April and May this year. The end of the peak travel season also marks the beginning of the refinery maintenance season. Last week, EIA reported that US refinery utilization fell 4.9 per cent month-on-month to 71.9 per cent overall. Judging from the data, the decline in utilization is still a reflection of the impact of previous hurricanes, but with the start of autumn inspections of refineries, utilization is likely to remain below 80 per cent. Under the influence of these dual factors, the negative pressure on the demand side will be more obvious in the future. Unless more employees return to work, more students return to school and the economy improves significantly, otherwise the weak demand situation will be difficult to reverse.

At the same time, China's demand for crude oil is weakening. China's import data for August showed that crude oil imports were 47.48 million tons, compared with 51.29 million tons in July, down 7.4% from a month earlier, the second decline since crude oil imports peaked in June. In addition, as of mid-July this year, all crude oil import quotas for China's non-state-owned refineries have been issued, which means that crude oil imports are bound to continue to decline in the coming months.

In addition to weaker demand from China and the United States, Saudi Aramco, the world's largest oil exporter, cut the official price of light crude oil exported to Asia and the United States in October. The price of light crude oil exported to Asia fell for the first time since June, a sign that it may also signal concerns about the spot market and reflect a decline in crude oil buying around the world.

Although the supply side can be controlled as a whole, the implementation of compensatory production reduction is still worrying. According to Platts' latest survey, OPEC+ crude oil production increased in August, led by Saudi Arabia, Russia and the United Arab Emirates. The 13 members of the OPEC produced 24.37 million barrels of crude oil a day, up 4 per cent from July, while nine allies, including Russia, produced 12.67 million barrels a day, up 6 per cent from July. According to Platts, the implementation rate of the organization's new quota in August reached 97%. If only from the point of view of the implementation rate, the implementation of OPEC+ production reduction does not seem to be poor, but the focus of the market has shifted from the overall implementation to the implementation of compensatory production reduction. Iraq and Brunei may ask for an extension of the compensatory production reduction period, while Nigeria hopes to exclude condensate production from the production reduction agreement, as Russia has done. If the OPEC+ still fails to come up with effective measures to prevent this from happening, then even if the overall implementation rate of production reduction remains high, it will still have a negative impact on oil prices. The OPEC+ Supervisory Committee will hold an online meeting on September 17, and the assessment of compensatory production reduction plans of oil-producing countries that do not meet the target will remain the focus of the meeting.

In the United States, data released by Baker Hughes showed that the number of active drilling decreased by 1 to 180 last week, 553 fewer than in the same period last year. Although the number of active drilling has bottomed out, the current oil price is completely below the cost of shale oil producers, not enough to support producers to drill new wells, shale oil recovery is still difficult, so the overall supply growth of crude oil is basically under control.

The discount on crude oil futures continues to expand in recent months, and traders' floating warehouses are hoarding oil again. Although the current discount is not as deep as in the second quarter, the cost of oil storage in the floating warehouse is on the low side. Judging from the discount degree of Brent crude in recent months, the six-month difference is $2.70 per barrel, while according to Bloomberg data, the cost of six months of floating warehouse storage is roughly $2.50 per barrel in the North Sea and the Mediterranean. Floating warehouse arbitrage began to be operational. Traders hoarding oil in the second quarter are already seeking to extend six-month tanker leases, according to Platts.

Overall, in terms of fundamentals alone, oil prices are expected to remain weak in the short term, but there is no logic for further substantial downward revision. It is undeniable that the oil market is indeed in a state of overall weakness on the demand side and slight loosening on the supply side, and the market has expectations for this weak fundamentals, and oil prices will remain under pressure in the short term. Recently, there has been a rapid rebound in the number of new infections in many European countries, but judging from Google's road travel time data, there has not been a significant decline, coupled with the current low mortality rate and no run on medical resources. it is unlikely that the government will completely close the city again in the short term, and it is also unlikely that oil prices will have another panic market in the first quarter. If US stocks can stop falling in the short term and risk sentiment can stabilize, there is a good chance that oil prices will return to volatility around $40 a barrel.

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