SHANGHAI, Dec 7 (SMM) — A brief summary on the other keynote addresses at Shanghai Metals Market's 2020 Nonferrous Metals Industry Chain Annual Conference, which was held in Suzhou on December 3-4.
Jinming He, Manager, Chinaiol
It is predicted that the scale of China's household air conditioning market will rebound in 2021, up 6.8%. By 2030, stocks of domestic air conditioners in China will stand at 750-770 million units, which is more than 240-260 million units of incremental space compared with stocks of 508 million units in 2019, which is equivalent to more than 24-26 million new units of theoretical incremental space every year. If 770 million units are taken as the steady-state threshold of domestic air-conditioning household demand scale and the normal distribution is updated in a 10-year cycle, the average scale of domestic retail market will stabilise by 77 million units after 2030.
Vyron Chen,Senior Copper Analyst, SMM
In 2020, the supply and demand of copper concentrate will be in short supply. It is estimated that the market will be short of about 513,000 metal mt, which is higher than the forecast at the beginning of the year. During the year, copper concentrate inventories will continue to decrease, and the annual TC will be in a downward trend. The global copper output is expected to show negative growth for two consecutive years. In 2021, the copper concentrate market tends to balance supply and demand, and copper concentrate inventories are still under pressure. SMM predicts that there will be an excess of 22,000 metal mt in the global copper concentrate market in 2021.
In 2021, the number of new expansion projects of China's copper smelters decreased, and the major increase in global smelting also came from the recovery of pandemic. At present, smelting growth is slowing down, and there is likely to still be concentrated production capacity in 2023, but some projects are facing uncertainty. It is expected that the Benchmark of long-term refining TC will gradually pick up in the next three years, which is expected to stand at 5.8 cents/pound of metal in 2021 and 7.0 cents/pound of metal in 2022; It is estimated that the Benchmark of crude refining TC will come in at $58/physical mt in 2021 and $70/physical mt in 2022.
Frank Liu, Chief Analyst, SMM
It has absorbed 1.68 million mt of production capacity in the first three quarters of 2020, which is expected to increase by more than 2 million mt in the whole year. It is estimated that the newly increased production capacity will still exceed 2 million mt in 2021, and the scale of China's imported aluminum ingots are likely to exceed 1 million mt in 2020. In 2020, the reversal of three conditions (inventory reversal, basis reversal and ratio reversal) is likely to not be completed in the second half of the year, and there is still a risk of staged supply shortage in 2021.
Roman Berstenev, Sales Director for Asia, UC RUSAL
Despite the outbreak of the COVID-19, we can see that the data of manufacturing activity has reached a level not seen in several months. The receiving volume of new orders has increased at the fastest speed in the past two and a half years, and the export business has expanded
for the first time in more than two years, and the confidence of enterprises has reached the highest level since May 2018. Overall business recovery exceeded expectations and forecasts. This translates into a primary demand forecast for aluminium, in which the recovery rate exceeds all initial expectations. We predict that the global primary aluminum consumption will fully recover in 2021, and the rebound volume will increase by nearly 3 million mt compared with 2019. China is in a leading position and will maintain its balance in 2021.
Jianyu Meng, Market Analyst, Shandong Hongqiao New Material
Outlook for 2021: For domestic ore, it is mainly a slight slow increase, with little probability of a large increase. At present, alumina prices keep trading in the bottom range, and the buyer has great resistance to the price reduction at the ore end. For imported ore, it is necessary to pay close attention to the trend of overseas pandemic and the change of bauxite sea freight caused by the fluctuation of crude oil prices. In 2020, crude oil prices will remain low, suppressing the fluctuation space of sea freight, and the overall CIF price of domestic imported ore will be low.
Rodrigo Cammarosano, Head of Corporate Strategy and Market Intelligence, Nexa Resources
In the medium and long term, the demand for zinc metal increased strongly at a rate of about 3.5% per year driven by China's economic growth from 2000 to 2007. The subsequent financial crisis affected the commodity industry. The demand for zinc began to pick up in 2016, and the consumption reached 14 million mt/year. From 2016 to 2018, we have seen a less intense but steady growth of about 1.3% per year.
It is predicted that the global refining output will have a more conservative recovery. Although the new project will bring new output, in the current mine operation, it will be accompanied by the end of some mine and the reduction of ore grade, thus affecting the current output. Coupled with a small amount of global investment in new deposit exploration, the output is likely to only increase slightly from 2021 to 2025, although the annual supply is expected to increase by about 1.6%. However, we don't think this is enough to maintain market balance. After 2025, we will not see any major projects, which is likely to support the zinc price.
Rare and Precious Metals
Polly Hu, Senior Analyst of Minor Metals, SMM
At present, domestic metal smelters are scattered, but the concentration of head enterprises is high. With the integration of resources and industrial upgrading, the concentration of production capacity will continue to increase in the future. In recent years, the market of most rare metals is saturated, and there is very little new capacity specially designed for rare metals. With the steady increase in the output of basic metals such as copper, lead and zinc, the supply of rare metals as their associated varieties is generally increasing. She said that for rare metals, supply, demand, cost, and market sentiment and mentality will be the four most important factors affecting the price trend. At present, the prices of many rare metals remain low. Under the support of supply, demand and cost, price repair will be a long-term trend.
Weibin Deng, Asia Pacific Director, World Platinum Investment Association
Platinum will enter the deficit for the third consecutive year in 2021, and the market shortage is being confirmed by investors. The potential for market demand growth is still high, mainly due to the EU's carbon emission reduction fines and stronger sales growth of diesel vehicles. In addition, China tightened emission regulation, and the platinum consumption of heavy vehicles increased. Platinum continues to replace palladium in gasoline vehicle catalysts. Gold price promotes platinum investment. The increasing demand for platinum in automobiles, the replacement of platinum and palladium, the prices of gold and the development prospect of hydrogen economy attract additional investment demand for platinum.
Han Xiao, Senior Analyst, Yanshui Investment Management and Consulting Team
In the second half of 2020, the factors affecting precious metal prices will focus on the Federal Reserve's monetary policy, the euro zone's monetary policy and the pandemic. Combined with the comprehensive factors of fundamental and technical aspects, it is expected that precious metal prices will rise first and then fluctuate widely in the second half of 2020. In the third quarter, precious metal prices are likely to continue to rise, and in the fourth quarter, precious metal prices are likely to fluctuate widely or be slightly adjusted back. Next year, precious metals are likely to end their bull market and return to the stage of wide fluctuation. In the second half of 2020, the pressure above of gold prices is seen from $2,000/oz, and the support below is seen from $1,700/oz. In 2020, the pressure above of silver prices is seen from $26.0/oz, and the support below is seen from $18.0/oz. The TD price of silver ranges from 4,200 yuan/kg to 5,400 yuan/kg. It is expected that precious metal prices will fluctuate widely after rising in the second half of 2020.