Content summary
In terms of precious metals, the price of gold did not change much last week, but experienced large fluctuations during the week. There was a lot of news about the epidemic and vaccines last week. The epidemic situation in the United States is still serious, but vaccines are also being launched in many countries; the prospect of the US financial rescue plan is still uncertain; and the news from the European market is also mixed. The mixed news caused gold to move up and down quickly. Looking to the future, the market currently has great differences on the economic outlook and policy expectations. This week, we will focus on the impact of the FOMC meeting on market expectations. At the same time, the negotiation deadline for the Brexit agreement and the US fiscal stimulus policy is approaching, making the market outlook more complicated and confusing. Gold may be waiting for a clear direction in the shock trend. The market is expected to be cautious this week, with gold likely to be limited to fluctuations of $1770-1870 before a clear direction.
In terms of basic metals, the overall operation of the non-ferrous metal plate was still strong last week, and the center of gravity of most varieties of trading has shifted upward. On the macro front, dollar-denominated non-ferrous metals have been supported by the continued weakness of the US dollar due to low global interest rates and ultra-loose monetary policy, coupled with optimistic prospects for economic recovery brought about by vaccine progress. Copper mine side interference has decreased, spot TC is still low, it can be seen that the supply is still tight; the domestic downstream market is gradually improving, with the improvement of the margin of supply and demand, exchange inventories continue to decline. Boosted by macro sentiment and marginal improvement in fundamental supply and demand, the short-term upward trend in copper prices may continue, but the resistance at the upper integer level is strong, and market volatility may intensify before the epidemic has yet to usher in a turning point and the details of US fiscal stimulus policies are not clear.
On the energy front, crude oil market sentiment remained highly optimistic last week, with oil prices rising against the backdrop of optimistic expectations of a recovery in demand next year and a recovery in European demand, with Brent crude breaking the $50 / barrel mark at one point. Last week, progress on vaccines was still quite rapid, further boosting expectations of a return to demand, with a sharp rebound in diesel cracking price spreads and diesel-coal price spreads in 2021 in the past two weeks. European fuel demand rebounded and Asian demand continued to be strong; despite the poor performance of inventory data last week, there was a marked reduction in market attention and a limited impact on oil prices. Looking ahead, although oil prices are expected to maintain a long-term strong trend, the current fundamental oil prices may still be difficult to stand on the front line of $50, and oil prices may fluctuate around $50 / barrel in the short term.
In terms of agricultural products, the price of American beans showed a fluctuating trend last week, and the intraday attempt to push higher failed. On the one hand, the main reason is that rainfall continues to occur in some producing areas of Brazil and Argentina, improving soil moisture and reducing the risk of yield reduction implied in soybean prices; on the other hand, as soybean prices remain high, US soybean exports remain depressed, easing the tight supply situation in North America. At the same time, USDA released its latest monthly report last week, and the decline in production and inventory also caused a shock in the market. Although rainfall in South America and USDA data have briefly put pressure on soybean prices, and the short-term sales outlook for American beans is not very optimistic, given the uncertain future of South American production, the food crisis facing South America and the improvement in global demand brought about by the introduction of vaccines, we still believe that soybean prices will return to the upward path after the correction.
01 precious metal market
The price of gold changed little last week, but experienced a lot of volatility during the week. It opened at $1838.4 at the beginning of the week, rose to a peak of $1875 in the middle of the week, and then fell back quickly to close at $1839.8 a week. Silver, platinum and palladium closed slightly lower, opening at $24.16, rising as high as $24.87, before quickly falling back to a low of $23.52 to close at $23.95. Platinum opened at $1047, but intraday volatility fell to as low as $994and then rebounded to $1012. Palladium opened at $2346, hit $2263 in intraday trading and rebounded to $2321 in the second half.
Last week, all aspects of information were intertwined, causing gold to move up and down quickly. There has been a steady stream of news of outbreaks and vaccines. The epidemic situation in the United States is still grim. There are 183000 new cases and more than 3000 deaths in a single day in the United States, and the epidemic situation is still serious. But vaccines are being launched in various countries, and vaccinations have begun in Britain, Canada will start this week, and the United States and France are expected to start vaccination in the near future. The future of the US fiscal rescue plan, which is widely concerned by the market, is uncertain. Although the Republican Party proposed a $916 billion stimulus package, the market was disappointed by the failure of both parties to make breakthroughs on key issues. The news from the European market has also been mixed. Mr Johnson and the president of the European Commission did not agree on the details of Brexit, raising the risk of leaving without an agreement, but the ECB renewed a series of easing policies in response to the impact of the novel coronavirus epidemic, including increased bond purchases. and extended the period by nine months to the end of March 2022.
On the investment demand side, gold ETF SPDR position outflow last week 6.7 tons, the outflow rate slowed down. CFTC speculative long positions increased more than short positions increased, net long positions increased by 8906 hands.
At present, there are great differences in the economic outlook and policy expectations in the market. One side believes that the global central bank will set off a new round of bond purchases. So far, the Federal Reserve, the Bank of England, the Bank of Japan and the European Central Bank have invested 5.6 trillion US dollars and are still increasing. The market will usher in a looser monetary policy environment. The other side believes that with the release of the vaccine, after the epidemic is brought under control, the economy will recover and the major central banks may withdraw from the easing program early. The market has not yet reached a consensus on the Fed's interest rate decision on FOMC this week, and some investors expect the Fed to extend the duration of its bond purchases at this week's FOMC meeting to control the yield curve. However, the Fed did not disclose the information in advance, indicating that it was in no hurry to tighten its bond purchases, but also said it had no plans to do more because of the current high level of securities purchases. In addition, the deadline for negotiations on the Brexit deal and the US fiscal stimulus policy this week is approaching, making the market outlook more uncertain, and gold may be waiting for a clear direction in the shock trend. Technically, gold has encountered resistance on the $1850-$1870 front, but there is support below $1770, and the market is expected to be cautious this week, with gold likely to be limited to $1770-1870 before a clear direction.
02 basic metal market
Last week, the non-ferrous metal plate rose and fell mixed, and the center of gravity of most varieties shifted upward. Lenny led up 6.06% to close at $17335 a tonne, hitting an one-year high of $17660 a tonne in the middle of the week. Except for Lun aluminum, which fell by 0.44%, Lunxi, zinc, lead and copper rose by 2.82%, 1.59%, 1.21% and 0.14%, respectively. Among them, Lun Copper, as a macro barometer, was boosted by market sentiment, hitting a seven-year high of US $7973.50 per ton during the week. The London metal futures index (LMEX INDEX) edged up 0.62 per cent from last week.
Recently, the overall operation of the non-ferrous plate is still strong, some varieties continue to refresh the stage of new highs, market sentiment is still optimistic, superimposed downstream demand is expected to be better, the whole plate is expected to continue a relatively strong pattern, but at the end of the year it is easy to be affected by bulls and profit-taking, and market volatility may increase.
On the macro front, dollar-denominated non-ferrous metals have been supported by the continued weakness of the US dollar due to low global interest rates and ultra-loose monetary policy, coupled with optimistic prospects for economic recovery brought about by vaccine progress. Specifically, the United States resumed negotiations on fiscal stimulus, and in order to weaken the negative impact of the second outbreak on the sustained economic recovery, the ECB announced a series of easing measures last week and increased its emergency anti-epidemic debt purchase program (PEPP) by 500 billion euros. In terms of data, the number of initial claims for unemployment benefits announced in the United States last week exceeded expectations due to the increase in the number of confirmed cases of novel coronavirus and restrictions on business operations. At present, it is widely expected that European and American governments will continue to increase the size of loose, in order to stimulate the market, affected by this non-ferrous sector rally is expected to continue. There are potential risks in the medium and long term. One is that the epidemic situation in Europe and the United States, led by Britain and the United States, is still very serious, and the actual situation of vaccine progress and epidemic control may not be as good as expected. The second is the Congress, which is likely to face bipartisan rule after Biden takes office in January next year, and the scale of fiscal policy may not be as large as expected.
With regard to the epidemic, Worldometers data show that as of 19:30 on December 13th in Beijing, novel coronavirus had a cumulative total of more than 72.21 million confirmed cases and more than 1.61 million deaths, and at least more than 30 countries had more than 1,000 confirmed cases in a single day. At present, the epidemic situation in Europe and the United States is still not optimistic, the epidemic situation in the United States is still at a high speed, and the number of deaths in a single day has exceeded 2000 for many days in a row. The US FDA has urgently approved the Pfizer vaccine, which is expected to be injected to key groups on the 14th. In addition, the use of vaccines has been approved in the United Kingdom and Canada. However, in addition to the problems of production capacity and transportation, injectors also had special cases such as facial paralysis and severe allergy. in addition to common adverse reactions, Pfizer vaccine had two deaths after vaccination during the experimental period. Before the global epidemic has taken a turn for the better, it is impossible to accurately predict when vaccines that reduce some of the necessary testing links in order to speed up the emergence of vaccines will be able to control the global epidemic safely and effectively. the non-ferrous sector is affected by this, and there is some potential interference on both the supply side and the demand side.
[copper]
Last week, Lunbro's performance remained strong and continued to run high, hitting a seven-year high of $7973.50 a tonne on Friday, closing at $7768.50 a tonne, up 0.14% from the previous week's close.
On the supply side, mine-side interference has declined, and Chile's national copper industry has reached a wage agreement with the Radomiro Tomic copper mine. Spot TC remains below $50 / ton, indicating that supply is still tight. According to data from the General Administration of Customs, due to the closure of the import window, China's imports of unwrought copper and copper products continued to decline in November. Although they have declined for two consecutive months and reached a six-month low, the year-on-year growth is still quite optimistic, with an increase of 16.2%. In the first 11 months of this year, imports of all forms of unwrought copper and copper products totaled more than 6 million tons, a record high.
On the demand side, the domestic downstream market is gradually improving. According to SMM research data, the copper production rate rose 2.13% month-on-month in November, and the copper tube operation rate rose 4.28% month-on-month. Due to repeated outbreaks overseas, long-term home has led to a substantial increase in the demand for home appliances, in the case of overseas factories delayed to return to work, some orders returned to China. Recently, the growth rate of overseas orders has been higher than that of the domestic market, which has become an important driving force for the growth of the industry. At the same time, data from the China Automobile Association show that car sales reached a new high in November, especially the sales of new energy vehicles continued to grow at a high speed. in addition, the operating rate of cable enterprises remained high and the terminal demand performed well. According to the (WBMS) data of the World Bureau of Metals Statistics, the global copper market has a supply shortage of 887000 tons from January to September this year, which is even more tight than the 383000 tons shortage for the whole of last year.
In terms of exchange data, with the improvement in the margin of supply and demand, LME fell by 1500 tons, SHFE by 15700 tons, COMEX by 1000 tons, and bonded area inventories fell by 8500 tons. Combined, inventories in the four places around the world fell 26700 tons compared with last week, supporting copper prices. In addition, COMEX speculative net bulls continued to rise to 90434 hands, an all-time high, the market is bullish sentiment is strong, still need to beware of bulls crowded after the market correction. In terms of the forward curve, the three-month spot rally has widened compared with last week, closing at $19.50 / ton on Friday, and the price spread may widen further.
Generally speaking, the overall operation logic of the copper city has not changed significantly compared with the previous period. In the short term, copper prices are boosted by macro sentiment and the marginal improvement in fundamental supply and demand, the upward trend may continue, and will remain strong in the short term. However, copper prices rose and fell last week, with strong resistance at the integer level above, and copper prices may adjust sideways before the epidemic has reached a turning point and the details of US fiscal stimulus policies are not clear. In the current volatile market environment, we also need to pay attention to the potential political risks, it is recommended to wait and see.
03 energy market
Last week, crude oil market sentiment remained highly optimistic, crude oil rose for the sixth consecutive week, Brent crude once broke through the $50 / barrel mark. Oil prices rose against a backdrop of optimistic expectations of a recovery in demand next year and a recovery in Europe, with Brent and WTI crude rising 1.46 per cent and 0.67 per cent to $49.97 and $46.57, respectively.
Rapid progress in vaccines has further boosted demand to return to expectations. Progress on vaccines remained rapid last week, with Britain beginning vaccination at the beginning of the week, the United States with a strong vote on emergency use of the Pfizer vaccine, and Canada approving the Pfizer vaccine on Wednesday. Against this background, the market's optimistic expectations for demand recovery have been further strengthened, especially the expected recovery of demand for intermediate fractions (diesel, aviation kerosene), which has been hit hard by the epidemic, has improved significantly. In the past two weeks, the price difference between diesel cracking and diesel and coal has rebounded sharply in 2021, compared with little change in gasoline.
Fuel demand rebounded in Europe and remained strong in Asia. Traffic data across Europe rebounded sharply last week after city closures were relaxed, with London's congestion index hitting its highest level since the outbreak, while US traffic data were stable and did not decline significantly as a result of tighter controls. On the Asian side, domestic demand has rebounded sharply recently after domestic refiners obtained import quotas for next year and market confidence has been consolidated, while Indian demand has also strengthened rapidly in recent months, further boosting market confidence.
The performance of inventory data is poor, but the market attention is significantly reduced. Last week, API and EIA data performed poorly. In the recent continuous low supply of oil products in the United States, crude oil, gasoline and intermediate distillate stocks all rose more than expected, indicating that the recovery rate of demand in the United States is weaker than that in other parts of the world, which has also led to the widening of the price gap between Brent and WTI recently. However, as the current market main line is based on expectations of future demand recovery, inventory data have only a very short-lived impact on oil prices.
Long-term refining profits have improved significantly, but the near-end performance is still low. Recently, the crude oil has returned to the full-line Backwardation structure, but most of the refined oil varieties are still in the Contango structure. Superimposed on the rapid rebound of the split price difference of intermediate distillation in 2021, there was a considerable increase in refining profits in 2021. However, due to the rapid rise of crude oil front-end contracts, near-end refining profits still maintain a downward trend in the near future, the performance is very low.
Oil prices are expected to remain volatile. Driven by optimism, Brent broke through the $50-a-barrel mark last week. Although oil prices are expected to maintain a long-term strong trend, the current fundamental oil prices may still be difficult to stand on the line of $50, and oil prices may fluctuate strongly around $50 / barrel in the short term. OPEC and IEA will release supply and demand outlook updates this week, and OPEC will hold a joint ministerial monitoring meeting on Thursday, but it is not expected to have much impact on the market.
