The "low inventory" of the LME metal market is becoming more and more intense. Against this background, the futures market sent a rare signal of tight supply-the spot rally of the six major industrial metals in LME at the same time.
This phenomenon occurred twice in history, but then peaked and fell back. Analysts said that the current round of rising water pattern is also difficult to last for a long time, and it is expected that the market of various varieties will be divided.
Spectacle reproduction
The six major industrial metals of LME appear spot rising water at the same time. "looking back on the last time this phenomenon occurred, it was 14 years ago." Sun Weidong, a senior analyst at the East Securities Derivatives Research Institute, told the Taurus reporter of the China Securities News.
The tight spot supply is the main reason. It is understood that the current LME copper inventory is at an all-time low, less than 100000 tons, aluminum fell below 1 million tons, zinc fell to 177000 tons, nickel fell below 123400 tons.
"when inventory is low and is still in the process of getting rid of inventory, panic on the spot side can easily lead to high water levels." Wang Yingying, a senior analyst at Galaxy Futures Nonferrous, told the China Securities News that Taurus was in the stock market.
"since last year, the supply side of all varieties has been disturbed to varying degrees, and the mine end has mainly been continuously disturbed by the epidemic. The supply of copper and zinc mines in South America and tin mines in Myanmar is not as expected. In addition, this year's dual control of domestic energy consumption and high electricity prices in Europe have also reduced the capacity utilization of electrolytic aluminum and zinc smelters. On the other hand, China and major overseas economies have successively started a post-epidemic cycle of economic recovery, leading to stronger demand for all kinds of industrial metals. " Sun Weidong explained.
"inflation expectations have also led to a strong speculative atmosphere in non-ferrous metals, with some funds hoarding and forcing positions leading to higher spot prices." Wang Yingying spoke bluntly. She analyzed that affected by the epidemic and other factors, there has been a squeeze in global port logistics this year, and transport bottlenecks have aggravated the shortage in the lower reaches.
It is understood that there have been two occasions in history in which the six major industrial metals rose at the same time, namely, mid-October 2006 and mid-March 2007. Two spot rises in industrial metals appeared in a demand-driven bull market, which ended with the release of capacity and the outbreak of the subprime crisis.
Or difficult to sustain.
"compared with the previous two metal price rises across the board, the similarity is that industrial metal prices are high, reflecting a premium that reflects tight fundamentals." Zhang Jeff, an analyst at Meierya Futures, said.
"the phenomenon of six major metals rising together is difficult to sustain. at present, the stagflation pressure of the global economy is high, effective demand is seriously insufficient, the act of releasing water to stimulate the economy after the epidemic is not sustainable, and the shortage of goods caused by supply-side disturbances is not sustainable." Wang Yingying said.
Zhang Jeff believes that at present, the pattern of low inventory, high rising water and high demand of major industrial metals remains unchanged, but the specific varieties are differentiated, the demand for copper, tin and nickel is still good, and indicators such as inventory and rising water will continue to provide support for prices. After the disturbance factors of aluminum and zinc supply add to the flames, the demand remains to be seen, especially the domestic metal demand, because the domestic electrolytic aluminum accumulation pool exerts great pressure on the price, it is unlikely that the two metals will continue to rise.
"in the short term, some metals in LME, such as copper, which is extremely low in stocks in Europe, and zinc, which is still potentially disturbed at the smelting end, are likely to strengthen further." Sun Weidong said, but in the medium term, there is a strong certainty of supply-side recovery, while the fastest recovery of demand at home and abroad has passed, and the collective upsurge of spot industrial metals may not be sustainable.
Focus on new opportunities
Looking to the future, analysts pointed out that the situation of rising water across the metal line is not sustainable, and the future market may be divided, and investors are advised to look at the price rise driven by supply disturbances rationally. pay more attention to the stable premium brought about by the demand level and the gradual change in the pricing mechanism at the macro level.
"the follow-up basic price support will also gradually weaken, at the same time, after the Fed turns, the macro level is not as bullish on the base metals as before. Therefore, the future suggests that we should pay more attention to the opportunity of short selling when it is high, and focus on copper with higher macro pricing weight and tin with more certainty released by supply. " Sun Weidong said.
Wang Yingying said, "at the commodity level, we feel that the current absolute price is expected to peak and fall, and now is the best time for the spot market and the best time for empty orders on the left. There is room for large varieties such as copper, aluminum, zinc and so on. Mapped to the stock market, long-term optimistic about energy storage and new energy sectors. "
