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Monetary easing is expected to boost the policy of resuming work and production or accelerate the boost of metal demand [institutional review]
Apr 18, 2022 13:48CST

Industrial metals: internationally, according to the U.S. Department of Labor, U. S. PPI reached its highest level since 2010 in March, and high inflation persisted. The Federal Reserve will further implement its plan to raise interest rates, putting pressure on industrial metals. China will actively deploy policies and measures to promote consumption, timely use monetary policy tools such as reserve reduction, reduce comprehensive financing costs, promote the recovery of consumption, and emphasize encouraging support for consumption of related commodities in industrial metals industries such as automobiles and home appliances, which may increase demand for industrial metals, boost industrial metal consumption, promote enterprises to resume production and development, and break the weak pattern of supply and demand. Suggested attention: Zijin Mining, Shenhuo shares, Nanshan Aluminum, Western Mining, Tin shares and so on.

Copper: interest rate hike is expected to remain, prices fluctuate at high levels

Global copper prices continued to fluctuate this week, with LME copper closing at 10332 US dollars per ton, down about 0.12 per cent during the week, while Shanghai copper closed at 74180 yuan per ton, up about 0.57 per cent during the week. LME copper inventory recorded 110700 tons, an increase of about 6.65% during the week, low inventory is still the focus of copper price support. The copper market basically maintains both supply and demand, and the supply of refined copper is tight due to the epidemic and the maintenance of smelters. On the demand side, downstream enterprises due to high copper prices and poor procurement of raw materials, mostly fixed production by sales, the overall consumption is weak. However, with the implementation of China's consumption decision-making and the implementation of the reserve reduction policy, the confidence in consumption in the peak season after the epidemic is still strong, and the copper price may be on the strong side.

Aluminum: supported by macro-control policies, domestic consumer confidence is still there.

Global aluminum prices have fallen this week, generally maintaining high shocks. LME Aluminum closed at $3299 a tonne, down about 2.16 per cent during the week, while Shanghai Aluminum closed at 21440 yuan a tonne, down 1.76 per cent. Fundamentally, with the increase in the operating capacity of electrolytic aluminum in the first quarter, the output of electrolytic aluminum in April is expected to be optimistic, but the epidemic interferes with transportation, the transportation cost of electrolytic aluminum enterprises increases greatly, and the spot circulation is limited. On the demand side, the lower reaches of Shandong and Wuxi resumed during the week, coupled with the strength of the country's stable growth policy, market consumer confidence is still there, and it is expected that the spot market will improve in the future.

Tin: epidemic situation suppresses consumption, tin price drops slightly

LME tin closed at US $43400 per ton, down about 0.30% during the week, while SHFE tin closed at 333560 yuan per ton, down about 2.12% during the week. In terms of inventory, the social inventory of tin ingots in the mainstream areas of SMM in China this week was 3710 tons, up 523 tons or 16.41% over the previous week. On the supply side, according to SMM research, the current domestic mainstream smelter production is normal, Yunnan and Jiangxi provinces refining tin operating rate remained stable, ring compared with last week slightly increased. On the demand side, the downstream solder enterprises as a whole maintain a stable production state, but the low logistics efficiency caused by the epidemic and the rise in freight costs are the main factors affecting production, and the overall high tin price also suppresses the downstream demand to a certain extent, driving tin prices down slightly. However, in the long run, new projects in tin mines are rare, while terminal consumption such as photovoltaic is strong, the overall tin market will continue to be in a state of shortage, and tin prices are expected to remain high.

Zinc: it is difficult to ease the energy crisis in Europe, and zinc prices continue to rise

LME zinc closed at US $4429.5 / ton, up about 3.06% during the week, while SHFE zinc closed at 28295 yuan / ton, up about 4.31% during the week. The problem of energy shortage in Europe remains severe this week and is difficult to alleviate in the short term. The increase in the cost of refining zinc caused by rising electricity prices has forced some smelters to cut production and stop production, and overseas zinc supply continues to be tight. LME zinc stocks closed at 115600 tons this week, down 8.02 per cent from 10075 tons last week. Continuous rapid destocking deepens market concerns and pushes up the price of lun zinc. On the domestic side, the supply side is affected by the epidemic, the transportation of raw materials is blocked, the production will of the smelter is insufficient, and more production is stopped for overhaul. And the Hulun ratio hit an all-time low of 6.17 this week, causing domestic refineries to refuse to mine imports and aggravating the shortage at the mine end. The demand side is still in a weak state due to the poor transportation caused by the epidemic and the weak performance of the downstream industries such as real estate and automobiles. However, weak prices and insufficient overseas supply have brought export opportunities, the current price transmission channels are unobstructed, the new internal and external price ratio is expected to be repaired, and zinc prices are expected to continue to rise.

Energy metals: affected by the epidemic, the demand for energy metals is expected to be weak this week, and prices show a slight downward trend. However, the terminal new energy vehicle industry continues to be in the stage of rapid development, and the production and marketing situation of automobile enterprises continues to improve. According to the China Automobile Association, China's domestic production and sales of new energy vehicles reached 465000 and 484000 respectively in March 2022, a year-on-year increase of 1.1 times.

Overall, the year-on-year data still maintain a strong growth trend, month-on-month data also showed a seasonal recovery. This continued positive trend has also helped to lead to a pick-up in demand for energy metals. It is expected that in the future, with the improvement of the epidemic and the gradual return to stability of the market, energy metal prices will remain high. Suggested attention: Ganfeng Lithium Industry, Tianqi Lithium Industry, Yongxing Materials, Salt Lake shares, Tibet Mining, China Mineral Resources, Yahua Group, Tianhua Super Clean, Shengxin Lithium Energy, Huayou Cobalt Industry, Shengtun Mining, Luoyang Molybdenum Industry, Hanrui Cobalt Industry, etc.

Lithium: lithium prices have fallen slightly this week, and profits have accelerated to the mining side.

The price of battery-grade lithium carbonate this week was 494000 yuan / ton, down 7500 yuan / ton from last week, down 1.5% from the previous week, while the price of lithium hydroxide was still 491000 yuan / ton, down 0.1% from last week. This week, the price of spodumene was 3225 yuan / ton, up 4.9% from last week, and the profits of the lithium industry chain accelerated to the mining side. On the demand side, the demand for the four major cathode materials fell this month due to reduced orders. The head battery factory is under the control of the epidemic, and there are great downside risks in the production plan. The April orders of high nickel manufacturers have been affected, and the May orders of some manufacturers have been clearly reduced, and the demand for lithium hydroxide has also declined. With the increase in supply and demand, driven by superimposed market sentiment, the price in the future may decline slightly in the short term. However, with the resumption of production downstream, the fundamentals become stronger, lithium prices may remain high.

Cobalt: demand forecast is pessimistic, cobalt price falls slightly

The price of SMM electrolytic cobalt is 549-573 thousand yuan per ton this week, which is slightly lower than last week. The prices of SMM cobalt intermediate products are between $33.8 and $34.20 per pound, with an average price of 30,000 yuan per ton higher than last week. Raw materials are affected by the closure of the port of Durban in South Africa to remain strong, demand-side outbreaks affect downstream procurement demand is weak, market inquiries are sporadic, cobalt smelter profits accelerate decline. It is expected that cobalt prices will remain high when demand picks up and costs support.

Nickel: weak supply and demand, high nickel price shock

This week, LME nickel closed at 33145 US dollars / ton, SHFE nickel closed at 223880 yuan / ton, LME nickel fell 2.49% year on year, and SHFE nickel increased 2.62% year-on-year. On the inventory side, LME inventories stood at about 72600 tonnes this week, down about 1.5 per cent from last week. On the whole, the market is still in the recovery stage after forcing the short market, showing a weak situation of both supply and demand. The price of nickel remains high under low inventory, waiting for the second half of the year to accelerate the release of nickel intermediates to break the deadlock.

Precious Metals: us March CPI and PPI exceed expectations, High inflation supports Gold Price rise

COMEX gold closed at $1977.1 an ounce this week, up 1.37 per cent from last week.

COMEX silver futures closed at $25.86 an ounce, up 3.81 per cent from last week. Us CPI grew at an annual rate of 8.5 per cent in March, a 40-year high and higher than expected of 8.4 per cent, while PPI rose 11.2 per cent year-on-year, higher than expected 10.6 per cent, 1.4 per cent month-on-month and 1.1 per cent higher than expected, according to the Labor Department. The stronger-than-expected inflation data supported the continued rise in precious metals prices. As of April 9, the number of initial jobless claims in the week was 186000, higher than the expected figure of 171000, but still low, supporting Fed tightening expectations. But in the short term, due to the deadlock in the Russian-Ukrainian negotiations and high inflation, gold prices are expected to remain high and volatile.

Rare earths: the price of rare earths is adjusted in the short term and basically good in the long run.

This week, the price of rare earths held steady after falling. According to SMM research data, as of April 15, praseodymium neodymium oxide continued its downward trend last week, with the market mainstream transaction price falling to 83.5-850000 yuan per ton, and the mainstream trading price of praseodymium-neodymium metal falling to 103.5-1.055 million yuan per ton. In the middle of the week, the mainstream transaction price of praseodymium-neodymium oxide market is weak and stable at 80-815000 yuan / ton, a small amount of market transaction is at 790000 yuan / ton, and the mainstream quotation of praseodymium-neodymium metal market is weak and stable at 10-1.03 million yuan / ton. Affected by the epidemic, logistics and transportation are blocked and imports of Burmese mines, the production of upstream enterprises has been affected to a certain extent, and the supply of medium and heavy rare earths is still tight. On the demand side, the current market price is unstable, the purchasing enthusiasm of inquiry order is not high, the wait-and-see mood of magnetic materials enterprises is strong, the performance of demand side is weak, and a small amount of rigid demand takes goods. On the whole, the supply side is tight, demand is gradually improving, market transactions are gradually rising, and prices will be supported after the market is stable. And the rapid and stable development of downstream wind power, new energy vehicles and other industries is good news for the rare earth market. On the whole, the fundamentals of rare earths are still improving for a long time. Suggested attention: northern rare earths, Jinli permanent magnets, etc.

Risk Tips:

Metal prices fluctuated sharply, demand for new energy fell sharply, and macroeconomic performance was lower than expected.

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