The weather has changed again and the US stock market is plummeting! Tesla sued the Trump administration to stop imposing tariffs on China! The logic of the trend of copper and nickel is as follows.

SMM: the three major indexes of US stocks fell sharply on Wednesday, as the cooling of US business activity and the standoff in Congress over more fiscal stimulus measures heightened concerns about the instability of the economic recovery. By the close of the day, the Dow Jones Industrial average was down 525.05, or 1.92%, at 26763.13; the NASDAQ was down 330.65, or 3.02%, at 10632.99; and the S & P 500 was down 78.65, or 2.37%, at 3236.92.

Tesla's share price plunged 10.3 per cent. On the one hand, the launch of Tesla's "Battery Day" on Tuesday was a far cry from market expectations; on the other hand, there was a large-scale connection failure in Tesla's internal system on Wednesday morning.

Tesla, a US electric car maker, filed a lawsuit against the US Trump administration at the International Trade Court in New York on Monday to prevent the latter from imposing new tariffs on Tesla's imports from China, foreign media reported on Sept. 23. Tesla hopes the court will rule that the Trump administration's actions are illegal and ask it to refund the money that Tesla has paid, including interest.

International gold and silver prices fell sharply on Wednesday, mainly due to the rise of the dollar index. As of the close of the day, the COMEX gold futures December contract closed down 2.05% at $1868.4 an ounce, or 5.78%, at $23.105 an ounce.

Recently, the overall copper price is in a state of high oscillation, the performance is relatively insipid. Analysts believe that less-than-expected fundamentals and a favorable macro environment are the main logic leading to copper price oscillations. In the view of market participants, the overall weak operation of nickel fundamentals in the near future, the main logic is the existence of excess expectations of nickel iron.

Since early September, the black market has begun a half-month downward trend. Analysts believe that there are two main reasons: on the one hand, the expected repair of excessive consumption in the previous peak season; on the other hand, the gradual improvement of the furnace charge supply end, the cost moved down.

Copper: peak season demand remains to be verified

Recently, the copper price as a whole is in a state of high oscillation, fluctuating around 50000 won 53000 yuan / ton range, the performance is relatively insipid. Jin Rui futures researcher Gao Weihong believes that the less than expected fundamentals and favorable macro environment are the main logic leading to copper price oscillation.

On the one hand, the current fundamentals of the copper market are weak, mainly due to the arrival of the traditional peak season of "Gold, Nine and Silver 10", but the expected improvement in consumption in the market has not come, the overall demand performance is weak, domestic inventories continue to accumulate, and the performance of the spot market continues to be weak. At the same time, with the continuous recovery of mine production stopped due to the epidemic in the early stage, the supply margin of copper mine continues to improve, so the fundamentals are in a pattern of marginal weakening.

On the other hand, the performance of the current macro environment is relatively good, which is mainly reflected in the relatively weak US dollar and inflation expectations. since the unprecedented quantitative easing policy adopted by major central banks around the world, market liquidity has greatly improved. demand for the dollar continues to weaken, followed by a decline in the dollar index, followed by an early second rebound in the US epidemic, which is more risky than the major economies, leading to the further weakening of the US dollar. It is good for the price of copper.

At the same time, at the global central bank meeting in August, the Federal Reserve announced changes to its policy framework, the market expected to keep interest rates at zero for longer, and the dollar bottomed out again. Inflation expectations are another factor supporting copper prices. After the global economy is recovering, abundant liquidity makes the market focus on the future level of inflation, especially the Fed's relative dove statement aggravates market expectations for inflation. Strongly propped up commodity prices.

Looking at the future performance of copper prices, Gao Weihong said that fundamentals and macro elements need to be re-examined. From a fundamental point of view, the demand side is still in a period of verification, especially after the end of the National Day holiday, whether the domestic peak season will repeat the pace of the fourth quarter of last year remains to be verified. From the perspective of various consumer sectors, we are still relatively optimistic about the leading role of completion in the field of construction and real estate, as well as the continuous improvement of consumer goods such as automobiles and household appliances. In comparison, Electroweb orders are difficult to look forward to. From the supply side, the continuous improvement of the mine end-to-month ratio will continue, while scrap copper imports will face a tight situation, which is likely to maintain a tight balance in the fourth quarter.

In addition, the macro level has recently begun to show some turbulence, especially after the serious rebound in the epidemic in Europe, which has led to the resumption of closed prevention and control measures in some countries, which has a greater impact on the US dollar and overseas demand. The market fears that Europe's economic recovery will be hampered and the euro begins to weaken, leading to a rebound in the dollar index, which needs to pay attention to Europe's decisions on preventive measures and stimulus policies. At the same time, with the US election approaching, in such a special context as this year, US political guidance for the global economy and policy guidance will be one of the factors driving macro-sentiment.

Taken together, he believes that the disturbance of the epidemic and political factors may aggravate the volatility of copper prices, so he maintains his judgment on the sustained high and wide volatility of copper prices.

Nickel: nickel-iron surplus is expected, it is difficult to improve the consumption of stainless steel downstream.

In the view of du Fei, a researcher at Jinrui Futures, the overall weak operation of nickel fundamentals in the near future, the main logic is the existence of excess expectations of nickel iron.

Looking at the supply side, he said that although the domestic ferronickel production capacity declined after the mining ban in Indonesia, the production progress of Nickel-Iron production in Indonesia was relatively rapid, with a large increase in addition to covering the domestic gap. On the demand side, due to the weakening consumption of stainless steel downstream, under the continuous accumulation of inventory, the profits of the industrial chain are damaged, and the overall output shows a downward trend compared with the same period last year.

On the supply side, the annual production of primary nickel (ferronickel + refined nickel) in Indonesia and China increased by 84000 tons compared with the same period last year. Specifically, on the domestic side, the total amount of domestic nickel ore imports from January to July 2020 was 17.32 million tons, down 8.82 million tons from the same period last year, or 33.7%. According to a rough estimate, nickel exports from the Philippines and Indonesia to China fell by 240000 tons for the whole year. From the perspective of port inventory, as of mid-September, the inventory of nickel mines originating in the Philippines had been reduced by about 2 million tons, equivalent to about 30, 000 tons of metal. As the domestic ferronickel plants mainly use the nickel ore raw materials of the above two places, it is expected that the domestic ferronickel production will be reduced by about 126000 tons of nickel metal for the whole year.

In Indonesia, the new production capacity is mainly concentrated in the Castle Peak, Delong Industrial Park and Weda Bay Industrial Park in Indonesia. Indonesia's nickel and iron production is expected to increase by 190000 tons for the whole year. As a result, the cumulative annual ferronickel production of China and Indonesia will increase by 64000 metal tons. In addition, in terms of refining nickel, the domestic total output from January to August was 116000 tons, an increase of 15000 tons over the same period last year, and the annual increase of refined nickel is expected to be 20, 000 tons.

From the demand side, he believes that there are few bright spots in Chinese and Indonesian consumption. On the Chinese side, stainless steel consumption, which is the main source of consumption downstream of nickel, has been dragged down by a sharp reduction in economic growth forecasts for the whole year, which is now 150000 tons from the beginning of the year, up 35 per cent from the same period last year. Although domestic stainless steel production continues to be high from July to September, consumption has not improved, prices are weak, profits are damaged, and the overall decline in stainless steel production is difficult to change. This has led to a cooling of nickel consumption, and domestic nickel consumption is expected to decline by 3500 nickel tons for the whole year. Indonesia's contribution to consumption increment is also relatively small. The cumulative output of stainless steel from January to August was 1.57 million tons, a slight increase of 3% over the same period last year, and had little impact on the marginal consumption of nickel for the whole year.

Black: the expected quality of the peak season is insufficient, and the valuation will be repaired downwards.

Since early September, the black market has begun a half-month downward trend. To investigate the reason, Huatai Futures Black Building Materials Group believes that there are mainly two aspects: on the one hand, the expected high consumption in the previous peak season is repaired; on the other hand, the furnace charge supply side is gradually improved and the cost moves down.

From the recent release of macro data, the impact on steel consumption of the two most important sectors of real estate and infrastructure are weaker than the previous market peak season expectations. From the real estate point of view, access to land and new construction as leading indicators show a certain weakness, which leads to the market expectations of future steel consumption weakening. From the perspective of infrastructure, due to the gradual decline in the proportion of special bonds in the field of infrastructure, which is lower than the previous market estimates, it reflects a slightly tight pattern of funds.

Going back to the fundamentals of the iron and steel industry itself, Huatai Futures Black Building Materials Group said that the profits of long-process steel mills this year, coupled with the current consumption base is still in place, resulting in high blast furnace operating rate and high steel output. Coupled with the huge number of imported resources, the speed of going to the warehouse in the peak season is not ideal, the future large inventory structure may become normal, suppress the upward space of steel. At present, the adjustable variable of the industry itself lies in whether there is a substantial reduction in production and whether imports can be reduced with overseas demand.

Looking at iron ore, Huatai Futures Black Building Materials Group believes that in the case of no substantial production reduction in steel mills, iron ore demand is more stable, the current supply side is gradually improving, the previous profitable factors except high basis are gradually weakened. At present, the iron ore plate first out of the expected logic of production reduction, we need to wait for the implementation of production reduction. If the production is reduced more than expected, the iron ore spot has the possibility of repairing the base difference downwards.

Overall, Huatai Futures Black Building Materials Group believes that the late black market focuses on two aspects, namely, demand performance and production reduction implementation. If strong demand can be maintained, black can still be matched at bargain prices, otherwise we should guard against the risk of continuing to repair valuations downwards.