Source: Industrial Securities Futures Author: Industrial Securities Futures
Research report text
Market Outlook and Strategic Suggestions
XingzhengShanghai Copper：Copper in Shanghai was weak and volatile on Friday night.
At the macro level, the Fed’s interest rate hike slowed down to 50 basis points, but it raised the peak interest rate guidance more than expected, and Powell hinted that it will not cut interest rates before 2024.
Domestically, China’s November economic data came in weaker than expected.
Fundamentally, the growth rate of production in Chile and Peru increased significantly in October, especially when Chile turned to positive growth. The sharp increase in China’s copper concentrate imports in November further confirmed the loose supply of copper mines.
On the demand side, the consumption in the copper market has gradually entered the off-season, and the arrival of the cold winter has also affected the start of work. Moreover, due to the early Spring Festival this year, most of the traditional power grids have been delivered in November, and new orders are relatively sluggish.
In terms of inventory, as of December 16, copper inventories in mainstream areas of SMM nationwide decreased by 13,700 tons to 94,300 tons from Monday, which was a decrease of 10,500 tons from last Friday.
On the whole, the short-term macro data is eventful and bearish, the fundamental supply is expected to gradually increase, the demand is gradually entering the off-season, and the spot support may continue to weaken. Short-term copper prices will be weak and fluctuate.
XingzhengShanghai Aluminum：On Friday night, Shanghai aluminum fluctuated weakly.
China’s November economic data came in weaker than expected. Fundamentally, according to SMM data, Guizhou’s power consumption has risen due to a sudden drop in temperature. Guizhou’s power grid requires electrolytic aluminum plants to reduce loads from December 13, which may affect production capacity by 400,000 tons; the import window remains closed, and there is no electrolytic aluminum inflow .
On the demand side, under the influence of multiple factors such as rising aluminum prices, the coming of the off-season, and declining exports, new orders from domestic and overseas downstream of aluminum have decreased, and the operating rate has weakened.
In terms of inventory, on December 15, 2022, SMM counted 482,000 tons of domestic electrolytic aluminum social inventory, a decrease of 18,000 tons from the inventory of last Thursday, a decrease of 34,000 tons from the inventory at the end of November, and a decrease of 429,000 tons from the same period last year. Aluminum ingot inventories hit a new low.
On the whole, with the continuous release of domestic stimulus policies recently, the aluminum market presents a state of weak fundamentals and strong macro expectations. It is expected that the short-term will maintain a relatively strong shock pattern.
Industrial Securities Shanghai Zinc:Shanghai zinc fluctuated weakly on Friday night.
Recently, the cancellation of LME warehouse receipts has increased significantly, and the long positions are relatively concentrated. With the recovery of spot premiums, the risk of squeeze has increased, which has formed a strong pull on Lunzinc.
Fundamentally, domestic raw materials are abundant and profits are high, creating better conditions for refineries to increase production in December and January next year, and the increase in supply is expected to continue. On the demand side, downstream consumption is currently in the off-season, and some companies may reduce production and take early holidays due to poor orders and the early Chinese New Year this year.
In terms of inventory, as of December 16, the total inventory of zinc ingots in the seven regions of SMM was 57,000 tons, an increase of 1,500 tons from December 12, and an increase of 3,300 tons from December 9.
On the whole, the expected increase in short-term supply has not yet been effectively realized as inventory, and the spot situation continues to be tight. However, in the medium and long term, the supply and demand of zinc ingots will gradually loosen.Zinc priceThe grid center tends to move down.
Macro information
1. Williams, chairman of the New York Fed, said that the federal funds rate does not need to exceed 6%; the rate hike may exceed FOMC’s terminal interest rate expectations. San Francisco Fed President Daly said that maintaining the peak interest rate for 11 months is a “reasonable starting point”; if necessary, it will be maintained for more than 11 months. Cleveland Fed President Loretta Mester said he hadn’t seen inflationary progress in service sector prices and needed to keep policy rates above 5% next year.
2. The initial value of the Markit manufacturing PMI in the United States in December recorded 46.2, a 31-month low. The initial value of the Markit services PMI in the United States in December recorded 44.4, a 4-month low. The initial value of Markit composite PMI in the United States recorded 44.6 in December, a 4-month low.
3. The US Bureau of Labor Statistics said it found no evidence that its systems were compromised, nor did it find any suspicious activity regarding the release of last week’s US CPI data.
4. Japanese Prime Minister Fumio Kishida plans to revise a 10-year-old agreement with the Bank of Japan and will consider adding flexibility to the 2% price target in the agreement, sources said, according to Kyodo News Agency on Saturday.
5. The monthly CPI rate in the euro zone recorded -0.1% in November, ending the growth trend since August 2021. According to the data released by IHS Markit, the initial value of manufacturing PMI in the euro zone in December was 47.8, which was below the line of expansion and contraction for six consecutive months.
6. Han Wenxiu: It is estimated that my country’s economic aggregate will exceed 120 trillion yuan this year, and the employment situation is generally stable.
7. The Central Economic Work Conference was held in Beijing. The meeting proposed that efforts should be made to stabilize growth, employment, and prices, and keep the economy operating within a reasonable range; adhere to the positioning of “houses are for living in, not for speculation”, ensure the stable development of the real estate market, and effectively prevent and resolve high-quality head housing. Enterprise risk; support platform enterprises in leading development and creating employment.
Industry news
1. Last week, the Panamanian government announced the closure of the Panamanian copper mine operated by Canada’s First Quantum Corporation. But for now, the situation may not be as certain as first thought. First Quantum Mining Ltd. is continuing to mine the sprawling Panamanian copper mine despite a government order to shut commercial operations at the mine after talks over a new tax arrangement collapsed, people familiar with the matter said.
2. On December 14, Zhongjin Lingnan (000060) (000060.SZ) stated in an agency survey that the company has formed an annual production capacity of 300,000 tons of lead and zinc mining metal. Through a series of mergers and acquisitions and resource integration, the company directly controls nearly 10 million tons of proven non-ferrous metal resources such as lead, zinc and copper. After the implementation of the 2 million tons annual output mining and dressing project of the Dominican Mining Company’s Maimon Mine, it is expected that the average annual production of concentrates containing zinc, copper, silver, gold and other metals will total about 60,000 tons, which is expected to reach 100,000 tons in December 2024. Estimated availability.
3. According to foreign news on December 16, Commerzbank said that the global economy and commodity prices are not expected to improve significantly until the middle of next year. Copper prices are expected to recover relatively modestly to $9,000 per ton in 2023. Aluminum prices are expected to have substantial upward potential in 2023, reaching US$2,800 per ton.
4. Last Friday, Rio Tinto completed the acquisition of Canadian miner Turquoise Hill Resources (Turquoise Hill Resources) for US$3.3 billion and became the major shareholder of the Oyu Tolgoi copper-gold mine in Mongolia. The deal gave Rio Tinto control of the world‘s largest known copper-gold mine and a direct 66 percent interest. The remaining 34 percent of the O yu Tolgoi copper-gold mine is owned by the Mongolian government.
Copper Market Data Update
1.1 Changes in domestic and foreign markets
1.2 Market trend
1.3 Global Copper Stocks
Aluminum Market Data Update
2.1 Changes in domestic and foreign markets
2.2 Market trend
2.3 Global Aluminum Inventory
Zinc City Data Update
3.1 Changes in domestic and foreign markets
3.2 Spot market trends
3.3 Global Zinc Stocks
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