November 24, the National Bureau of Statistics announced that in mid-November, the circulation of important production materials market price changes in mid-November compared with the first half of November, 24 kinds of product prices rose, 24 kinds of decline, 2 kinds of flat. Among them, non-ferrous metals have different degrees of increase, electrolytic copper rose 2.8%, aluminum ingots rose 3.4%, lead ingots rose 2.8%, zinc ingots rose 1.8%.
For this round of rebound in non-ferrous metal prices, the reporter combed through the views of all parties found the following four influential factors.
First, the macroeconomic fundamentals are stable and improving.
At the end of October, China’s third quarter GDP and other economic data were released. In the third quarter, China’s GDP growth rate reached 3.9%, up 3.5 percentage points from 0.5% in the second quarter. The endogenous momentum drove the economy to the upside, which in turn drove base metal prices up.
China Nonferrous Metals Industry Association, executive member of the party committee, vice president Chen Xuesen said at a press conference on the economic operation of the nonferrous metals industry at the end of October, the first three quarters of this year, the Party Central Committee and the State Council introduced a series of timely and targeted policy initiatives to help the real economy out of trouble, industrial resilience and confidence in development have been further enhanced. The previous domestic production capacity suppressed for a variety of reasons gradually released, domestic copper, aluminum, lead and zinc smelting production overall stable, the start rate is better, effectively pulling the growth of related products.
Secondly, since November, the dollar index fell back, non-ferrous metal prices rebounded.
The Fed’s November rate meeting on November 3, November 4, the U.S. release of October non-farm payrolls data have revealed a slower pace of interest rate hikes in the future, the U.S. release of October CPI data on November 10, to further strengthen the market expectations of the Fed’s slowing pace of interest rate hikes. All of the above are important time points for the current round of copper prices and other non-ferrous metals rise.
Chuan Cai Securities chief economist, director of the Institute Chen Li said in an interview with the “Securities Daily” reporter, along with the market rate hike is expected to fall, the U.S. inflationary pressure began to ease, will support copper prices and other upside.
Third, the tight spot pattern, there is support for prices.
Since 2022, the new production of copper mines is lower than expected, domestic refined copper stocks are at historically low levels, and it is also difficult to see significant accumulation in a short period of time.
The trend of global copper inventories going down is also more obvious, from the data since 2018, except for 2020 inventory did not decline, the rest of the years copper inventories have fallen back, 2018, 2019, 2021 inventories fell by 260,000 tons, 180,000 tons, 310,000 tons ringgit respectively. At this stage, global copper explicit inventories have fallen by about 180,000 tons ~ 246,000 tons from the end of 2021.
Fourth, in terms of demand, non-ferrous metals are widely used in high boom industries such as power equipment, new infrastructure and new energy vehicles.
New infrastructure relies on copper, aluminum and other non-ferrous metals to a high degree, such as intercity high-speed railroads and urban rail transit need to lay copper cable contact wire, ultra-high voltage needs a large number of aluminum cables, transformers and galvanized power fixtures, 5G base station construction needs copper foil, new energy vehicles and charging pile supplies for copper demand, as well as large data centers and other projects need a considerable number of electronic components.
For example, the China Association of Automobile Manufacturers released data showing that in October this year, China’s new energy vehicles continued to maintain high growth, and the market share has reached 28.5%. In addition, the National Development and Reform Commission released on November 16, “the State Council report on the development of the digital economy” clearly, firmly grasp the initiative in the development of digital technology, grasp the new round of technological revolution and industrial change development opportunities, vigorously develop the digital economy. These industries continue to be high boom or pull the current round of non-ferrous metals up one of the factors.
What will be the trend of non-ferrous metal prices in the future?
Chen Xuesen said, with the implementation of the national stable economic policy package and the formation of more physical workload, the national economy will continue to resume the growth trend, will continue to drive the non-ferrous metal demand rebound, supporting the industry’s steady and good development.
Chen Li believes that copper demand has relatively strong resilience, driven by power investment. Copper prices are expected to have upside momentum in the short term against the background of low inventory, but need to consider overseas recession expectations and demand-side recovery.
South China Institute of non-ferrous metals director Xia Yingying told the “Securities Daily” reporter, looking ahead to the market, in December before the Federal Reserve interest rate resolution, copper prices or to follow the main performance of the oscillating market, the dollar index in 105 near or have some support. Fundamental power supply and grid investment by December or seasonal peak season, which will help boost copper demand, but the resistance level of 68,000 yuan per ton still exists. Therefore, it is believed that the possibility of a big rise in the future is relatively small, still dominated by shocks.
Post time: Nov-26-2022