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Analyst: Expectations vs. reality

September 12, 2023
At the beginning of September, the macro optimistic mood did not continue in the non-ferrous metal plate, and the non-ferrous varieties generally showed a correction. Recently, the performance of non-ferrous metal varieties is differentiated, Shanghai aluminum, Shanghai zinc high oscillation, Shanghai copper, Shanghai tin pressure fall.
According to Zhan Dapeng, director of Nonferrous research at Everbright Futures Research Institute, from the macro environment, there are repeated expectations of US inflation, the probability of the Federal Reserve raising interest rates again in November has rebounded, and the US dollar index has been strong again; From the fundamental point of view, the "gold nine silver ten" gradually unfolded, and the domestic demand for non-ferrous metals is slow, the two aspects jointly create the weakness of the non-ferrous metal plate in the near future.
"In September, a main line affecting the pricing of non-ferrous metal plate is the game between the expected peak season and the expected delivery, and from the downstream recovery of various varieties into September, the characteristics of the peak season are not obvious, and some varieties even appear to have a accumulation and premium decline, so there is room for correction for the expected price of the peak season at the end of August." By domestic low inventory, deep Back structure support aluminum prices, zinc prices show a high oscillation trend; Affected by the strong dollar index, LME concentrated positions, domestic imports, copper prices fell." Mei 'er Ya futures senior analyst Zhang Jeff said.
In the view of Liu Peiyang, head of the metal group of the Central Plain Futures Research Institute, with the successive announcement of domestic economic data in August, the macro market focus has switched from policy side expectations to demand side reality, PMI, foreign trade and other data have improved month-on-month, but still face certain pressure. In addition, he believes that Shanghai copper, Shanghai aluminum and other varieties have risen to the highest point at the beginning of the year, which has a certain technical pressure.
Specific to the copper market, since mid-July, stocks in both Shanghai and London have rebounded, of which LME inventories have continuously risen 77,000 tons to 134,000 tons, and inventories in the previous period have climbed to 50,000-70,000 tons. For the increase in copper inventories, Liu Peiyang believes that on the one hand, the supply side remains loose. Domestic electrolytic copper production in August was 988,000 tons, an increase of 6.8% month-on-month and 15.5% year-on-year. In addition, according to the news of the Financial Union, it is expected that by the end of September, more than 200,000 tons of copper stocks in Congo can be shipped. On the other hand, the increase in LME inventories was concentrated in Europe and North America, where inventories rose 58.6% and 130%, respectively, in the past month, reflecting poor overseas demand. In his view, if the demand side is light, the continued recovery of inventories will weigh on copper prices.
In the view of Zhan Dapeng, LME copper accumulation, on the one hand, evidence of weak overseas demand, on the other hand, also shows that the domestic demand for refined copper imports is reduced. Its impact on the absolute price is not significant, but it can suppress the front-month swap fee, thus affecting the interperiod structure and reducing the probability of warehouse receipt problems.
"Overall, the global dominant inventory of copper shows a slow recovery trend, and the incremental inventory is concentrated in the sea warehouse." The pace of overseas inventory accumulation in recent months is driven by the accumulation of Asian warehouses and the accumulation of European and American warehouses. The domestic import window is basically closed in Jul-August, consumption is in the off-season, the demand for imported copper has plummeted, the LME spot price has been sharply discounted, Asian inventories have climbed, and recently, the signs of European and American warehouses are clear, especially in New Orleans and Rotterdam, and some hidden inventories have gradually become apparent." Jeff Zhang said.
For the future market, Zhang Jeff believes that the change in domestic copper inventories is more critical. At present, copper smelting returns to the high growth range, domestic copper and imported copper are expected to increase, and more than 200,000 tons of wet French copper stranded in Africa will gradually flow into the country, in the case of a large influx of imported goods, spot rising discount and inventory changes will have a significant impact on copper prices.
"In the domestic market, the downstream into the 'gold nine silver ten' traditional peak season, non-ferrous metal industry demand and the entire macro economy are steadily improving, which forms a certain support for non-ferrous metal prices." In the overseas market, the Federal Reserve has not given further guidance on future policy, and every economic data release will cause short-term fluctuations in the market, but as long as the US economy has not had a substantial recession, non-ferrous metal prices are easy to rise and difficult to fall." Liu Peiyang thinks.
In Jeff Zhang's view, there is no clear main line in the future macro logic, overseas is short, domestic neutral is more, the logic is contrary, from the direction of non-ferrous metal prices will still oscillate, the specific rhythm and strength of the relationship need to pay attention to the "gold nine silver ten" season expected industrial changes.
"From a macro point of view, the main line of metal trading is not clear, the game atmosphere is strong, and the logic at home and abroad is differentiated." Overseas, the strong operation of the US dollar index once again reversed market expectations, economic data is weak in Europe and the US, inflation is expected to rebound, monetary policy is difficult to turn, the Federal Reserve attitude is slightly inclined to eagle, interest rate hike expectations are rising, the US dollar follow-up performance is supported by oscillatory operation, metal price ceiling pressure remains, but the weakening of the renminbi will hedge the decline of the outside world, making domestic prices maintain range operation. On the domestic front, the market is more optimistic about the follow-up economic expectations and policy expectations. From the perspective of industry, the supply of non-ferrous metals in the year is safe, and some varieties even have the possibility of a substantial increase in supply. The main line of trading at the industrial end is the game between the expectation and reality of the demand peak season, the expected support for the price and the expected spread trading through the following two months. At present, downstream consumption does not have obvious peak season characteristics, and the demand drive temporarily stays at the expected level, but the non-ferrous metal futures price spread represented by copper, aluminum and zinc has expanded, providing obvious support for futures prices." Jeff Zhang explained.
Zhan Dapeng believes that the non-ferrous metal plate is once again facing "uncertainty of supply and uncertainty of demand." He said that the certainty of supply means that in the case of no accidents on the supply side, investors can deduce production according to the current pace of capacity maintenance and production resumption, and the output of most colored varieties has increased year-on-year. Taking copper as an example, electrolytic copper production in August was 989 thousand tons, up 15.5% year on year; The estimated production of electrolytic copper in September was 986,100 tons, up 8.48% year-on-year. At the same time, there is some uncertainty about the growth rate of demand. "Gold nine silver ten" gradually unfolded, from the feedback of downstream enterprises, the increase in demand is not obvious, which restricts the willingness of enterprises to purchase at high prices.
"Based on this, we believe that in September, the non-ferrous metal market needs to be cautious, there are repeated demand expectations, prices will also be repeated, you can use September as a month of observation, patiently waiting for the trend to appear." In addition, investors can pay attention to changes in the dollar index. At present, the rapid rise of the US dollar index beyond expectations has weighed on the price of non-ferrous metals, and once the US dollar index rises and falls, it is conducive to the price performance of non-ferrous metals, which is also a factor affecting the price repetition." Exhibition Dapeng said.
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