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Copper, aluminum resistance to the existence of toughness, nickel, zinc capacity to accelerate the liquidation
2023/7/6
Non-ferrous metals sector leader "Dr. Copper" is known as the observation of macro and real economic changes in the barometer, because its price changes and macroeconomic cycle, inflation cycle shows a high positive correlation, its economic growth in the context of low recovery, with strong price upside space and momentum, but in the context of economic growth is not optimistic. Prices will be under overall pressure, just more sensitive and resilient than other varieties. Therefore, the market believes that copper prices are more intuitive to reflect future economic growth trends.
However, I refer to the second half of the macroeconomic and non-ferrous metals industry change trend analysis at home and abroad, copper prices seem to be difficult to sustain optimism, is expected to copper as a representative of the pro-cyclical commodities in the third quarter to continue the divergent trend, copper, aluminum is expected to continue to show firm resistance in the non-ferrous metals sector, but nickel, zinc will accelerate the speed of production capacity out of cleaning cards, the overall weakness of supply and demand. As of July 5 close, the Mandarin commodity index non-ferrous metals sector fell more than 8%, copper, aluminum, zinc, lead, nickel, tin varieties of differentiated differences, futures prices rose and fell during the year were 2%, -5%, -16%, -3%, -32% and 6%.
International macro factors dominate the impact of the tail end of the interest rate hike still exists
From the perspective of international macro trends, entering the third quarter, European and American central banks still show a tendency to continue to raise interest rates to curb inflation. The reason behind this is that European and American central banks are concerned that premature easing of financial conditions will weaken the previous stage of suppressing inflation. At present, the most critical difference in global financial markets is when to cut interest rates in the future. Previously, the market generally believed that major central banks would switch from raising interest rates to lowering them in the second half of the year, but since late June, European and American central banks have officially said that they would maintain high interest rates for some time. In the context of repeated switching of overseas macro decisions and the highly uncertainty of subsequent interest rate hikes in Europe and the United States, high volatility in asset prices such as stocks, bonds and currencies, commodities, etc. seems to be the new normal.
Combined with high-frequency data can be found in the first half of this year, Europe and the United States economic structure internal differentiation is serious, Europe and the United States manufacturing industry continued to decline, while the consumer service industry and the job market is relatively firm. Based on the Fed's statement path deduction can be seen, three quarters, the Fed-led central banks in Europe and the United States may continue to raise interest rates, overseas monetary policy and liquidity will face the risk of further tightening.
Recalling the "interest rate hike" in Europe and the United States in the past year, its spillover effect has continued to trigger the return of capital from emerging economies to the United States, increased turbulence in national financial markets, and depreciation of non-US currencies. From the above macro factors on the impact of commodities, the global demand is weak to suppress non-ferrous metals as the representative of the industrial goods sector, Europe and the United States interest rate hikes to quickly tighten liquidity, the overall depression and commodity-related inflation levels. Broken down, the impact on optional and durable goods, which account for a relatively large share of non-ferrous metal consumption, is more prominent.
By tracking a number of model data, I found that in the second half of the year, Europe and the United States as the representative of the overseas real economy turned weak, and even into a mild recession signs further appear, especially on non-ferrous metals and other overseas demand accounted for a relatively high impact of the sector. On the one hand, the probability of overseas non-ferrous metal consumption growth rate decline; on the other hand, by the influence of geopolitical and other factors, the global physical supply chain represented by non-ferrous metals is facing the risk of regional fragmentation, the loss of efficiency, increased costs, the industry enterprises are trapped. At present, the main downstream of non-ferrous metals in the face of a sharp decline in optional consumption more by just demand to support, and overseas markets and domestic manufacturing consumption replenishment has not yet arrived, the non-ferrous metals industry into the end demand decline, excess capacity pressure, industry profits shrink the dilemma, which not only leads to increased pressure of excess supply of commodities, which in turn triggered a high commodity prices fall, but also by squeezing the production enterprises This will not only lead to increased pressure on the supply of commodities, which in turn will lead to high commodity prices, but also accelerate the reshuffling of the industry by squeezing the profits of producers.
Summer electricity peak will come to focus on industrial restructuring
In the third quarter, non-ferrous metals and other pro-cyclical assets ushered in the "open door" market. Standing in early July, the domestic market has already shifted from the "dry and rainy spring" to the "hot and rainy summer", which also reflects from the side, in the context of frequent extreme weather, non-ferrous metals and other high energy-consuming industries are changing.
Since this year, China's high temperature days since 1961, the most number of the same period in history, extreme weather led to frequent weather disasters, electricity load growth. Recently, the National Climate Center of the China Meteorological Administration organized relevant experts in Beijing to hold the summer (July to August) national climate trends and major meteorological disaster prediction meeting, is expected to summer China's extreme weather and climate events on the high side, the phase of heavy precipitation, heavy rainfall and flooding, high temperature heat waves and other disasters.
From the impact of weather factors on the commodity market, weather factors to China's regional economy and related industries supply and demand brought about a greater impact, which in turn affects the relevant commodity raw materials, especially the 2021-2022 Northern Hemisphere climate anomalies, combined with multiple factors lead to energy tension and raw material supply disruptions, commodity prices sharply higher. In addition, in the first half of this year, the lack of electricity in the southwest of China led to production cuts and shutdowns of electrolytic aluminum enterprises, which had a greater impact on regional economic growth and the stability of the supply chain of related physical industries. For this summer's unusual heat, the relevant departments have been intensively deployed to prepare for the peak summer. According to the statistics and data center of China Electricity Council, it is predicted that in 2023, if there is a long period of widespread extreme weather, the highest electricity load in China may increase by about 100 million kilowatts, or reach 1.47 billion kilowatts, compared with 2022.
Faced with the test of peak electricity load in the summer, the after-market market of non-ferrous metals has become the focus of market attention. In the cyclical fluctuations of non-ferrous metals and other sectors, history will not repeat every detail of the past, but the process will appear surprisingly similar. In recent years, the global extreme weather frequently, high temperature and dry weather easily affect the regional production and operation activities, especially the problem of electricity tension will disrupt and even affect the economy and industry development to a greater extent. In China's share of electricity consumption, compared to electric fans, air conditioners and other residential electricity consumption, industrial electricity consumption accounted for up to 70%, of which non-ferrous metal smelting, ferrous metal smelting, chemical raw materials products, non-metallic mineral products four major high energy-carrying industries and China's industrial sector is the most important electricity-consuming categories.
Review 2021-2023 in the first half of the year, many countries with abnormal climate, high temperature and dry weather, China has also had a peak electricity supply instability, but China's clear priority to protect people's livelihood electricity, focusing on pressure limit high energy consumption, high pollution industry electricity, especially the aluminum smelting industry.
In the second half of this year, as a high energy-consuming industry, aluminum smelting industry may face in the peak electricity consumption period to avoid peak load, graded warning, let electricity to the people and other situations. Generally speaking, if China's southern and eastern regions have a tight power supply and demand situation, then the power shortage may affect the processing of non-ferrous metals and end consumption links. According to the industry's years of experience in the analysis, power consumption peak avoidance to strengthen or weather environmental factors, mainly affect the non-ferrous metal supply and demand of the start rate and actual production is expected. In the context of relatively low apparent inventories of non-ferrous metals at home and abroad, the production side of the disturbance may be amplified, which will bring copper, aluminum and other low inventory, tight balance varieties of structural strength, but this situation is often phased, the industry duration generally matches the pace of electricity tension, need to pay close attention to the changes in the market hot factors at different points.
However, I refer to the second half of the macroeconomic and non-ferrous metals industry change trend analysis at home and abroad, copper prices seem to be difficult to sustain optimism, is expected to copper as a representative of the pro-cyclical commodities in the third quarter to continue the divergent trend, copper, aluminum is expected to continue to show firm resistance in the non-ferrous metals sector, but nickel, zinc will accelerate the speed of production capacity out of cleaning cards, the overall weakness of supply and demand. As of July 5 close, the Mandarin commodity index non-ferrous metals sector fell more than 8%, copper, aluminum, zinc, lead, nickel, tin varieties of differentiated differences, futures prices rose and fell during the year were 2%, -5%, -16%, -3%, -32% and 6%.
International macro factors dominate the impact of the tail end of the interest rate hike still exists
From the perspective of international macro trends, entering the third quarter, European and American central banks still show a tendency to continue to raise interest rates to curb inflation. The reason behind this is that European and American central banks are concerned that premature easing of financial conditions will weaken the previous stage of suppressing inflation. At present, the most critical difference in global financial markets is when to cut interest rates in the future. Previously, the market generally believed that major central banks would switch from raising interest rates to lowering them in the second half of the year, but since late June, European and American central banks have officially said that they would maintain high interest rates for some time. In the context of repeated switching of overseas macro decisions and the highly uncertainty of subsequent interest rate hikes in Europe and the United States, high volatility in asset prices such as stocks, bonds and currencies, commodities, etc. seems to be the new normal.
Combined with high-frequency data can be found in the first half of this year, Europe and the United States economic structure internal differentiation is serious, Europe and the United States manufacturing industry continued to decline, while the consumer service industry and the job market is relatively firm. Based on the Fed's statement path deduction can be seen, three quarters, the Fed-led central banks in Europe and the United States may continue to raise interest rates, overseas monetary policy and liquidity will face the risk of further tightening.
Recalling the "interest rate hike" in Europe and the United States in the past year, its spillover effect has continued to trigger the return of capital from emerging economies to the United States, increased turbulence in national financial markets, and depreciation of non-US currencies. From the above macro factors on the impact of commodities, the global demand is weak to suppress non-ferrous metals as the representative of the industrial goods sector, Europe and the United States interest rate hikes to quickly tighten liquidity, the overall depression and commodity-related inflation levels. Broken down, the impact on optional and durable goods, which account for a relatively large share of non-ferrous metal consumption, is more prominent.
By tracking a number of model data, I found that in the second half of the year, Europe and the United States as the representative of the overseas real economy turned weak, and even into a mild recession signs further appear, especially on non-ferrous metals and other overseas demand accounted for a relatively high impact of the sector. On the one hand, the probability of overseas non-ferrous metal consumption growth rate decline; on the other hand, by the influence of geopolitical and other factors, the global physical supply chain represented by non-ferrous metals is facing the risk of regional fragmentation, the loss of efficiency, increased costs, the industry enterprises are trapped. At present, the main downstream of non-ferrous metals in the face of a sharp decline in optional consumption more by just demand to support, and overseas markets and domestic manufacturing consumption replenishment has not yet arrived, the non-ferrous metals industry into the end demand decline, excess capacity pressure, industry profits shrink the dilemma, which not only leads to increased pressure of excess supply of commodities, which in turn triggered a high commodity prices fall, but also by squeezing the production enterprises This will not only lead to increased pressure on the supply of commodities, which in turn will lead to high commodity prices, but also accelerate the reshuffling of the industry by squeezing the profits of producers.
Summer electricity peak will come to focus on industrial restructuring
In the third quarter, non-ferrous metals and other pro-cyclical assets ushered in the "open door" market. Standing in early July, the domestic market has already shifted from the "dry and rainy spring" to the "hot and rainy summer", which also reflects from the side, in the context of frequent extreme weather, non-ferrous metals and other high energy-consuming industries are changing.
Since this year, China's high temperature days since 1961, the most number of the same period in history, extreme weather led to frequent weather disasters, electricity load growth. Recently, the National Climate Center of the China Meteorological Administration organized relevant experts in Beijing to hold the summer (July to August) national climate trends and major meteorological disaster prediction meeting, is expected to summer China's extreme weather and climate events on the high side, the phase of heavy precipitation, heavy rainfall and flooding, high temperature heat waves and other disasters.
From the impact of weather factors on the commodity market, weather factors to China's regional economy and related industries supply and demand brought about a greater impact, which in turn affects the relevant commodity raw materials, especially the 2021-2022 Northern Hemisphere climate anomalies, combined with multiple factors lead to energy tension and raw material supply disruptions, commodity prices sharply higher. In addition, in the first half of this year, the lack of electricity in the southwest of China led to production cuts and shutdowns of electrolytic aluminum enterprises, which had a greater impact on regional economic growth and the stability of the supply chain of related physical industries. For this summer's unusual heat, the relevant departments have been intensively deployed to prepare for the peak summer. According to the statistics and data center of China Electricity Council, it is predicted that in 2023, if there is a long period of widespread extreme weather, the highest electricity load in China may increase by about 100 million kilowatts, or reach 1.47 billion kilowatts, compared with 2022.
Faced with the test of peak electricity load in the summer, the after-market market of non-ferrous metals has become the focus of market attention. In the cyclical fluctuations of non-ferrous metals and other sectors, history will not repeat every detail of the past, but the process will appear surprisingly similar. In recent years, the global extreme weather frequently, high temperature and dry weather easily affect the regional production and operation activities, especially the problem of electricity tension will disrupt and even affect the economy and industry development to a greater extent. In China's share of electricity consumption, compared to electric fans, air conditioners and other residential electricity consumption, industrial electricity consumption accounted for up to 70%, of which non-ferrous metal smelting, ferrous metal smelting, chemical raw materials products, non-metallic mineral products four major high energy-carrying industries and China's industrial sector is the most important electricity-consuming categories.
Review 2021-2023 in the first half of the year, many countries with abnormal climate, high temperature and dry weather, China has also had a peak electricity supply instability, but China's clear priority to protect people's livelihood electricity, focusing on pressure limit high energy consumption, high pollution industry electricity, especially the aluminum smelting industry.
In the second half of this year, as a high energy-consuming industry, aluminum smelting industry may face in the peak electricity consumption period to avoid peak load, graded warning, let electricity to the people and other situations. Generally speaking, if China's southern and eastern regions have a tight power supply and demand situation, then the power shortage may affect the processing of non-ferrous metals and end consumption links. According to the industry's years of experience in the analysis, power consumption peak avoidance to strengthen or weather environmental factors, mainly affect the non-ferrous metal supply and demand of the start rate and actual production is expected. In the context of relatively low apparent inventories of non-ferrous metals at home and abroad, the production side of the disturbance may be amplified, which will bring copper, aluminum and other low inventory, tight balance varieties of structural strength, but this situation is often phased, the industry duration generally matches the pace of electricity tension, need to pay close attention to the changes in the market hot factors at different points.
Looking ahead to the market, non-ferrous metals and other commodities are still suppressed, and combined with the international macroeconomy and non-ferrous metals sector's own unique operating rules, copper, aluminum is expected to continue to show resistance, nickel, zinc will accelerate capacity clearance, the overall supply and demand is relatively weak. The author believes that the third quarter should focus on the search and grasp of market expectations, while tracking the weather, environmental protection and other factors on the impact of changes in supply and demand of non-ferrous metals, so as to grasp the trend, pay attention to risk control homeopathic trading.
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