This week (5/20-5/24), the Shanghai Composite Index fell 2.07%, the CSI 300 Index fell 2.08%, the SW Nonferrous Metals Index fell 3.95%, precious metal COMEX gold fell 3.50%, and COMEX silver fell 3.89%. Industrial metals LME aluminum, copper, zinc, lead, nickel and tin changed by+1.41%, - 3.56%,+0.51%,+0.11%, - 3.74% and - 3.21% respectively; Industrial metal inventory LME aluminum, copper, zinc, lead, nickel and tin respectively changed by+2.87%,+8.71%, -0.83%, -6.65%,+2.67% and+0.20%.
The minutes of the Federal Reserve meeting are more hawkish. The domestic real estate policy has boosted demand, and the high price shocks do not change the upward trend. Core view: The minutes of the Federal Reserve's meeting in May are more hawkish, domestic real estate support policies continue to be implemented, high price shocks suppress short-term demand, and continue to be optimistic about commodity prices. In terms of copper, on the supply side, the TC index of SMM imported copper concentrate on May 24 was -0.65 US dollars/ton, up 0.43 US dollars/ton week on week, still maintaining the situation that copper is more expensive than copper; On the demand side, copper prices hit a new high and fluctuated violently. Downstream procurement became more cautious, and overall consumption was under pressure. Some copper processing enterprises reduced production to alleviate inventory pressure, resulting in a larger than expected decline in operating rate. The operating rate of domestic refined copper rods was -5.20 pct to 64.46% month on month, and the operating rate of SMM copper cables was -3.95 pct to 75.87% month on month. In terms of aluminum, on the supply side, the recovery of production in Yunnan is in good progress, and the operating rate of most enterprises has reached more than 85%. The Inner Mongolia Huayun Phase III Project will be powered on within weeks, and the domestic electrolytic aluminum capacity will maintain its growth momentum; On the demand side, the end customers are not willing to purchase. Some aluminum processing enterprises reduce the start and take the initiative to go to the warehouse. The high price of aluminum restrains consumption. This week, the domestic aluminum ingot societies accumulated 20000 tons of inventory. Highlight: Luoyang Molybdenum Industry, Zijin Mining, Shenhuo Co., Ltd., Western Mining, Jincheng, China Nonferrous Metals Mining, Chinalco, and Yunnan Aluminum.
Energy metals: near the end of the month, the wait-and-see sentiment will become stronger, the lithium price will become weaker, and the cobalt price will be supported by the purchase and storage exceeding expectations. Core view: the downstream inventory is on the high side, and the downstream wait-and-see sentiment is stronger and the demand is weaker near the end of the month. In terms of lithium, on the supply side, Jiangxi small and medium-sized lithium salt plants were slightly reduced by environmental supervision, but the output of spodumene and Qinghai salt lake remained stable, and domestic lithium carbonate supply was mainly stable. On the demand side, first, near the end of the month, the negotiation on the long-term association discount coefficient is about to be carried out; second, most downstream companies are tracking the industrial production scheduling in June, and the wait-and-see and bearish sentiment is stronger. Under the background of high downstream inventory, purchasing is weaker.
In terms of cobalt, on the supply side, the new capacity of electric cobalt climbed, and the cobalt salt started to maintain a low level; On the demand side, the precursor production scheduling is likely to continue to decline, and the demand for lithium cobaltite remains weak. However, due to the country's purchase and storage exceeding expectations, the cobalt price is supported. In terms of nickel, Indonesia RKAB did not exceed expectations. The tight supply of nickel ore continued to support the strengthening of nickel price, and the profit inversion of nickel sulfate deepened. Although the demand was still weak, the cost supported the rebound of nickel sulfate price. Highlights: Zangge Mining, Yongxing Materials, Huayou Cobalt, and Sinomine Resources.
Precious metals: The minutes of the Federal Reserve's meeting are more hawkish, and we continue to see bullish opportunities for precious metals. The Federal Reserve released the minutes of its meeting in May. Although the inflation data in April cooled down, many officials said that they could not predict the future trend of inflation based on the data of a single month. It was too early to discuss interest rate cuts. The Federal Reserve's interest rate attitude turned hawkish and suppressed the expectation of interest rate cuts. The Federal Fund's interest rate futures showed that the probability of interest rate cuts in September returned to below 60% again. The Iranian president was killed in a plane crash, the Russian Ukrainian conflict continued, geopolitical risks continued to strengthen, and risk aversion increased. At the same time, the central bank will continue to increase its purchases of gold in the future, and continue to be firmly optimistic about the future rise in gold prices. At the same time, we believe that we should pay attention to the investment opportunities of silver at the moment. With the upward resonance of gold silver ratio repair+PMI, silver has a large price elasticity. Highlights: Zhongjin Gold, Yintai Gold, Shandong Gold, Zhaojin Gold, Chifeng Gold, Hunan Gold, China Gold International, and Shengda Resources and Xingye Silver Tin.
Risk tips: demand is less than expected, supply is more than expected, overseas geopolitical risks, etc.
