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China Singapore Jingwei, May 21 (Chen Junming) On May 21, the main futures contracts of Bank of Shanghai opened sharply, up more than 3% to 8220 yuan/kg as of press release, up about 40% in the year. On the international market, London silver spot hit a new high for 11 years, rising more than 30% in the year.
As a precious metal, silver has investment properties. Its good conductivity and heat transfer make it widely used in industrial manufacturing. On the 21st, Sino Singapore Jingwei called Shengda Resources, Xilong Science and other companies on the rise of silver price.
Shengda Resources, the "Silver Leader", is mainly engaged in the mining, processing and sales of non-ferrous metal ores. The main products of its primary mine business are silver ingots, gold, silver lead concentrate powder, and silver zinc concentrate powder. The staff of the company said that the increase of silver price will have a positive impact on the performance when the metal output remains unchanged. As for the supply and demand of silver, the staff member quoted the World Silver Association as saying that at present, silver is in short supply, and it is reasonable to say that there will be no price rise to curb demand; The company's silver mines are associated, the production scale is fixed, and will not be overdrawn.
Xilong Science is a professional manufacturer and integrated supplier of chemical reagents. Its main raw materials include silver. The staff of Xilong Science said that the company purchases and sells according to the order. If the cost rises, the sales price will rise accordingly, but it should also be analyzed specifically according to the time point of signing the contract.
Frequent investigation by institutions
The rising silver price has a positive impact on the performance of A-share companies that hold mineral resources.
Shengda Resources has 7 mining subsidiaries, including Yindu Mining, Jinshan Mining, Everbright Mining, Jindu Mining, Dongsheng Mining, Honglin Mining and Deyun Mining. The silver resource reserves (metal amount) reviewed and filed are close to 10000 tons. Among them, Dongsheng Mining has obtained the Mining License with a production scale of 250000 tons/year, and is currently preparing for the mine construction; Honglin Mining has obtained the Mining License with a production scale of 396000 tons/year, and is currently carrying out mine construction work; Deyun Mining obtained the Mining License in February 2024, with a production scale of 900000 tons/year, and is currently preparing for mine construction.
In 2023, Shengda Resources Mine will produce 13462.38 tons of lead metal, 24825.30 tons of zinc metal, 145.09 tons of silver metal and 148.02 kilograms of gold metal.
In the past month, Shengda Resources disclosed three institutional research announcements, and dozens of institutions including Changjiang Securities, Guangfa Securities, Tianfeng Securities, Guotai Jun'an, Zijin Mining Investment, Shenzhen Qiantu Investment appeared in the list of participants.
As for the business plan in 2024, Shengda Resources mentioned that it will actively promote the integration of the mining rights of the exploration rights of silver polymetallic ores in Bairen Daba (North Mining Area) and the mining rights of silver polymetallic ores in Bairen Daba, Keshiketen Banner, Yindu Mining, as well as the deep exploration and exploration work, increase the mineable reserves of Yindu Mining and extend the service life of the mine; Actively promote the merger and acquisition of high-quality precious metal primary mineral resources projects such as silver and gold, and strive to complete a merger and acquisition project within the year.
On the secondary market, Shengda Resources started in February, and its share price has risen from about 7 yuan to about 15 yuan at present, which has doubled in the year.
Yunnan Copper is an important production base of copper, gold, silver and sulfur chemicals in China, with its main business covering copper exploration, mining and smelting, extraction and processing of precious and scattered metals, sulfur chemicals and trade. In 2023, the company will produce 1.3801 million tons of cathode copper, 16.20 tons of gold, 737.53 tons of silver, 5.1645 million tons of sulfuric acid, and 63700 tons of copper concentrate, of which cathode copper and silver output will reach a new high.
Since May, Minsheng Securities, CICC, CSCI, CITIC Securities, China Merchants Securities, Haitong Securities, Southwest Securities, Great Wall Fund and other institutions have intensively investigated Yunnan Copper.
In the secondary market, Yunnan Copper experienced a sharp rise in February 2024, with its share price rising from a low of 9.2 yuan to more than 15 yuan, up about 60% in the range.
After sorting out, China Singapore Jingwei found that the A-share companies involved in silver and other metals also include Northern Copper. In 2023, the mine will handle 9.24 million tons of ore, with 43200 tons of copper concentrate, 134400 tons of cathode copper, 550700 tons of sulfuric acid, 2.22 tons of gold ingots and 26.39 tons of silver ingots.
Yuguang Gold Lead is mainly engaged in smelting lead and copper, producing electrolytic lead and cathode copper, and comprehensively recovering valuable metals and elements such as gold, silver, zinc, sulfuric acid, etc. In 2023, the output will be 553845.77 tons of lead products, 153394.12 tons of cathode copper, 11721.85 kilograms of gold and 1531.81 tons of silver.
Hunan silver business focuses on silver smelting and deep processing, and its main products are silver, electric lead, gold and other comprehensive recovery products. In 2023, 592.99 tons of Dianyin will be produced, with a year-on-year growth of 106.58%; 68318.35 tons of electric lead production, a year-on-year decrease of 15.14%; The production of gold was 1979.99 kg, up 92.67% year on year.
The main business of Industrial Silver Tin is nonferrous metals and precious metals mining and smelting. Its main products include silver, tin, zinc, lead, iron, copper, antimony, gold and other nonferrous metals and precious metals. The company has nine mining subsidiaries, of which Rongguan Mining is the leading enterprise in the location, and Yinman Mining is one of the largest silver production mines in China.
Cost side bearing
For some A-share companies, silver and other metals are used as one of the raw materials for their production, and the price rise has put pressure on the cost side.
Chint Electric is a leading enterprise in the domestic low-voltage electrical appliances and new energy industry. Its products include power distribution appliances, terminal appliances, control appliances, instruments, inverters and energy storage, and photovoltaic power station engineering contracting.
According to the annual report of Chint Electric in 2023, the cost of raw materials for low-voltage electrical appliances of the company will reach 12.48 billion yuan, accounting for 86.12% of the cost, and the remaining labor and expenses will account for 7.89% and 5.99% respectively.
The company also mentioned that the purchase cost of the main raw materials required for the production of low-voltage electrical appliances, such as copper, silver, steel and plastics, accounted for a high proportion of the total product cost. The price fluctuation of raw materials combined with the rise of transportation costs and other adverse factors may affect the company's main business costs and profitability.
In terms of countermeasures, on the evening of April 29, Chint Electric announced that, in order to avoid the risk of price fluctuation of bulk raw materials, the company plans to carry out hedging business of bulk commodities such as electrolytic copper and silver through domestic exchanges, and the trading limit of hedging business is not more than 300 million yuan.
Xilong Science is mainly engaged in the R&D, production and sales of chemical reagents, the production and sales of APIs and food additives, and the trade of some chemical raw materials. In 2023, the purchase amount of silver, the main raw material of Xilong Science, will account for 35.59% of the total purchase amount, with an average price of 4696.63 yuan/kg in the first half of the year and 5100.56 yuan/kg in the second half of the year.
By comparison, the futures price of BOC Shanghai has risen to more than 8200 yuan/kg. In terms of impact, the staff of Xilong Science told Sino Singapore Jingwei to make specific analysis according to the time point of signing the contract.
Fuda Alloy is mainly engaged in electrical contact materials, covering three categories of products: contact materials, multi-layer contacts and contact components. The raw materials purchased by the company are mainly silver and copper, and the upstream suppliers are mainly large-scale non-ferrous metal production or trade enterprises.
In terms of risk, the company mentioned that the main raw material required for the product is silver. Since silver has the dual attributes of industrial products and financial products, its price is vulnerable to the international political and economic situation, macroeconomic policies and other factors. If the silver price continues to fluctuate or fluctuates significantly in one direction in the short term, the silver price fluctuation will have a greater impact on the profitability of the company due to the lag of the risk transmission mechanism of the silver price fluctuation of the company.
In terms of coping methods, Fuda Alloy implements multi batch and small batch procurement according to production plan and inventory status, so as to reduce the adverse impact of silver and other raw material price fluctuations on the company's operation.
It is worth mentioning that silver price fluctuations may have had some impact on the performance of A-share listed companies.
In the first quarter of 2024, Ashikang's income from changes in fair value was -988800 yuan, which the company said was mainly due to silver leasing. The trading financial liabilities of Satellite Chemical increased to 1.384 billion yuan, an increase of 107.85% over the end of the previous year. The company said that this was mainly due to the increase in silver leasing measured at fair value in the current period.
For silver demand side, Minsheng Securities mentioned that silver demand is mainly divided into industry, investment, jewelry and silver, among which industrial demand accounts for about 55%, investment demand accounts for 20%, and jewelry demand accounts for 17%. In recent years, the demand for silver in the photovoltaic industry has grown rapidly. In 2023, the demand for silver in photovoltaic industry will account for 20.7%. Due to the shortage of silver in stock, due to the shortage of supply, the silver inventory of SHFE has decreased by about 73% from the peak in 2021.
As for the sharp rise of silver price, the CSCI Futures Research Report believes that at the current stage, most of the market is irrational, so the uncertainty of the market will be significantly enhanced.
Hualong Futures Research Newspaper believes that silver maintains the bullish view in the medium and long term. Silver short term is strong. Recently, silver has been greatly boosted without the stimulus of fundamental news, but usually after this short-run inexplicable boost, there are many corrections. The holdings of SLV funds do not support its prices to continue to rise, so investors should be cautious in catching up. (Zhongxin Jingwei APP)
(The opinions in this article are for reference only, and do not constitute investment suggestions. Investment is risky, and you should be cautious when entering the market.)
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