Investment advice
The situation in Russia and Ukraine continues to deteriorate, and the disturbance impact on the supply of resource goods is becoming more and more obvious. Russia plays an important role in the global energy and non-ferrous metal supply chain. According to our statistics, in 2020 / 2021, Russia's export share of crude oil and natural gas accounted for 12.2% and 6.2% in the world, and the export share of nickel, aluminum, copper, lead and zinc accounted for 13.6%, 4.9%, 4.5%, 3.2% and 0.3% in the world.
Since the outbreak of the conflict between Russia and Ukraine (from February 24 to March 24), the prices of oil, natural gas, nickel, aluminum, copper, lead and zinc have increased by 29%, 10%, 107%, 14%, 8%, 9% and 18% respectively.
Reasons
Since the covid-19 epidemic, the global countercyclical easing has prevailed, and the global inflationary pressure is becoming more and more obvious. Combined with the outbreak of the conflict between Russia and Ukraine, the Russian resource products and the Shenzhen Agricultural Products Group Co.Ltd(000061) supply of Ukraine have been impacted, which will further aggravate the global inflationary pressure. In this context, we believe that the current global economic momentum may weaken, global inflation may be high, the risk of overseas stagflation will rise, and the allocation value of gold and base metals will increase significantly.
Gold: the risk of global stagflation has increased, and gold has ushered in major allocation opportunities.
Aluminum: the deterioration of the situation in Russia and Ukraine has exacerbated energy tension and greatly increased the risk of electrolytic aluminum production reduction.
Nickel: Russian nickel exports were blocked by sanctions, which significantly impacted the global nickel market.
Zinc: the energy shortage has led to the reduction of production of zinc smelters in Europe, and the impact can not be underestimated.
Copper: the interference of Russia Ukraine conflict on the global copper market is weaker than that of other metals.
We believe that the transmission path of the disturbance to the supply of resource products caused by the conflict between Russia and Ukraine is reflected in four aspects:
First, the energy shortage has exacerbated the risk of global stagflation. Physical assets, especially gold, have performed well during the stagflation period. Second, the export of Russia's main resource goods was blocked, and it was difficult for key minerals and smelters to enter the market directly in the short term, resulting in a reduction in supply. Third, the energy shortage in the European market has intensified, and the smelting products with high energy consumption have been forced to reduce production or shut down. Fourth, energy prices push up the capital expenditure required for the development of key resource products, reduce the rate of return on the development of long-term resource products, and then suppress the development progress of long-term resource projects.
In the longer term, the stagflation risk caused by the tearing and reconstruction of the global energy and commodity supply chain is increasing, and the medium and long-term allocation value of non-ferrous metals should be paid attention to. The future stagflation risk not only comes from the short-term impact brought by the conflict between Russia and Ukraine, but also the tearing and reconstruction of the global energy and commodity supply chain in the future, as well as the rise of supply interference rate, the rise of medium and long-term global inflation and the suppression of economic growth. It is suggested to pay attention to gold and basic metals such as aluminum, nickel, zinc, copper and tin with limited supply.
Risk
1. The supply of energy and non-ferrous metals exceeded expectations; 2. The Fed raised interest rates more than expected; 3. Russia Ukraine conflict interference lower than expected
