Key investment points
[Key words this week]: Russia Ukraine relations show signs of easing, the US non-agricultural data is strong, and the epidemic has impacted China’s downstream demand
Market review: 1. The non-agricultural data of the United States in March was lower than expected but still strong. The Chinese epidemic affected logistics and transportation, resulting in a drop in downstream demand: 1) for base metals, the market’s concern about the weakening of downstream consumption caused by the Chinese epidemic brought down the price of copper and aluminum, with LME aluminum and copper falling by 5.1% and 0.1% respectively; 2) The real yield of 10-year US bonds increased from – 0.47% → – 0.41%, Comex gold closed at US $1942.7/oz, down 0.59% month on month, and SHFE gold closed at 396.26 yuan / g, down 1.35% month on month. 2. A shares rebounded as a whole this week. Shenwan nonferrous metals index closed at 528653 points, down 1.97% month on month, outperforming the Shanghai Composite Index by 4.16 percentage points. Among them, gold, industrial metals, rare metals and new metal and non-metallic materials rose and fell by – 1.24%, – 1.30%, – 2.65% and – 2.73% respectively.
Macro “three factors” summary: China has made efforts to stabilize growth in an all-round way, and Jin Wenhui stressed the prudent introduction of contractionary policies; The core PCE price index of the United States reached a new high year-on-year in February, and the non-agricultural data in March was lower than expected but still strong; PMI in the euro zone fell in March and the epidemic warmed up. Specifically: 1) China’s official manufacturing PMI fell in March. This week, it was disclosed that China’s official manufacturing PMI in March was 49.5 (the previous value was 50.2, the expected value was 50.0), and the PMI of non manufacturing business activities was 48.4 (the previous value was 51.6); In March, the PMI of Caixin manufacturing industry was 48.10 (the previous value was 50.40). 2) In the United States, the core PCE price index in February reached a new high year-on-year. The core PCE price index in the United States in February was 5.40% year-on-year (the previous value was 5.17%, and the expected value was 5.50%); In March, the PMI of manufacturing industry was 57.10 (previous value 58.60), and the PMI of Markit manufacturing industry in March was 58.80 (previous value 57.30, expected value 56.30); The number of new non farm jobs in the United States in March was 431000 (the previous value was 750000, and 475000 are expected). 3) The initial value of PMI in the euro zone in March has dropped, and the epidemic is heating up. This week, it was disclosed that the PMI in the euro zone in March was 56.5 (the previous value was 58.2, the expected value was 57.0), and the PMI in the service industry was 54.8 (the previous value was 55.5); In February, the EU unemployment rate was 6.2% (the previous value was 6.3%), and the eurozone unemployment rate was 6.8% (the previous value was 6.9%, expected to be 6.7%); This week, the United Kingdom, Germany and France added 5 Tech-Bank Food Co.Ltd(002124) cases of covid-19 on a daily basis, an increase of 2311.2 cases on a month on week basis, and the epidemic is heating up. 4) On the whole, the global manufacturing industry recorded pmi53.5 in February 4. Up 2.0 month on month; However, according to the manufacturing PMI data of the above sub countries in March, the global manufacturing industry fell month on month in March or was an event with high probability. Here we maintain the judgment that the global economy has entered the downward phase of the boom trend.
Precious metals: risk aversion eased, non-agricultural data were strong, and gold prices were under pressure
During the week, there was a positive signal from the Russian Ukrainian negotiations, and the market’s preference for risky assets rebounded. However, the US announced strong non farm employment data in March, which pushed the yield of the US dollar and the US ten-year Treasury bond stronger. At the same time, inflation was high, and the market expected to increase the interest rate actively by the US Federal Reserve, which put some pressure on the price of gold. As of April 1, Comex gold closed at US $1942.7/oz, down 0.59% month on month; COMEX silver closed at US $24.654/oz, down 3.75% month on month; SHFE gold closed at 396.26 yuan / g, down 1.35% month on month; SHFE silver closed at 55038 yuan / kg, down 3.80% month on month.
Base metals: the European energy crisis supports metal prices, and the epidemic has impacted China’s downstream demand
During the week, the Russian law on energy settlement in rubles continued to have a considerable impact on the market, and the energy issue remains the key to supporting prices; However, copper and aluminum prices fell, mainly due to market concerns about the weakening of downstream consumption caused by China’s epidemic. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose or fell by – 0.1%, – 5.1%, 3.4%, 6.2%, 4.0% and – 6.3% respectively this week, and prices rose or fell.
1. For electrolytic copper, the market focuses on the impact of the epidemic in China. In the Jiangsu, Zhejiang and Shanghai regions of China dominated by Shanghai, affected by the epidemic, the logistics efficiency has decreased seriously. Some downstream enterprises are forced to reduce production and stop production due to the shortage of raw materials, and the downstream demand has decreased significantly. But on the whole, China’s destocking rate is significantly faster than in previous years. On Wednesday, the social inventory of electrolytic copper was 130000 tons, and the weekly inventory was 10400 tons.
2. For electrolytic aluminum, the overall stable operation of China’s supply side, and the resumption speed of aluminum plant has increased; On the demand side, due to the impact of the epidemic on downstream material transportation and production, aluminum downstream processing enterprises were forced to reduce production, and social inventory accumulated. Calculated according to the market price of real-time raw materials, the price of alumina this week was 2966 yuan / ton, up 0.41% month on month, the cost of alumina was 2877 yuan / ton, up 0.20% month on month, and the gross profit per ton was 89 yuan / ton, up 7.73% month on month; The anode price was 6198 yuan / ton, unchanged month on month. The anode cost was 5813 yuan / ton, up 0.60% month on month, and the gross profit per ton was 384 yuan / ton, down 7.41% month on month. According to the market price of real-time raw materials, the real-time cost of electrolytic aluminum is 17718 yuan / ton, up 0.09% month on month. The spot price of electrolytic aluminum in the Yangtze River is 22720 yuan / ton, down 1.17% month on month. The profit per ton of aluminum is 3320 yuan, down 5.39% month on month. This week, China’s eight aluminum ingot inventories totaled 1041000 tons, and the weekly cumulative inventory was 2000 tons.
3. For zinc ingots, overseas, the Russian law on energy settlement in rubles continues to have a considerable impact on the market, and the energy problem is still a strong support for the current rise in zinc prices; In China, the epidemic has a certain impact on the transportation of upstream and downstream enterprises. All localities are subject to varying degrees of traffic and transportation control, which makes it difficult for enterprises to replenish their raw material inventory, and enterprises in some regions have successively reduced production and operation. The total inventory of zinc ingots in seven places this week was 272800 tons, and the weekly cumulative inventory was 0200 tons.
Investment suggestion: maintain the “overweight” rating of the industry
1. For base metals, China’s economic work in 2022 is set to be “stable”. It is expected that the follow-up steady growth policies will be introduced continuously to support the confidence of base metal demand. However, from a global perspective:
1) changes in the structure of overseas economic demand before, during and after the epidemic;
2) the Fed raised interest rates, but the subsequent tightening trend of overseas liquidity is expected to accelerate and suppress the demand for base metals. Look for structural opportunities brought by supply change in non directional assets.
2. For precious metals, under the impact of oil prices and the epidemic on the supply chain, overseas inflation data continued to rise and hit a new high in nearly 40 years. Market concerns about inflation continued to intensify, and precious metal prices are expected to continue to be supported.
Core target:
1) base metal: Yunnan Aluminium Co.Ltd(000807) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Tianshan Aluminum Group Co.Ltd(002532) , Sunstone Development Co.Ltd(603612) , Zijin Mining Group Company Limited(601899) , Tongling Nonferrous Metals Group Co.Ltd(000630) , etc.
2) precious metals: Shandong Gold Mining Co.Ltd(600547) , Chifeng Jilong Gold Mining Co.Ltd(600988) , Shengda Resources Co.Ltd(000603) , etc.
Risk tips: macroeconomic fluctuation, import and environmental protection policy risk, gold price fluctuation risk, lower than expected risk of new energy vehicle sales, lower than expected risk of premise assumption of supply and demand calculation, etc.
