Non ferrous metals: the epidemic prevention and control has affected the short-term pressure on the metal sector, accumulated the steady growth of the reservoir, and gradually made efforts to be optimistic about the rebound in demand

Event: China’s epidemic continues to ferment, the non-ferrous metal industry is affected, and some relevant enterprises are forced to make decisions to reduce production or stop production due to problems such as limited transportation and difficult arrival of raw materials.

Comments: in terms of industrial metals, the impact of the epidemic on the demand side is greater than that on the production side, the accumulation of reservoirs is obvious, and the commencement of relevant downstream enterprises is limited. In the later stage, with the mitigation of the epidemic or entering the destocking cycle. At present, the epidemic situation in Shanghai and surrounding areas is severe. East China, the main consumer of industrial metals, has strict control over transportation and production of downstream products, affecting the demand side. The rhythm of going to the warehouse was interrupted, and there was a temporary accumulation in many warehouses, and the inventory of most industrial metals rebounded slightly. The terminal demand was restrained in the short term. Subsequently, with the gradual recovery of logistics, the supply chain restrictions were gradually relaxed, and the steady growth policy continued to work. It is still optimistic about the resilience of long-term demand.

(1) copper: the output of SMM electrolytic copper in March was 848500 tons, with a month on month increase of 1.5% and a year-on-year decrease of 1.4%. The output of smelters was basically in line with expectations. However, due to the strict epidemic control in Shanghai and surrounding cities, the circulation of electrolytic copper was blocked, and the raw material inventory of copper rod and copper pipe enterprises was urgent, so they were forced to reduce production, and then continued to be transmitted to cable, enamelled wire and other industries.

(2) aluminum: the output of SMM alumina was 6.548 million tons in March, and the output of electrolytic aluminum was 3.315 million tons, a year-on-year decrease of 0.92%. The epidemic broke out in many places, which affected the conversion of molten aluminum in some aluminum factories. According to the SMM survey data, the proportion of molten aluminum in China was about 63% in March, an increase of 1.8% month on month. At the same time, due to the epidemic situation in East China, some small and medium-sized aluminum sector, strip and foil enterprises have gradually faced difficulties in purchasing raw materials Large scale production reduction or even shutdown due to slow capital turnover and other reasons.

(3) lead: the output of SMM electrolytic lead in March was 263900 tons, with a month on month increase of 11.35% and a year-on-year decrease of 6.07%, mainly due to the expansion of the impact scope of the epidemic, especially the great interference in transportation, the tight regional supply of lead concentrate and crude lead, and the production reduction of smelting enterprises in Yunnan, Henan, Guangxi and other regions.

(4) tin: the operating rate of China’s solder enterprises recovered in March. However, due to the short-term shutdown of some enterprises affected by the epidemic in the Pearl River Delta in the middle of the year, the overall output was lower than the previous expectation to some extent.

(5) zinc: affected by the epidemic situation, the transportation of raw materials and finished products across the country is limited, and the overall liquidity deviation. At the same time, the profit compression caused by the increase of cost reduces the production enthusiasm of enterprises, and the reduction and shutdown of enterprises increase, especially the continuation of management and control in Tangshan, Handan, Hebei, Xuzhou, Jiangsu and other places, and the commencement of enterprises is blocked.

In terms of energy metals, the production side is basically in line with expectations, and the future market is optimistic. The short-term epidemic has had a certain negative impact on new energy vehicles, and some car enterprises have stopped reducing production or curbing short-term consumption.

(1) lithium: the lithium salt plant overhauled at the beginning of the year basically resumed production in March, and some new production capacity was in a climbing state. There was production increment in the superimposed Salt Lake sector, and the lithium salt output increased significantly. In terms of demand, in March, some regions of Guangdong implemented the sealing and control policy, and some small and medium-sized lithium manganate battery core plants stopped production and reduced production seriously.

(2) nickel: the output of SMM electrolytic nickel was 12600 tons in March, with a month on month decrease of 2.48% and a year-on-year decrease of 3.38%, mainly due to the continuous fermentation of the current epidemic in China and the superposition of continuous import losses, resulting in the current tight supply of electrolytic nickel raw materials, and the production reduction of some manufacturers. At the same time, the production of nickel pig iron and nickel sulfate is also limited due to the impact of the epidemic. It is expected that the output will increase slightly in April, mainly because it is expected that the epidemic situation in other provinces may ease this month, and some manufacturers in Xinjiang will resume normal production.

(3) cobalt: the output of SMM Co3O4 in March was 6413 tons, with a month on month decrease of 13% and a year-on-year decrease of 11%. According to SMM research, affected by the epidemic, the output of a large cobalt sulfate head factory decreased in late March, and the output of a Zhejiang precursor factory also decreased significantly Zhejiang Huayou Cobalt Co.Ltd(603799) announced that the production line of Quzhou subsidiary of the company temporarily reduced production due to the epidemic will resume production in an orderly manner from April 4, 2022.

Risk tip: the demand for new energy is less than expected, and the macro-economy fluctuates greatly

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