Key investment points
[Key words of this week]: according to the minutes of the March meeting of the Federal Reserve, the national Standing Committee reiterated the timely use of monetary policy tools to support the development of the real economy, and the epidemic continued to impact China’s downstream demand
Market review: 1. The minutes of the Federal Reserve’s meeting in March showed that it was biased towards eagle and tightened expectations. The Chinese epidemic affected logistics and transportation and continued to impact downstream demand: 1) base metals. The epidemic continued to impact China’s downstream demand. LME aluminum and copper rose and fell by – 2.0% and 0.7% respectively; 2) The real yield of 10-year US bonds rose from – 0.41% → – 0.15%, Comex gold closed at US $1945.6/oz, up 1.14% month on month, and SHFE gold closed at 396.04 yuan / g, down 0.06% month on month. 2. A shares fell overall this week. Shenwan nonferrous metals index closed at 523079 points, down 1.05% month on month, outperforming the Shanghai Composite Index by 0.11 percentage points. Among them, gold, industrial metals, rare metals and new metal and non-metallic materials rose and fell by 6.58%, 0.61%, – 2.11% and – 4.57% respectively.
Macro “three factors” summary: China held an executive meeting of the State Council, which proposed to use monetary policy tools in a timely manner to more effectively support the development of the real economy; The minutes of the Fed’s meeting in March showed that the US manufacturing new orders increased in February; The PPI of the EU and the eurozone rebounded year-on-year in February, and the epidemic cooled down. Specifically: 1) in China, the PMI of Caixin manufacturing industry fell in March. This week, it was disclosed that the PMI of Caixin manufacturing industry in March was 48.10 (the former value was 50.40), and the PMI business activity index of Caixin service industry was 42.0 (the former value was 50.2); In March, China’s foreign exchange reserves were 3187994 billion US dollars (the previous value was 3213827 billion US dollars). 2) In the United States, the new orders of manufacturing industry increased in February. The new orders of all manufacturing industries in the United States in February were 514779 billion US dollars (the previous value was 512431 billion US dollars), 0.46% month on month (the previous value was – 5.21%) and – 0.5% quarter on quarter (the previous value was 1.5%); Among them, the new orders for durable goods were 265296 billion US dollars (the previous value was 260087 billion US dollars), with a quarter on quarter increase of – 2.09% (the previous value was 1.54%); In March, the PMI of ISM manufacturing industry in the United States was 57.1 (the former value was 58.6), and that of non manufacturing industry was 58.3 (the former value was 56.5);
3) the PPI of the EU and the euro zone rose year-on-year in February, and the epidemic situation cooled down. This week, it was disclosed that the PPI of the EU in February was 31.1% year-on-year (the former value was 30.4%), the PPI of the euro zone in February was 31.4% year-on-year (the former value was 30.6%, the expected value was 31.6%), and the chain was 1.1% (the former value was 5.1%, the expected value was 1.3%); This week, the United Kingdom, Germany and France added 3890192 cases of covid-19 on a daily basis, down 1111932 cases from last week, and the epidemic has cooled down. 4) Overall, the global manufacturing PMI recorded 53.0 in March, down 0.6 month on month, and the global economy entered the downward stage of the boom trend for further verification.
Precious metals: the minutes of the Federal Reserve showed a bias towards hawks, while inflation was still high, which supported the price of gold. Within the week, the minutes of the meeting of the Federal Reserve in March showed a bias towards hawks, believing that the Federal Reserve thought it might be appropriate to reduce the asset ceiling of $95 billion per month, and this process could begin as early as may. In addition, the real interest rate of US bonds continued to rise, giving upward resistance to the price of precious metals; However, inflation expectations are still high, the market expects that the tightening policy lags behind inflation, and it is difficult for the real interest rate to outperform inflation, which forms support for the price of gold. As of April 8, Comex gold closed at US $1945.6/oz, up 1.14% month on month; COMEX silver closed at US $24.823/oz, up 0.69% month on month; SHFE gold closed at 396.04 yuan / g, down 0.06% month on month; SHFE silver closed at 5030 yuan / kg, down 0.16% month on month.
Base metals: the epidemic continues to impact China’s downstream demand
During the week, the Fed released the minutes of its meeting in March, which showed that it was biased towards hawks, tightening expectations continued to strengthen, and the US dollar index rose, putting pressure on the price of base metals; China’s epidemic continues to impact downstream demand. The national Standing Committee reiterated the timely use of monetary policy tools to support the development of the real economy, and the steady growth policy is expected to be strengthened. Under the background of strong demand for steady growth, the national Standing Committee explained that the connotation of maintaining economic operation in a reasonable range lies in the stability of employment and prices; In terms of policy, external tightening and internal delivery are differentiated. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose or fell by 0.7%, – 2.0%, 0.0%, – 0.8%, – 1.1% and 0.0% respectively this week. The overall price fell.
1. For electrolytic copper, affected by the epidemic, China presents a situation of weak supply and demand. On the supply side, according to SMM, China’s electrolytic copper output was 848500 tons in March, down 1.4% year-on-year; In terms of demand, the suppression of downstream demand by the epidemic continues, the logistics under the comprehensive closure of the city continues to be blocked, and the restriction of raw materials leads to the reduction and shutdown of downstream processing enterprises, further expanding the scope of impact; A large number of warehouses in Shanghai and surrounding areas cannot pick up goods, leading China to return to the rhythm of accumulating warehouses. There are 130000 tons of copper in the electrolytic warehouse this week.
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, China’s downstream consumption recovered slowly during the week, and some areas were still disturbed by the epidemic, and the start-up weakened. However, according to SMM research, at present, there are many enterprises passively reducing production, and the overall orders on hand and new orders are good. It is expected to resume production quickly after the epidemic improves. Profit update of industrial chain: calculated according to the market price of real-time raw materials, the price of alumina this week was 2974 yuan / ton, and the gross profit per ton was 88 yuan / ton, up 3.09% month on month; The anode price was 7048 yuan / ton, and the gross profit per ton was 1234 yuan / ton, up 221.22% month on month. The spot price of electrolytic aluminum in the Yangtze River was 21790 yuan / ton, and the profit per ton of aluminum was 2905 yuan, down 23.67% month on month. This week, China’s eight aluminum ingot inventories totaled 1066000 tons, and the weekly cumulative inventory was 25000 tons.
3. For zinc ingots, overseas, the European energy problem is still continuing, and the energy problem is still a strong support for the current rise in zinc prices; In China, the overall supply and demand are both weak, and the maintenance and shutdown of some smelters in China are affected. The output of refined zinc in March was 501300 tons, which is lower than expected. Due to the Qingming Festival holiday, the superposition of the impact of the epidemic, the logistics is blocked, the downstream operating rate of the market is weak, and the overall inventory continues to accumulate. The total inventory of zinc ingots in seven places this week was 278000 tons, and the weekly cumulative inventory was 5200 tons.
Investment suggestion: maintain the “overweight” rating of the industry
1. 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.
2. For base metals, China’s economic work in 2022 will be “stable”, and 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.
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, new energy vehicle sales less than expected risk, premise assumption of supply and demand calculation less than expected risk, etc
