Steady growth has helped the high profitability of industrial metals continue, and the value of gold allocation appears under the background of risk aversion and high inflation. This week, the Shanghai Composite Index fell 0.94%, and the Shenwan nonferrous metals sector fell 1.05%, underperforming the Shanghai Composite Index by 0.11pct, ranking 11th in the Shenwan sector.
Steady growth contributes to the sustained high profitability of industrial metals: on April 6, the national Standing Committee deployed the timely use of monetary policy tools to more effectively support the development of the real economy. At the meeting of the national development and Reform Commission, it was said that all localities should put maintaining steady industrial growth in a more prominent position, pay close attention to formulating and issuing specific implementation plans and supporting policies, promote 102 major projects in the 14th five year plan, and promote Beidou industry in the 14th five year plan. Multiple ministries and commissions are expected to take multiple measures to stabilize the operation of the industrial economy. The demand for industrial metals is closely related to real estate and infrastructure. The top three consumption fields of copper, aluminum and zinc are concentrated in the four fields of power / construction / household appliances and automobiles. Steady growth is expected to help improve the marginal demand for industrial metals, and the high prices and profits will continue. With the rising global energy prices, the smelting costs of overseas electrolytic aluminum, copper and zinc with high energy consumption have increased significantly, exacerbating the cost advantage of China’s related industries. At present, the gross profit of electrolytic aluminum is still more than 5000 yuan / ton, which has increased by about 30% since the beginning of the year; Copper smelting processing fees and the price of by-product sulfuric acid continued to rise, and the gross profit of smelting enterprises has reached about 3350 yuan / ton, up about 144% since the beginning of the year. Although the profit of zinc smelting has not changed, the processing fee has reached the bottom or may rise. It is suggested to pay attention to: Tianshan Aluminum Group Co.Ltd(002532) , Yunnan Aluminium Co.Ltd(000807) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Aluminum Corporation Of China Limited(601600) , Zijin Mining Group Company Limited(601899) , Tongling Nonferrous Metals Group Co.Ltd(000630) , Yunnan Chihong Zinc & Germanium Co.Ltd(600497) .
The value of gold allocation appears. Since the beginning of the year, US inflation has continued to rise, and the core CPI has increased from 1.4% in 2021 to 6.4% in February 2022. Since the end of February, the conflict between Russia and Ukraine has exacerbated global concerns about high inflation. Comex gold prices have risen 6.7% year to date, stabilizing at more than 1930 US dollars / ounce, and oil prices have remained high. At present, the number of initial jobless claims in the United States is still falling, gold ETF positions are rising, and risk aversion and high inflation are still the main logic of gold allocation, In the short term, it may reach a new high. Focus on incremental Zijin Mining Group Company Limited(601899) , Yintai Gold Co.Ltd(000975) , Shandong Gold Mining Co.Ltd(600547) , etc. In March 2022, the Fed entered the interest rate hike cycle. Most Fed officials believe that if the inflationary pressure fails to ease in the future, it may need to raise interest rates by 50 basis points (BP) once or several times. The minutes of the Fed meeting show that the monetary policy committee is ready to start to shrink the table, which will be implemented as early as may, and the upper limit of asset size may be reduced to $95 billion per month. The pressure on gold price corresponding to the increase and contraction of interest rate may react in the second half of the year. If the US economy is under pressure and the number of interest rate increases is less than expected in the second half of the year, medium and long-term opportunities for gold may appear.
Risk warning: the risk of less than expected demand recovery, the risk of large increase in upstream supply, the risk of repeated epidemic, and the risk of significant increase in inventory.