Weekly report of bulk metal industry: China's logistics pressure is relieved, steady growth is further strengthened, and the rebound continues

[Key words of this week]: relief of logistics pressure in China; The five-year LPR was reduced by 15bp.

Market review: 1. The Federal Reserve issued "partial Eagle" remarks to maintain a radical interest rate increase to deal with inflation; The cooling of the epidemic in China and the resumption of logistics and express delivery prompted China to speed up the unloading of stocks. China lowered the five-year LPR and continued to increase the steady growth policy: 1) for base metals, the Federal Reserve said it would maintain a radical pace of raising interest rates to curb inflation until the inflation rate reached 2%. The market's concern about the economic recession is heating up. This week, the US dollar index changed from up to down, supporting the recovery of gold and silver prices; In China, the epidemic situation in China has eased, and the logistics and transportation problems have been alleviated. Under the impact of the epidemic, China has reduced the five-year LPR and made further efforts to stabilize growth. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose or fell by 2.3%, 5.0%, 4.0%, 4.7%, 0.9% and 1.1% respectively this week, and the price rebounded as a whole compared with last week; 2) Precious metals, the real yield of 10-year US bonds increased from 0.24% → 0.23%, Comex gold closed at US $184210/oz, up 1.87% month on month, and SHFE gold closed at 397.18 yuan / g, down 0.62% month on month. 2. A shares rebounded overall this week. Shenwan nonferrous metals index closed at 497357 points, up 6.91% month on month, outperforming the Shanghai Composite Index by 4.89 percentage points. The gains and losses of new metal and non-metallic materials, industrial metals, rare metals and gold were 11.36%, 5.96%, 5.70% and 1.70% respectively.

Macro "three factors" summary: China's steady growth is further strengthened; US retail sales fell month on month; The CPI of the EU picked up year-on-year and the epidemic cooled down. Specifically: 1) the impact of the epidemic has eased, and China's overweight has increased steadily. This week, China's logistics situation was further repaired, the five-year LPR interest rate was lowered by 15bp, and the steady growth policy was further strengthened. In April, China's industrial added value was - 2.90% year-on-year (the previous value was 5.00%, expected to be 1.30%), of which the non-ferrous metal mining and beneficiation industry was 8.90% year-on-year, and the non-ferrous metal smelting and rolling processing industry was 1.40% year-on-year; In April, China's fixed asset investment totaled 6.80% year-on-year (previous value 9.30%, expected 6.53%); In April, China's one-year LPR was 3.70, unchanged, and the LPR over five years was reduced to 4.45 (the previous value was 4.60); In April, China's total retail sales of social consumer goods were - 0.20% year-on-year, including 0.40% year-on-year of commodity retail sales and - 5.10% year-on-year of catering retail sales. 2) Us core retail fell month on month in April. Core retail sales in the United States in April were 0.9% month on month (the previous value was 1.41%); Retail and food service sales in April were 8.19% year-on-year (the previous value was 7.34%); Total retail sales in April were 0.75% month on month (the previous value was 1.34%); In April, 154600 new houses were started (the previous value was 143100). 3) The CPI of the EU picked up year-on-year and the epidemic cooled down. This week, it was disclosed that the EU CPI in April was 8.1% year-on-year (the previous value was 7.8%); In April, the CPI of the euro area remained unchanged year-on-year, with a month on month ratio of 0.6% (the previous value was 2.4%); This week, the United Kingdom, Germany and France added 97478 cases of covid-19 on a daily basis, down 246372 cases from last week, and the epidemic continued to cool. 4) In April, the global manufacturing PMI was 52.2, down 0.7 month on month, and the global economy entered the downturn stage for further verification.

Precious metals: the Federal Reserve issued "partial Hawk" remarks, and the rise of recession expectations supported precious metal prices

In a hawkish speech this week, Fed chairman Powell said that interest rates would be raised above neutral levels if necessary to deal with inflation. Market worries about the US recession increased. During the week, the US dollar turned from up to down, supporting the price trend of gold and silver. As of May 20, Comex gold closed at US $184210/oz, up 1.87% month on month; COMEX silver closed at US $21.674/oz, up 3.20% month on month; SHFE gold closed at 397.18 yuan / g, down 0.62 month on month; SHFE silver closed at 4775 yuan / kg, up 3.15% month on month.

Base metals: the logistics problem is alleviated, steady growth is further strengthened, and the price of base metals is supported

During the week, the Fed said it would maintain a radical pace of interest rate hikes to curb inflation until inflation reached 2%. Radical remarks exacerbate market concerns about recession; In China, the epidemic situation in China has eased, the logistics and transportation problems have been further alleviated, and the resumption of work and production in China continues to be promoted. At the same time, China has lowered the five-year LPR to boost market confidence. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose and fell by 2.3%, 5.0%, 4.0%, 4.7%, 0.9% and 1.1% respectively this week, and the price rebounded as a whole compared with last week.

1. For electrolytic copper, on the supply side, with the cooling of the epidemic, enterprises gradually return to work and production. On the demand side, the overall supply and demand of the market has gradually warmed up, but the market has not shown an unexpected demand performance. As of May 20, the social inventory of Shanghai, Jiangsu and Guangdong was 116600 tons, and the cumulative inventory of Zhou Du was 0600 tons.

2. For electrolytic aluminum, the new production capacity at the supply side and the supply side continues to be put into operation slowly. The production of individual enterprises is reduced, and the overall supply is declining. On the demand side, the spot purchase of electrolytic aluminum in the downstream is still relatively limited this week, and the inventory of electrolytic aluminum plant continues to be consumed, but the execution volume of long orders and the existing inventory are basically enough to maintain the needs of daily production, so the willingness of spot purchase is not very strong; The price of alumina was 2997 yuan / ton, and the gross profit per ton was 66 yuan / ton, down 8.02% month on month; The anode price was 7758 yuan / ton, with an average gross profit of 601 yuan / ton during the week, up 8.87% month on month; The spot price of electrolytic aluminum in the Yangtze River was 20770 yuan / ton, and the profit per ton of aluminum was 1813 yuan, up 30.28% month on month. This week, the inventory of aluminum ingots in eight places in China was 965000 tons, and the inventory of aluminum ingots in zhoudu was 37000 tons.

3. For zinc ingots, overseas continued the weak trend, driving the domestic and foreign price ratio to rise further; In China, although China has been boosted by optimistic expectations, the short-term consumption of zinc is still weak, and the social inventory has accumulated again during the week, leading to the price decline again. In the future, when both internal and external are weak, the price comparison is expected to remain volatile. This week, the total inventory of zinc ingots in seven places was 265800 tons, and 1100 tons went to the warehouse every week.

Investment suggestion: maintain the "neutral" rating of the industry

1. For precious metals, short-term high inflation supports gold prices, but under the trend of continuous tightening of overseas liquidity, the downward pressure on precious metals is becoming increasingly prominent.

2. For basic metals, China's economic work has set the tone of "stability first", and the steady growth policy will continue to be introduced to support demand confidence. However, globally, under the tightening cycle of the Federal Reserve, the demand for durable goods is still falling, and the structural opportunities brought by supply change are sought 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) , Jchx Mining Management Co.Ltd(603979) , Tongling Nonferrous Metals Group Co.Ltd(000630) , etc.

2) precious metals: Shandong Gold Mining Co.Ltd(600547) , Chifeng Jilong Gold Mining Co.Ltd(600988) , Yintai Gold Co.Ltd(000975) , Shengda Resources Co.Ltd(000603) , etc.

Risk tips: macro fluctuations, policy changes, and the premise assumptions of supply and demand measurement are less than expected.

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