Will non-ferrous metals usher in a staged rebound in the second half of the year?

Views:1990 Author:Site Editor Publish Time:2023-06-19 15:09:17 Orgin:Site

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In the first half of 2023, there will be a general and sharp decline in global commodities, with non-ferrous metals falling the most. The general decline in commodities is closely related to factors such as the economic slowdown of developed economies such as Europe and the United States, global monetary tightening, and the dissipation of supply disturbances caused by the epidemic and geopolitical crises. Looking ahead, we believe that after a period of active destocking in the domestic non-ferrous metal market, the pressure on inventory in the market outlook will weaken, and there may even be inventory replenishment activities. Potential for sexual backlash. However, the prospects for economic growth in Europe and the United States are not good, especially the banking crisis brought the risk of recession in the fourth quarter of the European and American economies. Non-ferrous metals may only rebound in stages in the second half of the year, rather than bottoming out.

relatively stable supply

From the perspective of the domestic economy, from January to April, the growth rate of industrial added value rebounded in stages, of which it rebounded to 5.6% in April, mainly due to the recovery of manufacturing output, but insufficient demand. In terms of industries, the growth rate of industrial added value in the upstream mining industry slowed down due to insufficient demand, and even showed a year-on-year negative growth in April. The year-on-year growth rate of the added value of the midstream processing and manufacturing industry, such as the non-ferrous metal smelting and rolling processing industry, has picked up steadily, rising to 7.4% in April, higher than the growth rate of 1.4% in the same period last year.

From the perspective of the official manufacturing PMI sub-indices, the production index fell slower than the new order index. In May, the manufacturing production index fell to 49.6%, but the new order index fell to 48.3%, which also shows that the output of the manufacturing industry has increased. The growth rate is still higher than the growth rate of demand, which brings that the manufacturing industry is forced to take the initiative to destock. In February, the year-on-year growth rate of finished goods inventory climbed to 10.7%, and then gradually fell back to 5.9% in May, returning to a relatively reasonable level.

The output of non-ferrous metals is relatively stable. Only the output of electrolytic aluminum and electrolytic nickel has declined in stages, but the cumulative output from January to April still increased year-on-year. According to data released by the National Bureau of Statistics, from January to April, the cumulative output of refined copper, electrolytic aluminum, refined lead and refined zinc increased by 12.9%, 3.9%, 9.7% and 8.2% respectively year-on-year. According to institutional research data, from January to April, domestic electrolytic nickel production increased by 36.4% year-on-year. In order to further verify the growth of domestic refined copper production, the agency surveyed 22 domestic mainstream copper smelting enterprises and found that the refined copper production of these 22 copper smelting enterprises increased by 18.5% year-on-year in April.

For electrolytic aluminum, due to the implementation of the "dual carbon" policy and the limitation of the 45 million tons capacity ceiling, the expansion of domestic electrolytic aluminum production capacity has slowed down in the past five years. Coupled with the transfer of electrolytic aluminum production capacity to clean energy areas such as hydropower, the instability of clean energy such as hydropower has led to fluctuations in the production of electrolytic aluminum. In February, Yunnan once again cut production by 20% due to persistent drought. However, since the domestic electrolytic aluminum production capacity is in a state of surplus as a whole, the impact of production reduction caused by hydropower instability on aluminum supply is relatively limited.

From the perspective of overseas markets, despite the continued sharp drop in European natural gas prices and the sharp drop in European non-civilian electricity prices, the European electrolytic aluminum and refined zinc industries will resume production in 2023, which means that similar to the energy crisis in 2022 that caused overseas non-ferrous metals The reduction in metal production will not be repeated. In terms of copper, according to data released by the International Copper Research Group, in the first quarter, global refined copper production increased by 7.5% year-on-year to 6.69 million tons. In terms of aluminum, according to data released by the International Aluminum Association, in April, the global primary aluminum production was 5.628 million tons, higher than the 5.609 million tons in the same period last year.

Demand continues to weaken

From the perspective of economic growth, the economies of overseas economies are slowing down in the first quarter, which means that overseas demand for non-ferrous metals is weakening. According to data released by the OECD, the year-on-year GDP growth rate of the G7 fell to 1.2% in the first quarter, compared with 4% in the same period last year.

In terms of countries, the actual year-on-year growth rate of U.S. GDP in the first quarter fell to 1.6%, and the quarter-on-quarter annualized rate fell to 1.3%, compared with 2.6% in the fourth quarter of last year. U.S. copper consumption is mainly distributed in construction, durable goods and home appliances, while U.S. real estate continued to weaken from January to April as mortgage interest rates continued to rise. Among them, new housing starts in April fell by 22.3% year-on-year. The International Copper Research Group found that in the first quarter, the global refined copper market had a surplus of 332,000 tons, which was 8,000 tons in the same period last year. U.S. aluminum consumption is mainly distributed in transportation, construction and packaging, and these three sectors account for 39%, 25% and 16% of its total aluminum consumption respectively. Core capital orders, which reflect the U.S. transportation boom, rose just 2.6% in April from a year earlier, compared with 5.8% a year earlier.

From the perspective of the domestic market, the main consumption areas of non-ferrous metals are electricity, construction, home appliances and transportation. From January to April, home appliances and automobiles benefited from exports, and production and sales did not decline sharply; sales of household appliances and audio equipment in social retail sales fell by 0.3% year-on-year; domestic automobile production increased by 8.6% year-on-year, mainly driven by the increase in new energy production. The production of traditional fuel vehicles only increased by 5.6%.

For copper, construction copper accounts for about 8% of domestic copper consumption, about 64,000 tons per month. From January to April, the cumulative real estate investment decreased by 6.2% year-on-year, and the cumulative housing area increased by 18.8% year-on-year. Copper consumption in the real estate field is mainly in the decoration stage after completion, but the social retail sales of construction and decoration materials from January to April decreased by 4.5% year-on-year , which means that after the completion of the house decoration, the consumption of copper is still weak. The year-on-year growth rate of power investment picked up. From January to April, power investment and power grid investment increased by 53.6% and 10.3% respectively year-on-year, mainly benefiting from the rising installed capacity of photovoltaic and wind power, but the growth rate of installed capacity of photovoltaic and wind power began after April. The decline shows that the growth rate of power investment is not sustainable in stimulating the consumption of non-ferrous metals.