winningbaccarat| The non-ferrous metals sector rebounded overall, with these two varieties among the top gainers! LME aluminum inventories surge

Futures daily

May 10thWinningbaccaratThe non-ferrous metal plate rebounded as a whole, with Shanghai Tin and Shanghai Zinc among the top gainers. The main contract of Shanghai tin closed up 3%.Winningbaccarat.33% to 268050 yuan / ton. The main contract for Shanghai Zinc closed up 2.62% at 23720 yuan / ton. Why does the non-ferrous metal plate stop falling and rebound?

Why does the non-ferrous metal plate rise as a whole?

After the shock adjustment a few days ago, the non-ferrous metal plate rose again on Friday, and some varieties reached a new high. "the overall pull up of the non-ferrous metal plate is mainly due to the good macro mood, and the supply side of most varieties is tight." Citic Futures non-ferrous metals senior researcher Zheng Wei said.

In the domestic macro aspect, the import and export data in April exceeded market expectations, indicating a steady rebound in the economy. On the policy side, some cities lifted purchase restrictions, boosting real estate demand to a certain extent and giving market confidence. Under the background of strong macro sentiment and disturbance on the supply side of most varieties, the overall price of non-ferrous metals is strong.

Overseas, interest rate cuts are expected to heat up again, supporting the non-ferrous metal plate to stop falling and rebound. Jiang Lu, head of futures industrial products research at CITIC Construction Investment Co., Ltd., said that in the first week after the May Day holiday, Fed officials released eagles one after another, emphasizing the long-term high interest rate environment, suppressing the market's risk appetite. However, the number of initial jobless claims announced on Thursday rebounded more than expected, reaching its highest level since August last year, causing the dollar index to weaken and prompting the non-ferrous metals sector to rebound.

Overall, Sun Kuangwen, a non-ferrous analyst at Xinhu Futures, said that expectations of domestic and foreign macro policies dominated the rise in non-ferrous metals on Friday. Recently, restrictions on the purchase of real estate have been abolished in many places in China, and the policy guidance of stable real estate has become more and more clear. At the same time, the cooling of the US labor market, coupled with the fact that the US GDP growth rate in the first quarter was lower than expected, provided the basis for the Federal Reserve to cut interest rates this year.

Expectations of tighter supply and demand push up tin prices

In the non-ferrous metal plate, Shanghai and tin led the increase. "in addition to the boost of macro factors, the fundamentals of Xi City can not be ignored." Sun Kuangwen told Futures Daily that mainly due to the expected reduction in tin supply, the WA state of Myanmar has not formally recovered since the total suspension of tin mining in August last year, and concerns about a reduction in tin supply persist. At the same time, Indonesia's export license approval has a great impact on the country's refined tin exports, which rebounded sharply in March, but still below the normal level in previous years.

Zheng Wei said that tin itself does have tight expectations on its own fundamentals. On the one hand, the supply of tin ore is constantly disturbed. The delay in the approval of Indonesia's export quotas has led to a reduction in global refined tin supply and the elimination of LME inventories; Myanmar tin mines have not yet resumed production, and although domestic ore imports are acceptable, they are expected to cause domestic tin ore supply shortages from April. On the other hand, the direction of demand recovery is relatively clear. After two years of decline, traditional electronic demand has finally ushered in the industry replacement cycle; at the same time, the continued growth in demand for photovoltaic and new energy vehicles continues to contribute to demand growth. In 2024, global demand for tin ingots will increase significantly, expected to increase by 5.0 per cent year-on-year to 399000 tons.

From a realistic point of view, Sun Kuangwen said that there is no obvious supply gap in the current tin mine, and the tin concentrate processing fees have even risen slightly recently, while the smelter is basically running smoothly and the output is high. However, concerns about a decline in mine-side supply persist until mining resumes in Myanmar. With Indonesia's export approval resuming, overseas refined tin supply has rebounded, and LME tin inventory has changed from a decline to an increase. On the other hand, the consumer side has been expected to improve, but the actual performance is not good, the increase in new orders of downstream solder enterprises is not obvious, and the recovery expectation of the consumer electronics market has not been fulfilled.

Overall, Jiang Lu said that the current tin industry presents a "strong expectation" and "weak reality" game situation. As of May 10, global exchange tin inventories reached 21000 tonnes, up more than 40 per cent from the hub in 2023. At present, downstream enterprises only purchase a small amount after the price correction, and the domestic spot has maintained a discount situation for a long time, confirming the "weak reality" performance of supply and demand. However, the market is more optimistic about the future of the tin market, and expectations of tight supply and recovery in demand have not abated.

Looking ahead, Zheng believes that supply constraints and demand pick up or guide tin prices to continue to strengthen, while the low price sensitivity of the terminal brings high elasticity to tin. "although inventories are at an all-time high, disruption on the supply side and deficiencies in new tin projects indicate a tightening of follow-up supply, while the demand side has successfully bottomed out in 2023 and the direction of recovery is clear. With the elimination of terminal inventory, the downstream of the second quarter is expected to start a replenishment cycle, the suppression of high inventory on tin prices will be eliminated, prices will continue to run strongly. " Zheng Fan said.

"at present, there are no new variables in the tin supply and demand game. considering the repetition of risk preference in the current market, the persistence and height of tin price rebound are expected to be limited." Jiang Lu said that in view of the rising tin cost curve and the tight supply of overseas tin mines, there is a strong support below the tin price, and with the support of the automobile trade-in policy and the active replenishment cycle of the electronics industry, tin ingot consumption is expected to be better.

Zinc ore tight logic continuous fermentation to boost zinc price

In terms of zinc, Mo Xiaoxiong, a non-ferrous metals researcher at Guotai Junan Futures Research Institute, said that the rising elasticity of Shanghai zinc is more based on the continuous tightening of the mining end and the strengthening of the marginal consumption margin, that is, although the fundamental contradictions are not sharp, they are moving in the direction of optimism, and the marginal warming of consumption promotes the upward repair of prices.

Zheng Xie said that the supply of zinc ore has been tight since the beginning of the year. After a cumulative reduction of 300000 tons in overseas zinc mine production in the second half of 2023, new zinc mine production cuts occurred in Peru and Australia in the first quarter of this year, resulting in a sharp drop in zinc mine imports in March compared with the same period last year. The processing fee of zinc mine at home and abroad continues to move downward under the logic of tight supply of zinc ore, and the smelter has lost money at present. Under the background of low processing fees, the pressure of production reduction in the smelter is greater, and the supply side is more tight.

Mo Xiaoxiong said that under the background of low capital expenditure, the previous low zinc price operation forced the mine to reduce production, and the large mine Antamina took the initiative to reduce zinc ore production, the zinc mine increment forecast was lowered during the year, and some smelters fell into losses through low TC transmission, and refined zinc output is expected to continue to be under pressure in the second quarter. However, with the pick-up of terminal consumption, the willingness to replenish stocks in the lower reaches has rebounded one after another, providing a boost to the rise in zinc prices.

"similar to copper, we believe that the bargaining power of the zinc industry chain has been gradually transferred to upstream enterprises." Jiang Lu said that recently, domestic mines have begun to increase production, and overseas mines have also begun to resume production after the end of the disturbance. However, on the whole, the contribution increment before June is relatively limited, and the new production increment of overseas mines is more than realized in the second half of the year. Therefore, the zinc pricing logic of "tight mining-low processing fees-tight supply" will continue in the first half of the year.

Overall, Zheng Wei believes that with the tight logic of zinc mine supply continued fermentation, there is support for zinc prices, zinc prices are expected to remain strong in the short term. In the medium term, we need to pay attention to the improvement of the supply side after the rebound of zinc prices.

Guard against the risk of surge in LME aluminum inventory

After the Asian market closed on May 10th, LME reported a sharp increase in aluminium stocks by 424000 tons to 904000 tons, the highest level since January 2022. It is worth noting that all the new inventory comes from Port Klang in Malaysia.

"We initially judge that the goods are Rusal, and international traders plan to export to China and have been stored in the port of Klang since the domestic import window was closed in April." Wang Xianwei, a futures researcher at Citic Construction Investment Co., Ltd., said that the sanctions imposed by Britain and the United States on Russian metals in mid-April narrowed the Shanghai-Lun ratio and delayed the opening of the import window.

At the same time, affected by sanctions, the circulation of the goods in the international market is poor, and the holder chooses to deliver the goods in LME in order to obtain part of the rental income.

From the whole event, Wang Xianwei believes that traders from a profit point of view, overseas hidden inventory will be visible, short-term or to LME metal spot water has a certain suppression. At the moment when the import window is closed, it will not affect the domestic supply for the time being.

Guoxin Futures Nonferrous Metals analyst Gu Fengda believes that recently Shanghai Aluminum is running above the 20000 yuan / ton integer mark, taking into account the trend of domestic aluminum ingots going to the warehouse, and the expected policy support on the demand side, the trend of Shanghai Aluminum is on the strong side. However, in the context of the sharp increase in LME aluminum inventories and the obvious suppression of bullish sentiment in the outer market, the varieties of non-ferrous metals represented by Shanghai aluminum and alumina are likely to be dragged down. Affected by the news, the market opened on Friday night, Shanghai aluminum main contract turned downward, alumina futures fell even more. He predicted that under the influence of this incident, domestic aluminum fundamentals are stronger than overseas market support, short-term need to pay special attention to LME inventory changes, investors should pay attention to risk control.