The trend of metal prices will not fundamentally change the supply and demand of differentiated copper, at least for the moment there is no clear indication that any change in supply or demand has occurred. Sling,Flat Belt Sling,Webbing Sling Belt,Polyester Flat Webbing Sling Jiangsu Zhongyi Work Rigging Co., Ltd. , https://www.zy-rigging.com
The bull market pattern remains that global stocks remain low, as well as factors such as the continued weakening of the US dollar, will continue to support the basic metal bull market. The price shock region may widen and the leading role will weaken.
We believe that the trend of various types of basic metals will be divided, and zinc and aluminum are expected to go out of the independent market. Even if the price of copper continues to fall sharply, regardless of whether it is down to $6000 or $5000 (the price level is not very important to other varieties), as long as the balance is re-established at the new price, its negative impact on the confidence of other varieties will gradually weaken. Other species will perform their own way under the influence of their respective fundamentals.
The cost of production as a price-influencing factor diminishes as the price gradually moves away from the cost zone. Supply and demand are the real decisive forces. Between the various metal species, the original price relationship established by the cost factors, the distinction between the noble and the noble will eventually be broken. Metal prices will no longer be expensive.
In the case of metallic aluminum, the sharp decline in costs cannot be used as a basis for speculating on the decline in aluminum prices. At present, the prices of copper, nickel, zinc and even oil are obviously not directly related to production costs.
The supply and demand relationship supports the zinc price The supply and demand relationship of zinc is relatively strong for price support. LME zinc stocks have fallen below 100,000 tons and have been reduced by nearly 30,000 tons per month. Before the second half of 2007, worries about supply disruptions will always support zinc prices. The current zinc price is $4150, and we believe that it is expected to break through $5000 in the next few months. The low inventory and worries about potential supply disruptions have provided strong support for zinc prices and zinc prices are expected to break through $5000 in the future. Zinc listed companies are more explosive, it is recommended to increase the holding of Chihong Zinc and Sino-King Lingnan.
The electrolytic aluminum company's growth can be electrolytic aluminum. Listed companies are the group of basic metals that can be profitably obtained through smelting processing. The company's performance is less sensitive to aluminum prices than other varieties, and the price difference between alumina and electrolytic aluminum is a truly important factor.
The relatively new domestic alumina spot price is ¥2100, and the imported alumina CIF Lianyungang $210 is lower by approximately RMB300 than the open offer of ¥2400 adjusted by Chinalco earlier this month, which means that it can resist the risk of falling electrolytic aluminum prices by nearly 600 yuan. We still maintain the forecast that alumina prices will continue to fall. It is expected that alumina prices will be ¥1500 for a certain period of time in the second half of next year or early 2008.
At present, the domestic aluminum price is ¥20,500 or more, which is higher than our expectations. We insist on the weak balance of supply and demand of electrolytic aluminum—supply a small amount of gaps, and the price is mainly based on the forecast.
With regard to the concerns that there may be a rapid increase in the supply of aluminum in the market, our view is:
First, supply growth is mainly due to the increase in capacity utilization, and new production capacity will be limited (foreign countries are subject to energy and environmental factors; domestic are subject to macro-control).
Second, the growth rate of demand is even more pronounced. From January to August this year, domestic demand increased by 19.8% year-on-year. The newer statistics for domestic supply from January to October this year increased by 17.6% year-on-year.
Thirdly, assuming that electrolytic aluminum's new production capacity is not limited, for projects with a production capacity of over 100,000 tons, the investment impulse that is now starting may take 2-3 years to achieve full capacity. For example, the 150,000-ton project invested by Lanzhou Aluminum in 2004 is expected to be put into operation in early 2007; and the 280,000-ton project invested by Yuze Power and Chinalco, which entered into a joint venture with Chinalco, will be put into production in early 2006.
Fourth, the length of the industry cycle depends on the characteristics of the industry. Although the length of each cycle is different, it has a basic reference length. We insist that the cycle of electrolytic aluminum started in the middle of this year will continue for 2-3 years. A period of less than one year is a seasonal industry, not a cyclical industry.
Transparent Risks and Profits The risks of investing in listed companies in the nonferrous metals industry are actually far less than those that cannot be grasped in the future. Because of the existence of futures markets, changes in the price of non-ferrous metals have become more transparent and risks are foreseeable. Business operators can avoid risks and lock in future profits through futures market operations. Moreover, as a bulk raw material, non-ferrous metals have the characteristics of homogeneity and there is no risk of unsalable sales.
Only in the highly liquid futures market will prices change frequently. It is not indicating risk but means more trading opportunities. Under the premise that the cost factors are relatively certain, non-ferrous companies can lock in advance the profits for the next few years at an appropriate time, which is impossible for companies in other industries to do.
The price of non-ferrous metal goods is closely related to the performance of listed companies. However, short-term changes in commodity prices have little impact on company performance. What is important is the medium-to-long-term price trend.
It is recommended to increase the holdings: Yunlv Stock, Guanlv Stock, Jiaozuo Wanfang, S Lan Aluminum, Chihong Zinc Handan and Zhongjin Lingnan.