According to the research report of CICC, since the second quarter, supply risk concerns related to Russia and Ukraine have been suspended, Europe and the United States have entered a process of “passive interest rate hikes”, and demand in some overseas industries has begun to weaken. At the same time, domestic consumption, manufacturing and construction activities have been disrupted by the epidemic. , non-ferrous metal prices fell. In the second half of the year, demand in China’s infrastructure and construction sectors may improve, but it is difficult to offset the weakening of external demand. The decline in global demand growth may lead to a downward shift in the price of base metals. However, in the medium and long term, the energy transition will continue to contribute to increased demand for non-ferrous metals.
CICC believes that additional attention needs to be paid to the effect of overseas interest rate hikes on inflation in the second half of the year, which is critical for judging whether overseas economies will fall into “stagflation” next year or even in the future and the duration of demand pressure. In the domestic market, although the demand for real estate completions may improve in the second half of the year, considering that the growth rate of new real estate starts in China has dropped sharply since 2020, the demand for real estate completions may turn negative in 2023, and the outlook is hard to say optimistic. In addition, global supply-side risks have not subsided, such as geopolitical events, increased trade barriers, and rising resource protectionism, but the probability of extreme situations is reduced, and the impact on the fundamentals of commodities may also be marginally weakened. These medium- and long-term considerations may also have an impact on market expectations and price trends in the second half of the year.
In terms of copper, CICC believes that according to the global copper supply and demand balance sheet, the copper price center tends to decline in the second half of the year. Looking at the tight supply of new copper mines, the bottom range of copper prices will still maintain a premium copper of about 30% relative to the cash cost of copper mines, the gap between supply and demand has narrowed, and prices may still fall in the second half of the year. In terms of aluminum, cost support is effective, but price increases may be limited in the second half of the year. Among them, the rebound of aluminum prices will be dragged down by both supply and demand factors. On the one hand, China’s production capacity increase and production resumption expectations may suppress the price increase. On the other hand, although it is expected that China’s construction activities may increase in the second half of the year. A rebound will lead to better fundamentals, but the outlook for completion and construction demand next year is not optimistic over time. In terms of supply risks, although risk factors continue to exist, the possible impact is relatively limited: First, the possibility of RUSAL reducing production is low, and although there is still a risk of production reduction in Europe, the overall value may be lower than that at the end of last year. The concentrated production reduction has been greatly reduced, and the impact on the fundamentals has also tended to weaken.
Post time: Jul-01-2022
