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Copper is still the preferred base metal in the world. Global nickel production will increase by about 11% in 2019.
Release time:2019-05-10Browse times:53

ABSTRACT: Copper is still the first choice in the field of basic metals. Zinc prices will fluctuate in the short term, and zinc stocks will rebound in the second half of 2019 as production starts to rise from the end of the second quarter. Nickel and battery materials may face difficulties in 2019, but they will remain strong in the long run.






On May 6, 2019, the SMM/HKEX/BBG Asia Metals Seminar, co-sponsored by SMM, HKEx and Bloomberg, was successfully held at the 7th LME Asia Annual Conference. At the meeting, Ian Roper, general manager of SMM Singapore office, made an analysis of China's domestic economic development and the future trend of major metals. "Copper is still the first choice in the field of basic metals," he said. Zinc prices will fluctuate in the short term, and zinc stocks will rebound in the second half of 2019 as production starts to rise from the end of the second quarter. Nickel and battery materials may face difficulties in 2019, but they will remain strong in the long run. Infrastructure will support steel prices in the first half of 2019, which will also support iron ore prices. It is expected that by the end of the second quarter, the production capacity of running electrolytic aluminium will increase by 1-1.3 million tons, which will bring pressure to the market in the third quarter. Alumina prices have recently fluctuated and may decline in the second half of this year.




Domestic Macroeconomic Data Drive the Development of Metal Market Strongly




China's strong performance at the beginning of 2019 has given the market greater confidence in demand and infrastructure spending in 2019. The macro data in the first quarter are very bright. The gross domestic product (GDP) in the first quarter increased by 6.4% year-on-year, while the growth of industrial production, consumption, investment and import and export accelerated.




This year's marked improvement in domestic financing has supported development.




In early 2019, financing constraints were effectively alleviated. The Chinese government has urged local governments to speed up the issuance of bonds to finance infrastructure construction. At the same time, new loans have increased significantly in recent months.




copper




Demand for copper will continue to be strong in 2019, but the recent strengthening of copper supply and inventory will limit copper prices. On TC, spot TC prices have fallen below $70 per ton due to shortage of supply and smooth progress in China's smelter capacity.




With the expansion of the capacity of 730,000 tons of smelters and the net growth of global copper concentrate supply below 300,000 tons this year, TC should decline throughout the year, as well as the price of sulphuric acid.




If TC continues to decline, smelter profits will continue to shrink. So it is expected that the utilization rate of smelter capacity will be affected in the fourth quarter of 2019.




In the scrap copper market, the import volume of scrap six is expected to decrease dramatically by mid-year as the date of "scrap six" converting to restricted category (July 1) is approaching. By 2020, restrictions will be tighter.




Therefore, some high-quality copper scraps are likely to be reclassified as resources, but the key issue is to determine the criteria.




Although the physical tonnage of imported copper scrap decreased significantly in 2019, the average copper grade of imported copper scrap increased significantly, so the reduction of metal tonnage of imported copper scrap was not obvious.



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