Nonferrous Metals Development Trend Forecast in 2015

First, non-ferrous metal fundamentals will still be differentiated

copper

In terms of copper, according to forecasts, the global mine production capacity in 2015 will increase by 2.5 million tons or 11.2%, and in 2016 it will be 2.77 million tons or 11.4%. The mine output increased by 1.24 million tons on the basis of 480,000 tons in 2014, and continued to increase by 1.49 million tons in 2016. The capacity utilization rate has started to increase since 2010, but the actual capacity utilization rate in 2014 was lower than the expected 85%, only 83.1%. This data is used to calculate that although a large amount of production capacity was put into production in 2015-2016, it is because Affected by cost and other factors, actual effective capacity may be less than expected. In addition, from the perspective of global economic conditions, except for the United States has stabilized and picked up, the situation in other regions is still severe, so capacity utilization will not necessarily remain high in 2015.

In 2015, Chile’s national copper mining company could implement a US$4.5 billion investment through financing. The National Bank of Chile raised US$3.5 billion through the issuance of bonds, of which US$1.5 billion was loaned to SMEs and US$2 billion was used to make mortgage loans to individuals who lacked funds. It can be seen that the Chilean side is making efforts to increase the output of ore. According to estimates from the Peruvian government, the country’s newly acquired mining investment amounted to approximately US$ 61 billion. China’s mining-related investments in Peru include, in addition to Minmetals' Las Bambas copper project, the Toromocho copper mine, Minmetals Group and Jiangxi Copper, which were still in the process of expansion, spent US$2.5 billion in joint acquisition of El Galeno copper and gold. The silver mine project, Shougang Peru Iron Ore Company's $1.5 billion iron ore expansion project operating in Marcona, and Jinzhao Mining planned to invest US$3.28 billion in the PampadePongo iron ore project. Vale also made new investments in Brazil, Canada, New Caledonia, and Indonesia. According to statistical data, until the peak of mine production in 2017, the global supply of copper ore is still in ample state.

aluminum

Aluminum is still subject to capacity pressure issues, and there are still huge numbers of new and ongoing projects. In 2015, the global aluminum production capacity is estimated to be close to 5 million tons, of which North America has plans to increase production.

However, China’s estimated new production capacity still exceeds 2.5 million tons. These new production capacities are mainly distributed in the western region and have natural advantages in terms of costs. At the same time, upstream and downstream facilities, especially deep-processing facilities, are relatively complete, and the industrial chain profits are evenly distributed. The downward pressure on aluminum prices is strong. The upstream supply of aluminum in 2014 due to the impact of bauxite export ban in Indonesia, the market was once worried that there will be upstream supply tensions, so the alumina also had a decrease in production during the year last year, but then production increased substantially, showing that the upper reaches of the tension Expected changes. At the same time, the drop in alumina prices and Australian alumina prices also shows that the tension brought by the ore-side has eased, and the export of bauxite including Malaysia, etc., has greatly increased and there is a better improvement in the future upstream supply. As a whole, the international supply capacity of bauxite in 2015 still has certain protection.

Zinc

Zinc is still a major highlight of non-ferrous metals. On the supply side, the tight supply of concentrates is the expectation that the market has been heated up, but we believe that the actual supply of concentrate is still sufficient to meet the refining demand at this stage. This can be seen from the slightly higher processing fees during the year. In 2014, the focus of the zinc market in the middle of the year was concentrated on closed mines. According to statistics, from 2014 to 2016, the world's total production capacity for shutdowns and shutdowns reached 1.609 million tons, and a total of 1,117,400 tons of new, expanded, and restarted production capacity remained. There will be a decrease of nearly 438,600 tons of production capacity, and the old mines are mostly high-grade mines, and the new mines are of low grade. Thus, the supply of concentrates in the later period will remain relatively tight.

The timing of the tightness of concentrates depends on the time of closure of mines in major mines, with a higher probability of occurrence in the second half of 2015. As China, the world's largest producer of refined zinc, is expected to achieve an expansion of refined zinc production capacity of about 460,000 tons in 2015, but this is still insufficient for downstream demand growth.

Second, consumption and demand

In terms of consumption, copper’s global consumption growth has historically mainly contributed to Asia. However, ICSG expects that in 2015, the Asia region may have only 1.7% growth, and the Americas region will have a certain growth rate, but the overall European region has only 1.11% growth.

China's consumption mainly depends on the electric power industry. Grid investment may maintain steady growth. However, if we consider other Marshall plans and other grid needs, there may be major changes and uncertainties. We believe that this growth rate should be underestimated.

In addition to the constraints of real estate factors on the demand for building profiles, the demand for industrial profiles driven by manufacturing industries, especially the aluminum alloy industry, is rapidly growing. Especially in 2015, under the influence of LME warehousing system may raise the cost of metal aluminum storage and hosting and other factors, the performance of aluminum spot in the international market will still be stronger than in China.

With the increase in shipments of iron ore, zinc prices will also receive demand support in shipbuilding and other areas. At the same time, the number of passenger vehicles in the world continues to improve, and it also has good support for zinc demand.

Third, the impact of the global economic environment

At present, the U.S. economy is recovering step by step. Various economic indicators, including the labor market, are favorable. The Fed has already withdrawn from quantitative easing. The U.S. dollar index has stabilized since the middle of last year and is now approaching 90. It is expected that this kind of strength will continue until the Fed raises interest rates. Time. The return of assets to the U.S. market is bound to put some pressure on emerging market countries. In addition, a strong dollar will also exert pressure on the commodity market. The strong recovery of the US job market is a bright spot. On December 18, 2014, the Fed’s two-day meeting conveyed a change in policy attitude. At the same time, in the quarterly economic forecast, the Fed is expected to achieve full employment in 2015, but inflation expectations have declined. The most important aspect is that Yellen announced the rate hike path for the first time. It is expected that the possibility of raising interest rates for the first time in mid-2015 will be more likely. The dollar will appreciate in anticipation of rate hikes.

Europe faces deflationary pressures, stagnating economy, weak recovery and high unemployment. In terms of fundamentals, European quantitative easing is well-accepted, but for the Euro section where the fiscal and currency are not unified, the ECB's policy will be hampered by all parties. It is not easy to introduce quantitative easing. The European Central Bank's decision-makers are preparing to consider buying sovereign debt on January 22, and Draghi is trying to get as much support as possible from most policy-makers and the public. Despite heavy pressure, the euro zone does not rule out the possibility of quantitative easing again in the context of falling crude oil and increasing deflationary pressure. This will help the market to a certain extent. The European economy is in a sluggish economy. The ECB intends to increase its balance sheet from the current 2 trillion euros to 3 trillion euros. Combined with the 400 billion euro TLTRO officially implemented at the end of August last year, the European Central Bank is expected to continue to expand its balance sheet. To stimulate the economy.

From the macro-environmental perspective, we believe that the European economic data may continue to be weak, and the probability of continued quantitative easing in Europe is greater. The differentiation of resource supply has become a trend indicator for the overall trend of non-ferrous metals. The adjustment of the global cycle of the industrial structure will continue, and the resources game of the mining giants will continue to expand.