The continued weakness of the U.S. dollar this week, coupled with the market’s expectations of central banks’ purchases of gold, kept gold strong and once rushed to 1,126 U.S. dollars per ounce. While gold prices continued to innovate, basic metals did not perform well. Due to the speed of downstream recovery and inventory concerns, buying interest was not high, and LME stocks remained high. In particular, LME copper stocks have now risen to 400,000 tons. , And high inventory will also put pressure on late metal prices.
Copper and nickel production continued to increase significantly in October. According to the information released by the Ministry of Industry and Information Technology, the value added of the nonferrous metals industry increased by 26.4%, which was 11.1 percentage points higher than that of the previous month. The output of ten non-ferrous metals was 2.44 million tons, an increase of 16.3% year-on-year, an acceleration of 6.3 percentage points from the previous month. Refined copper production increased by 24.48% year-on-year, an increase of 6.6% from the previous period; electrolytic aluminum production increased by 9% year-on-year and increased by 3.37% from the previous quarter. The output of electrolytic nickel increased by 113% year-on-year and increased by 40.79% compared with the previous period, setting a record high.
The increase in electricity prices is expected to catalyze the trading opportunities in the electrolytic aluminum sector. On the one hand, we believe that electrolytic aluminum companies with relatively high proportion of self-owned power plants and preferential direct electricity purchases will directly benefit. On the other hand, we believe that the current domestic sales situation of electrolytic aluminum is stable, and the downstream demand continues to recover, which will help electrolytic aluminum enterprises to further increase sales prices, thereby covering the increase in costs caused by the increase in electricity prices. It is estimated that the sales price will increase by 2.5 points, and the average production cost of the electrolytic aluminum industry will increase by around RMB 350/ton, which means that the production cost will increase by 2-3%. Domestic electrolytic aluminum listed companies, such as China Aluminum, Jiaozuo Wanfang, Zhongfu Industry, Shenhuo, etc., have a higher proportion of their own power plants, so the cost pressure brought by the increase in sales price is small, and the production cost only rises. -1.3%, lower than the industry average of 2.6%. Therefore, investors are advised to pay attention to Zhongfu Industry, Jiaozuo Wanfang, Shenhuo and China Aluminum.