① Everyone sees copper as an important cornerstone of the energy transition. This makes for a very attractive demand-side context. ② In the absence of geopolitical supply shocks, the ceiling for Brent oil is $90. The reason is that high excess capacity and higher prices may cause OPEC+ to increase production in the third quarter.
Financial Services Association, April 24 (Editor Chen Kandi) Recently, with a focus on gold and silver, non-ferrous metals such as copper, tin, and other non-ferrous metals have followed the sharp rise. At the same time, comments about the commodity bull market have continued to be heard.
As of today, in January, gold has risen by more than 14%, silver by more than 20%, copper by 14%, zinc by 10%, aluminum by 7%, and tin by 15%. However, crude oil, which many institutions are optimistic about, has not yet begun to rise sharply.
Furthermore, commodity related resource stocks also showed significant gains. As of April 10, the cumulative growth rates of the non-ferrous metals, coal, petroleum and petrochemical industries since 2024 were 16.7%, 14.3%, and 12.2%, respectively, and the performance was significantly better than other tier-1 industries.
China Merchants Securities pointed out that in the early stages of this round of commodity growth, the Fed's interest rate cut expectations were mainly traded. However, as the Fed's interest rate cut expectations continued to be postponed, commodity prices remained strong, mainly driven by a combination of factors such as depreciation of the US dollar's intrinsic value and improved global demand. The increase in demand brought about by US demand and the depreciation of the intrinsic value of the US currency due to the unlimited increase in the supply of US bonds are the key reasons for the sharp rise in industrial metals and gold in this round.
Some analysts said that at present, it is necessary to continue to seize definitive investment opportunities for upstream resources, and the prices of resource products such as gold, crude oil, and industrial metals represented by copper are all expected to be supported in the future.
The crude oil market can still be expected in the future, boosted by 7 major favorable factors
In terms of price, crude oil rose 7% in the past two months, which is slightly weaker than precious metals, but institutions are more fond of the future market.
The Financial Services Association previously summarized 7 factors favorable to rising oil prices; ① the conflict between Iran and Israel ② Mexico plans to restrict crude oil exports ③ US manufacturing PMI returns to the expansion range ④ Russian refineries are continuously attacked ⑤ the US will resume energy sanctions against Venezuela ⑥ OPEC+ is expected to maintain production limit measures this week ⑦ Hedge funds are actively increasing crude oil positions.
Goldman Sachs said that in the absence of a geopolitical supply shock, the ceiling on Brent oil prices was $90. The reason is that high excess capacity and higher prices may cause OPEC+ to increase production in the third quarter. Inventory has remained stable over the past year, and prices have triggered stable reactions, including increased OPEC exports and reduced demand for crude oil from US SPR (strategic crude oil reserves) and refineries.
Additionally, Goldman Sachs has adjusted the Brent crude oil price forecast for the second half of 2024 to $86 (previously $85) and $82 in 2025 (previously $80).
As of 11:30 a.m. this morning, the main crude oil futures contract had risen 1.76% to 648.2 yuan/barrel.
Copper prices hit a new high since 2006, taking over gold as the new favorite
Gold has recently declined, while the non-ferrous metal copper has begun a spectacular bull market.
On April 22, Shanghai Copper reached a high of 81,050 yuan/ton, a new high since 2006.
On the one hand, due to the closure of Cobre Panama, the world's largest open pit copper mine, the global supply of copper concentrate this year turned into a shortage.
Commodity market analyst Jake Lloyd-Smith said that the surge in copper prices continued at an accelerated pace this month and is now on the verge of returning to 10,000 US dollars per ton. The rise in copper prices appears to be due to the still-stable macroeconomic data in the US and prospects for an improvement in China's manufacturing industry. Also, everyone sees copper as an important cornerstone of the energy transition. This makes for a very attractive demand-side context.
“In particular, a major copper mine in Panama was closed, Chilean company Codelco production was sluggish, and a project in the Democratic Republic of the Congo was suspended.” He said that from a broader perspective, the industry has continuously warned that the construction of large-scale mines is becoming more difficult and more expensive.
According to an analysis by Everbright Futures, the US short-term bond bid plan slightly exceeded expectations, showing strong demand and fluctuating expectations for a soft economic landing, but market liquidity remained stable; on the domestic side, the economy is resilient, and the market is also concerned about more steady growth policies. Central bank officials answered last night about purchasing treasury bonds in the secondary market.
In terms of fundamentals, judging from recent domestic fundamentals, high copper prices have dragged down demand. Whether in terms of downstream construction or inventory status, there are signs of slowing down, but prices continue to rise driven by LME, while the domestic market passively follows suit. Copper prices weakened last night. Although import losses were slightly repaired, the resilience of LME can also be seen. The focus of the long and short game is still overseas. Everbright Futures believes that expectations deviate from reality, and that it is not surprising that the mid-term adjustments have arrived. It is only close to the May 1st holiday, and external market volatility is difficult to predict, so pay attention to position control.