newdragontiger| Strong daily limit! Gold, silver and copper are all going crazy!
editor 2024-05-20 21:34:31 Finance 22
After a brief correction, the non-ferrous metals represented by gold, silver and copper once again set off a rising tide.
Iran's president's plane crash intensified this morningNewdragontigerAfter the risk aversion in the market, precious metals such as gold and silver began to pull sharply in early trading, the price of gold rebounded to an all-time high in April, the price of BofA hit an 11-year high, and all contracts of Shanghai silver hit the daily limit.
Copper futures, which have been forcing the short market recently, have also reached new highs again, and international copper and Shanghai copper futures have also soared by more than 5%. Over the past three months, copper in Shanghai has soared by more than 30 per cent.
Unwittingly, important non-ferrous metals such as gold, silver, copper, tin and nickel have risen by more than 30% in international commodity futures since 2024, far ahead of other commodities except cocoa.
A series of stimuli, such as geopolitical wars, mismatch between supply and demand and loose monetary expectations, have contributed to this unexpectedly strong commodity supercycle.
This 30% increase is probably not the end of it.
01
War-- the most direct fuse
War has always been the most direct factor in stimulating the surge in commodities, especially gold, silver, copper, tin and nickel, which are key commodities that can maintain their value in the long run.
In fact, from the beginning of the war between Russia and Ukraine to the outbreak of the Israeli-Palestinian conflict in October last year, as well as the continuous fermentation of geo-war events such as the Houthi forces in the Red Sea, there are sufficient reasons for safe-haven funds to rush into non-ferrous metal contracts to hedge.
The reason why copper futures rose much more than other varieties, there is also an important "fuse"-"forcing short" market.
According to reports, due to the sanctions imposed by Britain and the United States on Russia, Russian copper produced after April 13 cannot be used for delivery.
Russian copper accounted for 62 per cent of LME copper inventories in March and 91 per cent of Russian primary aluminium in LME-approved warehouses, according to data released by the London Metal Exchange (LME). The proportion of Russian copper is so high, but all of a sudden, because it can not be used for delivery, it will inevitably cause the exchange to be unable to gather together the replenishment source in a short period of time.
According to CICC, COMEX copper inventories have fallen from nearly 30, 000 tonnes in early April to 20, 000 tonnes on May 17, with inventories at a low level and sudden surge in delivery pressure.
It is reported that as of last week, copper futures on the two exchanges in New York and London had attracted as much as $25 billion in bullish funds, and the market for "forcing positions" was approaching.
In order to prevent the frenzied integration of funds into "short selling", the exchange directly asked for a margin increase of US $500,000 to US $5000 per hand. Although this move suppressed the opening of long positions, it also increased the financial pressure of the bears who had suffered heavy losses. They had to surrender one after another and admit defeat.
The surge of international copper futures contracts is also transmitted to the domestic futures market, as well as other futures varieties.
It eventually led to a collective carnival of non-ferrous metals.
02
Interest rate cut and superimposed imbalance between supply and demand continue to catalyse the rise.
In addition to the two fuses of war and emptiness, the overall upward trend of these commodities has also been supported by expectations of interest rate cuts over the past month.
Let's take a look at precious metals first.
In recent trading days, traders have been increasing their bets that the Fed could cut interest rates as early as September. Last week, the United States reported a decline in April CPI data, and the monthly rate of retail sales fell unexpectedly in April, indicating that inflationary pressure in the United States has eased.
Interest rate futures show that the market expects the fed to cut interest rates by about 52 basis points this year, with a probability of more than 70 per cent in September.
Against the backdrop of record gold prices, money has also begun to shift to silver as a bullish allocation, and COMEX silver futures have now risen above $32 an ounce, an 11-year high. Domestic silver futures continue to hit a record high.
However, unlike the main use of gold lies in the attribute of financial investment, silver in addition to the risk aversion attribute, its own industrial attribute gives it better price flexibility.
The industrial demand of silver covers many key areas from high-tech electronic products to renewable energy, health care and so on. The comprehensive effect of these needs makes the silver market show the characteristics of diversification and high complexity. As domestic silver futures and gold exchange inventories continue to be removed, the fundamental supply and demand situation now supports a breakthrough in silver prices.
According to the analysis of relevant research reports, the structural shortage will become the key to promote the price center of silver in the future. According to the World Silver Association, the total global demand for silver in 2023 is 35551 tons, with a silver gap of about 4400 tons. Total global silver supply is expected to increase by 2-3 per cent to more than 31700 tons in 2024, driven by a recovery in mineral silver production. The total demand for silver is expected to increase by 1% to more than 36700 tons; in the future, the gap between supply and demand will remain high, reaching about 5000 tons.
In terms of copper futures, in addition to the empty market caused by Russian copper sanctions, what really makes the copper price stand is its unbalanced supply and demand structure.
China and the United States have always been the largest copper users in the world, but they are not major copper producers.
On the supply side, major copper producers such as Chile and Peru have failed to steadily increase their production in recent years due to some political reasons and their own conditions, and Russia has also ranked among the top five countries in the world in copper reserves, but now the West refuses to deliver copper futures in order to sanction Russia, which is bound to aggravate the pressure on the global market for copper supply.
The International Copper Research Group (ICSG) lowered its copper production growth forecast for 2024 to zero.Newdragontiger.5% is mainly due to the slower-than-expected increase in copper production, the delay in the commissioning of the project, and the reduction of production guidelines by major producers.
On the demand side, China and the United States, as the world's largest copper users, have also seen a steady increase in demand for copper in recent years.
The US economy has been strong in recent years, and the demand for copper has been rising significantly driven by economic plans such as deliberately guiding the return of manufacturing and upgrading infrastructure construction in Daxing.
On the other hand, China's economy is in a state of downward pressure, but the upsurge of investment in new energy vehicles and scenery power grid continues to bring incremental demand for copper. with the strong promotion of last year's "Baojiao Building" and this year's "de-stock housing" policy, the real estate end of another major use is expected to form a strong recovery in demand for copper.
At present, the supply and demand situation of the copper market has been in a tight state. The latest weekly data show that in the domestic market, as of Monday, May 20, copper inventories in the mainstream areas of SMM fell 0% month-on-month compared with last Thursday.NewdragontigerBetween 760000 and 402800 tons, inventories are decreasing in most parts of the country.
These have also become the reasons that stimulate copper futures prices to continue to soar.
03
The inevitable super cycle
Not long ago, Goldman Sachs raised its forecast price for copper prices to the end of this year from US$10,000 per ton to US$12,000. Currently, copper futures have soared to US$11,000.
However, stimulated by the short-term market caused by "sanctions on Russian copper", Goldman Sachs 'target value is likely to be breached soon.
Taken together, the major factors of geopolitical war, monetary easing, and imbalance between supply and demand are still significantly stimulated at present and are expected to continue for a long time to come.
Stimulated by their joint efforts, a global commodity super cycle represented by non-ferrous metals such as gold, silver and copper has become inevitable.
Domestically, public utilities such as hydropower, energy, and transportation services have begun to increase prices one after another. Under policies such as strong rescue of real estate and promotion of automobile and home appliance consumption, the price increase of upstream industrial materials will gradually become an objective trend.
Therefore, this wave of commodity price increases is far from over.
which would in turn lead tonewdragontigerOur various consumer goods and services will also increase in prices. Next, we may soon see news in this regard published in the newspapers.
This is actually the transmission process of rising inflation, which we cannot avoid.
However, for investors, it may also be a feast about inflation and asset investment. For example, upstream energy and materials (mass goods and related stocks), downstream consumption and services will all usher in significant benefits, and the market is already trading this logic.
Don't miss this rare and coming dividend period. (End of the full text)