Non-ferrous metals: interest rate expectations and power cuts affect the price trend

The CPI was high for two consecutive months and inflationary pressure was evident. This Saturday, the Bureau of Statistics released China’s macroeconomic data for August, in which the industrial added value in August increased by 13.9% year-on-year, which is the first recovery since the real estate regulation in May. The recovery of economic growth will increase the demand for metals; The CPI for August was 3.5, which is also the CPI value of more than 3 consecutive months since July, showing that the inflation pressure China is currently facing is very obvious. Whether or not to raise interest rates has become a major hidden danger in the metal price trend.

On the external disk, the European and American economies have started the trend of economic turbulence. The depression of the European debt crisis on Tuesday was a resurgence, and the US economy continued to show good data. The number of US citizens applying for benefits for the first time fell for three consecutive weeks, and this number had dropped to 450,000 last week.

Interest rate hike concerns and power cuts have affected the price of metals and maintained the “neutral” rating for base metals. Currently, there are two factors that have a substantial impact on the price of metals: First, concerns about raising interest rates; second, the current storm of power cuts. The continuous increase in the CPI 3 will inevitably aggravate the market's concerns about raising interest rates. At present, the real interest rate is negative, and the real estate market has rebounded. The possibility of raising interest rates cannot be ruled out. Power cuts will limit the supply of high energy-consuming electrolytic aluminum and thus support aluminum prices.

At present, among the basic metals, we are most optimistic about electrolytic aluminum, mainly due to power cuts. For other metals, due to the uncertainty of interest rate hikes, we remain cautious and wait-and-see attitude. We maintain our Neutral rating on base metals.

Inflationary pressure has become a catalyst for another round of gold price rises, maintaining the gold "buy" rating. China’s CPI has reached CPI for three consecutive months in March and August, and inflationary pressure is evident. In the context of global loose money, rising gold prices will become a constant trend. We are always bullish on gold and maintain the gold “buy” rating, which is ranked according to the size of performance flexibility: Shandong Gold , China Gold Gold , Hengbang Stock , Chenzhou Mining and Zijin Mining .

Rare earth related companies are sought after, continue to maintain the "overweight" rating of small metals. Small metal prices continued to strengthen this week. Small metal stocks related to rare earths have a strong trend. Specific stocks as Baotou Steel Rare Earth, the color of shares, Xiamen Tungsten, Rising colored. We continue to maintain our small metal rating as “overweight”, focusing on Xiamen Tungsten and Baotou Steel Rare Earth.

Investment strategy and industry ratings. In terms of investment strategy, the profit-making segment brought about by inflation is gold; rare earth-related companies are still Baotou Steel Rare Earth, China Resources, Xiamen Tungsten Industry, and Guangshou Nonferrous Metals.

In addition, this week we are paying particular attention to the trading opportunities of electrolytic aluminum plates brought about by power cuts and power cuts. According to the power supply and performance elasticity of captive power plants, the investment targets for electrolytic aluminum plates follow the order: Jiaozuo Wanfang and Zhongfu Industrial , Nanshan Aluminum , Shenhuo shares , China Aluminum and Yunlv shares .