Analysis review

The overall weakness of the non-ferrous metal market in the past six months is mainly due to three reasons:

1. Macroscopically weak. The intensity of the domestic economic recovery in the first half of the year and the pace of the Federal Reserve's slower rate hike process were not as expected, but the domestic economic recovery and the Federal Reserve's rate hike were gradually coming to an end.
2. The supply had generally increased. Copper, China's import volume of copper ore and concentrate from January to May 2023 was 11.31 million tons, a year-on-year increase of 8.8%. The overall import volume of copper ore in the first half of 2023 had increased compared to the first half of 2022. Nickel, China and Indonesia had seen a growth rate of up to 15% in high-grade NPI production this year, and NPI tended to be in large surplus. In 2023, Indonesia's NPI production will reach around 1.4 million tons, an increase of 20% year-on-year. The first batch of rare earth mining, smelting and separation total control indicators issued by the Ministry of Industry and Information Technology and the Ministry of Natural Resources were 120,000 tons and 115,000 tons, respectively. The total amount of light rare earth mining was 109,057 tons, an increase of 22.1% compared to the first batch in 2022, and the rare earth mining index continued to increase.
3. Downstream demand was average. The year-on-year decline in domestic real estate development investment continued to increase, with the newly started construction area from January to May decreasing by 22.6% compared to the same period last year.

Market outlook

Analysts from the Nonferrous Branch of SunSirs believe that the strength of domestic economic recovery in the first half of the year and the pace of the Federal Reserve's slowing rate hike process were not as expected, but inflation, job market, and economic growth in the United States will continue to decline in the second half of the year. The Federal Reserve's rate hike is coming to an end and is expected to end its rate hike cycle in third quarter of 2023. In the forth quarter of 2023, the strengthening of the risk of economic recession in the United States may open up market expectations for the Federal Reserve to start rate cuts in 2024, The macro outlook is expected to improve in the second half of the year. In the second half of the year, the demand for new energy terminals may improve, especially for photovoltaic, wind power and Alternative fuel vehicle related to new energy. In terms of real estate, there has been no significant improvement. In terms of supply, the supply of copper, nickel, and aluminum is loose, while the supply of zinc is relatively tight. Overall, in the second half of the year, the overall macroeconomic situation may be better than in the first half, with no significant improvement in downstream demand and no significant positive news on the supply side. It is expected that the overall average price of non-ferrous metals in the second half of the year will be in the middle of the first half, with prices mainly fluctuating and rising in the middle and low positions.

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