According to SunSirs data monitoring, the May Colored Index continued its rebound in April. As of the end of May, the Colored Index closed at 815 points, up 2.9% from 792 points at the beginning of the month, down 4.2% from the beginning of the year, and down 3.07% year-on-year. SunSirs nonferrous industry analysts pointed out that compared with the 4.65% rebound in the April colored index, it was slightly inferior in May, only rebounded by 2.9%, the rebound rate has slowed down, affected by COVID19 this year, the colored index hit the bottom on March 19th, after the outsole, Nonferrous Metals has been in a volatile rebound trend, with a cumulative rebound of 11.79%, but it is still lower than the value at the beginning of the year and has not reached the level of the same period last year.
In May, in the non-ferrous sector, the precious metals sector led the rise with a 9.58% increase, base metals rose 2.05%, and rare earths rose 0.94%.
The nonferrous market in May slowed down compared to April, mainly due to the following reasons:
1. The demand growth effect slows down. Due to the impact of the pandemic, the demand was released in March and April. The non-ferrous operating rate reached 90% in April. The capacity utilization rate of commonly used non-ferrous metal smelting products was 86.6%. The capacity utilization rate of copper and aluminum materials resumption and recovery enterprises gradually recovered. The capacity utilization rate of copper and aluminum processing enterprises that resumed production reached 90.6%. By May, the room for demand growth was less than 10%.
2. Metal consumption and storage effect consumption. At the end of April, it was reported that the Yunnan Provincial Government and Gansu Gansu Province would purchase and store non-ferrous metals, which greatly encouraged the non-ferrous market to rise. However, with the favorable consumption, the market focus refocused on the fundamentals, there is no major favorable situation, the metal market growth slowed down.
3. Mining restarts. Previously, the metal mine transportation was blocked due to the foreign epidemic situation. As the mining industry restarted, it has recovered. Among them, Teck Resources (TSX, NYSE: TECK) announced that it has resumed operations at the Antamina mine in Peru, which is one of the largest copper-zinc mines in the world. President Cyril Ramaphosa recently announced that under strict Covid-19 control measures, the mining industry will be allowed to resume full work from June 1. On May 15, the CEO of Hudbay Mining Company (PeterKukielski) stated that his Constanta copper mine had been approved by the Peruvian government and was about to resume production. Previously, the tight supply was expected to ease.
4. International demand is blocked. As the foreign pandemic continues to ferment, although foreign countries are optimistic about the start of construction, in fact, demand is not enough. In Europe, refined copper consumption is expected to fall by 6.4% in 2020, and refined copper consumption is expected to climb 5.4% to 2.927 million tons next year. In North America, including the United States, Canada, and Mexico, the demand for refined copper is expected to decline by 6.9% this year to 2.223 million tons. The demand for refined copper is expected to increase by 5.3% in 2021.
5. LME base metal inventories increased more and decreased less. In addition to the LME inventory of tin declined in May, the LME inventories of the remaining five basic metals have increased to varying degrees, with aluminum inventories rising the most.
Analysts at SunSirs Nonferrous Branch believe that the continued rebound of the nonferrous market in May is expected. In May, as a traditional peak season for consumption, although the demand released in April was not as concentrated, the overall demand was not satisfactory. With the restart of the mining industry, the worries of less supply have been reduced, and foreign demand fell short of expectations. In May, the non-ferrous market could maintain a slight increase, which was entirely supported by domestic demand. However, with the arrival of the traditional off-season in June, demand has slowed down, the prospects for the international market are still uncertain, and the non-ferrous market is under pressure. It is expected that the non-ferrous market in June may be slightly inferior to that in May. The main shocks are weak and it is still difficult to reach last year’s same period.
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