Seeking progress while maintaining stability and helping the high-quality development of the non-ferrous industry
On January 26, the first "Online Metal Week" in 2022 and the seminar on the high-quality development of the non-ferrous metal industry by the futures market held by the Shanghai Stock Exchange was successfully held. Participants in the non-ferrous industry and experts in the futures industry reviewed and looked forward to the performance of the non-ferrous metal market, and made a detailed analysis of the nickel and tin markets that have recently attracted much market attention. Relevant measures were discussed in depth.
The non-ferrous bull market in 2022 may come to an end
The reporter learned at the meeting that in the past two years, driven by ample liquidity, clean energy consumption and supply-side contraction, the global base metal market has shown a strong bull market as a whole. Judging from the performance of the whole year of 2021, the price-driven logic of non-ferrous fundamentals has undergone a relatively obvious change. From the resonance of supply and demand in the first half of the year to push prices upward, to the guidance of supply and demand on prices in the second half of the year, it gradually turned to tear, and even the supply side It has also fallen into a situation where energy consumption constraints and price regulation are mutually constrained.
Wang Rong, chief researcher of nonferrous metals and precious metals of Guotai Junan Futures, believes that this kind of tearing pattern may continue to be staged in 2022, but the way of presentation is different. This also means that in 2022, the non-ferrous metal market will fully enter the year of seesaw. Under the big cycle of new and old energy conversion, the contradiction between the long-term trend and short-term rhythm of related non-ferrous metals will be more prominent.
From the perspective of supply and demand, Wang Rong said that the supply side of non-ferrous metals is likely to increase in 2022, but the magnitude is not large. The "increment" is because once the proportion of secondary production returns to the downward trend, the domestic energy consumption will be double-controlled. The certainty that the pressure will be reduced in stages is relatively large, and the constraints of the dual-carbon policy on the non-ferrous supply side will also be reduced; the “small increment” is due to the fact that global mines and smelters are in a cycle of relatively low capital expenditures In addition, the high price of overseas electricity drives up smelting costs, which further affects the willingness to spend on capital. And the pattern of non-ferrous demand side will be more chaotic, showing the game of old and new consumption as a whole. The overall decline of the traditional demand side and the growth of clean energy consumption form a hedge. For 2022, she expects that there will be a certain reduction in traditional demand, but there is no need to be overly pessimistic, and "new consumption" may form a better hedge. Overall, she judges that the bull market in the non-ferrous metal market in 2022 will temporarily come to an end, and it will turn from a unilateral direction to an oscillating market. You can pay attention to structural arbitrage and unilateral band opportunities.
In the short term, she said that the current global market macro expectations are temporarily stable, the Fed is fully expected to raise interest rates, and China's macro expectations are constantly being repaired, but it should be noted that the current node risks still exist, and the short-term conflicts in the non-ferrous market are concentrated in the domestic stockpiling during the Spring Festival. , and the risk points come from the situation in Russia and Ukraine, the squeeze on the LME nickel market and the policy disturbance in the main overseas producing area (Indonesia). Therefore, it can be seen that the recent high volatility of the nickel and tin markets has risen, and enterprises in related industries need to pay more attention to risk management under the high market volatility.
The performance of the nickel market for the whole year may be first rise and then fall
Looking back on the whole year of 2021, the nickel market showed a boom in both supply and demand, especially the recovery of global primary nickel consumption exceeded expectations. Xu Aidong, chief expert of Antaike, said that on the one hand, nickel for batteries continued to develop, and lithium iron phosphate and ternary kept pace. According to the data, in 2021, the output of precursors in China is 590,000 tons, an increase of 85.7% year-on-year, and the output of ternary materials is 400,000 tons, an increase of 83% year-on-year. It is expected that in 2022, the output of ternary precursors and materials will continue to increase by 30%-40%. Therefore, on the whole, nickel raw materials for batteries are still in short supply. Although there is a dispute over the share of ternary and lithium iron phosphate, we cannot worry about the rapid growth of ternary because of the doubling of lithium iron phosphate. Lithium iron phosphate has played an important role in seizing the primary market, but the need for consumption upgrades in the field of electric vehicles cannot be ignored. On the other hand, there is still room for growth in the stainless steel industry, with China and Indonesia bearing the brunt. In China, my country's stainless steel output in 2021 will be 32.44 million tons, a year-on-year increase of 6.6%. Under the influence of production capacity growth and price decline, it is expected that the output will continue to increase by 4% in 2022, reaching 33.7 million tons; in Indonesia, the stainless steel output in Indonesia will be 5.03 million tons in 2021, an increase of 87% year-on-year, and the products are all 300 series, In 2022, Indonesia's stainless steel production is expected to increase by 29.2% year-on-year to 6.5 million tons. Overall, she predicts that from 2021 to 2025, the global stainless steel compound annual growth rate will need to remain at 4.5%, of which China is 5.6% and Indonesia is 12.3%.
From the perspective of supply, nickel pig iron leads the growth of global primary nickel, but the growth of traditional nickel enterprises is weak. Data show that in 2021, the global primary nickel production will be 2.68 million tons, a year-on-year increase of 7.7%, and the increase will mainly come from Indonesia's nickel pig iron. She said that 2022 will enter the peak period of production, and it is expected that the output will increase by 17.4% year-on-year to 3.15 million tons, mainly from Indonesia's nickel pig iron and China's nickel salt. However, it can be seen that the global primary nickel production in 2021 will decrease year-on-year. Major producers such as Vale, Russian Nickel, and Glencore will all experience unplanned output reductions. The overall performance of traditional nickel producers is poor.
Specifically, she predicts that China's primary nickel production will stop falling and rebound to 781,000 tons in 2022. At the same time, with the continuous transfer of China's nickel industry, Indonesia will become the world's largest nickel producer. It can be seen that almost all new nickel investment in the past ten years has flocked to Indonesia. In 2021, Indonesia's primary nickel production is expected to increase to 920,000 tons. China's capital, technology and market have helped Indonesia become the world's largest nickel producer. She expects that in 2022, Indonesia's wet and pyrotechnical projects will usher in the centralized release of new production capacity. The production capacity to be put into operation will be close to 500,000 tons. Indonesia is expected to become the main source of nickel for batteries in the world.
Overall, Xu Aidong believes that the structural shortage of nickel market still exists, and it is expected that the price will rise first and then fall throughout the year. Although the annual supply and demand balance sheet shows that the nickel market will turn into surplus in 2022, structural shortages still exist, and inventories in the two cities continue to hover at low levels. At the same time, the global energy supply will remain tight in 2022, electricity and natural gas prices will remain high, and the growth of nickel supply in countries other than Indonesia will be suppressed. The input of clean energy and the pressure of carbon neutrality may increase the production cost of nickel. Although the market is worried that Indonesia's low-cost nickel pig iron and wet process projects will bring down the cost focus of the overall industry, the main task at present is to meet the demand growth, and China's ferronickel supply has become the marginal support for the high cost of the global market. From the perspective of price performance, she predicts that nickel prices will rise first and then fall in 2022, and the LME three-month nickel price range will be US$15,000-25,000 per ton. The market still needs to pay close attention to the adjustment of Indonesia's mining policy.
Tin market remains in short supply
Affected by supply disturbances and low inventories, tin prices will surge by more than 90% in 2021, the highest increase among base metals. Entering January 2022, Shanghai tin prices continue to hit highs and refresh historical highs, and the risk of high-level fluctuations continues to intensify. Xia Xiaodong, a senior analyst at the International Tin Association, said that the surge in tin prices was mainly affected by the transformation of the market structure. The tin market entered an era of structural shortage, and the inventory in the two cities continued to hover at a low level.
According to Xia Xiaodong, as the global tin market presents a pattern of concentrated supply and scattered consumption, the impact of supply disturbances on the market structure is very prominent. In the past two years, under the influence of the new crown epidemic, the supply of tin market has been constantly disturbed, especially in Indonesia, Malaysia, Myanmar and other major overseas producing areas affected by local policies, new crown epidemic and other factors, tin production has declined. In China, due to factors such as dual control of energy consumption and the suspension of production and maintenance of Yunnan tin, the supply shortage situation has been further exacerbated. Since January this year, the demand for replenishment of the market has been relatively strong, which has promoted the further rise of tin prices.
Judging from the current market situation, he said that as the domestic Spring Festival holiday is approaching, domestic traders and downstream related tin-using enterprises have begun to take holidays one after another. Most smelters in Yunnan will continue to maintain production operations during the Spring Festival, but Jiangxi and Anhui . Some smelters in Guangxi have plans to reduce production during the holidays, and the production reduction is expected to be around 2,000 tons. However, combined with the downstream situation, the overall impact on the market is not great.
Looking at overseas markets, recently affected by the delay in Indonesia's tin export license, both internal and external tin prices hit a record high in the week of January 24. According to him, Indonesia is the largest tin exporter, with more than 70,000 metric tons of tin exported in 2021. The annual government's license confirmation is mainly to prevent the export of tin from illegal mines, especially for private enterprises, the possibility of delay in the export of tin is higher. At present, the Indonesian state-owned company PTTimah has obtained a license and will start exporting tin at the end of this month as scheduled, but private enterprises have not yet obtained an export license.
In the long run, the International Tin Association predicts that the global tin market will be in a state of supply shortage in the next 3-5 years, mainly due to the obvious consumption bright spots on the consumer side, especially in the photovoltaic field. According to the model of the International Tin Association, 2021 The annual tin consumption in the photovoltaic industry will exceed 14,000 tons, a year-on-year increase of about 40%; the tin consumption in the photovoltaic industry is expected to reach 16-19,000 tons in 2022; before 2025, the tin consumption in the photovoltaic industry will be 25%-40% The average annual growth rate has continued to increase, and it has grown into a tin consumer market with an annual consumption of tens of thousands of tons of tin. In addition, 5G communications and the development of the new energy vehicle industry will continue to drive the growth of tin demand.
Futures services need to keep pace with the development of the spot market
In the discussion session of the meeting, the participants believed that to serve the high-quality development of the non-ferrous industry chain, the futures market needs to follow the pace of industrial chain transformation and development, and timely launch new varieties and new tools that meet market needs. The variety layout of the non-ferrous industry chain serves the transformation and high-quality development of the non-ferrous metal industry.
"The recent high volatility of nickel prices has brought a certain pressure to the stable operation of industrial enterprises, and the importance of futures tools to play the risk management function is even more prominent." Xu Aidong believes that this requires all parties in the industry to pay close attention to price changes, actively solve problems, and clear channels , and play the functions of serving the real economy such as price discovery and hedging in the futures market. In terms of specific measures, she suggested that the first is to increase the number of brands that can be delivered in nickel contracts, and to formulate delivery rules for nickel beans as soon as possible, so that futures prices can more fully reflect the demand in the spot market; the second is to study the possibility of adding new transaction targets. She said that the current futures pricing is dominated by electro-nickel, but the proportion of electro-nickel in the spot market has been declining year by year, and the mainstream consumption is concentrated in the fields of nickel pig iron and nickel sulfate, and related varieties need to be studied.
In terms of aluminum varieties, Li Xun, general manager of Shanghai Steel Union's aluminum business department, said that the current aluminum market mainly uses electrolytic aluminum as the benchmark for pricing, but with the proposal of the "dual carbon" goal and the background of Chinese enterprises' continuous "going out" , The price fluctuations of alumina and aluminum alloys are also gradually increasing. At present, alumina spot is mainly priced by "three networks", and the market has a high voice for the launch of alumina futures listing, hoping to launch futures prices as a tool for spot pricing and settlement. In terms of aluminum alloy ADC12, it was mainly traded between factories in the past, but since last year, it has also appeared in the trade circulation more and more. However, since 80% of its raw materials are scrap aluminum, the price fluctuation of aluminum alloy ADC12 is related to electrolytic aluminum. It is basically out of touch. When prices fluctuated violently in the fourth quarter of last year, the value preservation needs of relevant production enterprises and downstream consumer enterprises were very prominent, and they were all looking forward to the listing of relevant futures products.
In the end, the relevant person in charge of the Shanghai Futures Exchange said that with the continuous reform and development of the spot market, new requirements have also been put forward for the functions of the futures market. SHFE will strictly follow the requirements of the Central Economic Work Conference and the 2022 CSRC System Work Conference, and adhere to the principle of stability and progress while maintaining stability. First of all, in terms of "stability", we must adhere to "system establishment, non-intervention, and zero tolerance", adhere to "four awes and one combined force", put stable growth and risk prevention in a prominent position, further strengthen market monitoring, and resolutely maintain Three public markets, crack down on various violations of laws and regulations, etc.; secondly, in terms of "advance", accelerate the promotion of market innovation business, and actively implement "fast reforms that can be improved, and quick work that can be done" in response to the real needs of the real economy and industrial customers. , such as accelerating the introduction of nickel beans and recycled lead into the delivery system, expanding deliverable resources; accelerating preparations for the listing of alumina futures, vigorously promoting the research and development of aluminum alloy futures, better optimizing the relevant rules of international copper futures, and serving the high-quality non-ferrous industry. developing.