In the first three quarters of 2020, the non-ferrous industry is recovering after bottoming out

Generally speaking, in the first three quarters, China's non-ferrous metals industry showed a bottoming out in the first quarter, and recovered in the second and third quarters. However, the expansion of smelting capacity must be vigilant.

In the first three quarters, the non-ferrous metal industry showed a trend of recovery after bottoming out

The cumulative growth rate of the added value of the non-ferrous metal industry increased steadily. In the first three quarters, the added value of the non-ferrous metal smelting and rolling processing industry increased by 1.9% year-on-year, which was 0.7 percentage points higher than the nationally regulated industrial added value. Among them, the value added of the non-ferrous metal smelting and rolling processing industry in the first half of the year changed from a decline of 3.8% in the first quarter to an increase of 1.0%. In the first three quarters, the growth rate was 0.9 percentage points higher than that in the first half of the year.

The smelting output of commonly used non-ferrous metals increased steadily, and the output of mines and processing resumed positive growth. In the first three quarters, China's output of ten non-ferrous metals was 45.176 million tons, a year-on-year increase of 3.5%.

The decline in fixed asset investment has generally narrowed. In the first three quarters, the total investment in fixed assets completed by the non-ferrous metal industry (including independent gold companies) fell by 7.0% year-on-year, 1.5 percentage points lower than the first half, and 4.4 percentage points lower than the first quarter. Among them, the fixed asset investment completed in mining and dressing fell 6.9% year-on-year, and the fixed asset investment completed in smelting and rolling fell 7.0% year-on-year.

In terms of import and export, the import of unwrought copper and copper materials increased significantly, and the decline in the export of unwrought aluminum and aluminum materials narrowed. In the first three quarters, China imported 4.994 million tons of unwrought copper and copper materials, a year-on-year increase of 41.2%, an increase of 16 percentage points from the first half of the year, and an increase of 32.1 percentage points from the first quarter; China's unwrought aluminum and aluminum exports 3.561 million tons, a year-on-year decrease of 18.4%, the decline narrowed by 2.2 percentage points compared with the first half of the year, but it was still 0.9 percentage points higher than the first quarter.

The prices of copper and aluminum in the domestic market have recovered and exceeded their pre-epidemic price levels. In September, the average price of copper in China's domestic spot market was 51814 yuan/ton, an increase of 10,200 yuan/ton or 24.5% from the average price in March; it was 3263 yuan/ton or 6.7% higher than the average price in December last year before the epidemic. In September, the average price of aluminum in the domestic spot market was 14,620 yuan/ton, an increase of 2,290 yuan/ton, or 18.6%, from the average price in March, and an increase of 358 yuan/ton, or 2.5%, from the average price in December last year before the epidemic.

Non-ferrous metal companies realized profits turned to positive growth. In the first three quarters, the regulated non-ferrous metal industrial enterprises achieved a profit of 110.07 billion yuan, a year-on-year increase of 2.9%. Among the 34 industry sub-categories of regulated non-ferrous metal industrial enterprises, 17 sub-categories achieved profit growth in the first three quarters.

The non-ferrous metal industry is expected to maintain a recovery trend in the fourth quarter

According to the domestic and foreign macroeconomic environment, combined with the "Trinity" non-ferrous metal industry forecast and early warning index compiled by the China Nonferrous Metals Industry Association, it is preliminarily judged that the non-ferrous metal industry will continue to maintain a recovery trend in the fourth quarter of this year, but there is still uncertainty.

The main indicators of the non-ferrous metal industry are expected to be as follows: in the fourth quarter, ten non-ferrous metals continue to maintain steady growth, mining and processed products are expected to maintain sustained growth, and the overall annual non-ferrous metal output is expected to be slightly higher than last year's level; in the fourth quarter, non-ferrous metals The decline in investment in metal fixed assets is expected to gradually narrow; in the fourth quarter, the export pressure of aluminum and other non-ferrous metals is still relatively high, and exports for the whole year are hard to be optimistic; in the fourth quarter, the prices of major non-ferrous metals in the domestic market generally fluctuated at a high level; In the fourth quarter, the realized profit is expected to continue the profit level of the third quarter; in the fourth quarter, the demand for non-ferrous metals in China's domestic downstream industries is expected to further recover.

Issues that need attention to keep non-ferrous metals running smoothly

It is still necessary to maintain a high degree of vigilance against capacity expansion in the smelting industry, and attention to monetary policy will also help industry companies to carry out risk control.

Pay attention to the growth of non-ferrous metal smelting capacity. According to the China Nonferrous Metals Industry Association statistics, as of the end of 2019, China mineral blister copper production capacity of 8.2 million tons / year of electrolytic copper production capacity to 11.8 million tons / year alumina production capacity to 88.5 million tons / year, electrolytic aluminum production capacity reached 43.5 million Tons/year. Under the premise of the current product price rebound and profit increase, the expansion of the already saturated non-ferrous metal production capacity should arouse the attention of the industry.

In September, the growth rate of the added value of the non-ferrous metal industry above designated size was corrected. The value added of the non-ferrous metal smelting and rolling processing industry above designated size in September increased by 3.5% year-on-year, which was 1.3 percentage points lower than that in August, and 3.4 percentage points lower than the industrial value added under national regulations.

Pay attention to the return of monetary policy to normalization. On October 21, the Governor of the People’s Bank of China, Yi Gang, said at the 2020 Financial Street Forum: “This year, during the special period of the epidemic, the macro leverage ratio has increased. After the GDP growth rate rebounds next year, the macro leverage ratio will be more stable. Monetary policy needs to control the total gate of the money supply and appropriately adjust the fluctuation of the macro-leverage rate to maintain it on a reasonable track for a long time.” The PBC Monetary Policy Committee’s third quarter 2020 regular meeting deleted “increase macroeconomics”. The expression of “policy adjustment strength”. Market analysis believes that the total easing represented by interest rate cuts and RRR cuts may no longer be overweight.