Core point:
1. The market has been trading recession expectations recently, and the excessively pessimistic expectations have driven the prices of commodities such as oil, copper and aluminum to a very low level. But just as the Fed said last year that “inflation is only temporary” is a lie, the Fed’s willingness to “create a recession to control inflation” is also a lie. These two lies have a common purpose: to lower people’s inflation expectations. Before recession and inflation, the Fed will definitely choose inflation…and I deeply doubt the role of monetary policy in driving down commodity prices, resource nationalism, chronic shortage of capital spending in commodities, and the incremental demand for metals brought about by the new energy revolution. It is the root cause of this non-ferrous hyperinflation.
2. There was no significant accumulation of domestic copper and aluminum during the closure of Shanghai, especially for aluminum, the inventory has been declining. From the data observed so far, demand has gradually recovered after the full resumption of work in June. The picture of inventory decline after the full resumption of production in the third and fourth quarters is too beautiful to imagine.
3. The domestic real estate market gradually showed signs of weak recovery in early June. It is believed that local governments will continue to issue policies until the real estate shows a comprehensive recovery. Infrastructure construction is expected to start construction at a faster pace when funds are available in August. In the second half of the year, real estate and infrastructure will give nonferrous metals the biggest support.
Non-ferrous prices are essentially the best reflection of the hot and cold Chinese economy. The 21-year power cut and production shutdown and the 22-year closure of Shanghai have had a huge impact on the price of nonferrous metals. The current time point is basically the short-term lowest point of non-ferrous prices. If you are optimistic about China’s economy for a long time, there is no reason to be negative. When the impact of Shanghai’s closure of the city passes, everyone realizes that the price of bulk commodities will never return to the original low, and the main upswing of non-ferrous metals will soon come. $Zijin Mining(SH601899)$ $CNOOC(SH600938)$ $Yunnan Aluminum (SZ000807)$
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