The five upward force of non-ferrous metal in next year

In 2017, China nonferrous metals market environment is better than the previous year.Troika pulling steady growth in domestic demand, the cost factors towards ascension, day of "hot money", five forces push the market continues to heat up.

Firstly, the troika demand is stable growth

Since June in 2016, the main economic index of collective recovery, especially some leading indicators, such as PMI, entrepreneurs confidence index and market stability good, macroeconomic L stabilizing trend appeared, and due to the decision-making departments steady growth policy effect further, nonferrous metals "troika" having enough, demand is stable growthin the new year of China .

"Troika" of the first investment growth is improved.To September 2016 in total, the fixed asset investment growth (nominal growth) is 8.2%, than 1-0.1% in August to speed up, reverse the previous four consecutive month of decline.Fixed asset investment structure, in September 1 - private investment grow faster than in August 1-0.4%, real estate development investment growth 0.4% higher than that of 1 - August, all growth stabilisation in ascension.Infrastructure investment is high, in the first three quarters of growth as high as 19.4%.In 2017 is expected to increase the investment in fixed assets, are still steady growth first choice for decision-making department.Approval for this in the future will be great efforts and new investment projects, adhere to the project investment in the introduction of PPP mechanism, strengthen supervise.Meanwhile, in September this year the national PPI (producer producer price index) over the 54 consecutive months of decline, rose 0.1%.This is not only a major change in the price situation in China, at the same time also means that many industry began to profitable investment.Step by step with PPI inflation in the future, increase profits and good prospect, is bound to attract more investment to enter, reverse private investment has fallen sharply."Area" construction also provides investment momentum.All the way around this year and next, "area" construction, China's overseas construction projects, will also drive China's level of investment growth.Subject to the push, is expected to improve the level of investment in fixed assets in 2017, the fixed asset investment growth will rebound to about 10%, 1-2% higher than that of growth in 2016.Year-on-year growth of around 20%, of which, the infrastructure investment growth momentum do not change;Rose more than 6%, the national real estate development investment growth rate increase was most pronounced, not only far in excess of the 1% growth in 2015 level, also higher than the growth rate of at least 1% in 2016,Private investment growth in the second half of 2016 ZhiJiang rally, on the basis of stable growth in 2017 to more than 3%.

The second is the industrial production stabilization.Growth of investment in fixed assets, investment, an increase in orders, of course, to promote the growth of industrial production.According to statistics, in September 2016, the national industrial output (at comparable prices rose by 0.47%, year-on-year growth of 6.2%, year-on-year growth for 7 months in a row at more than 6%, 1 - industrial added value growth also reached 6% in September.Most can reflect the state of industrial production of electricity consumption, rail cargo volume index all stabilization.The whole society power consumption in September (national energy bureau statistics) rose 6.9% year-on-year, sharply rebounded 7.1% year-on-year growth.Is expected in 2017 the national industrial production recovery advocate tone, industrial added value growth rate for the whole year will be more than 6%, even up to 7%.Industrial manufacturing industry in China, is the global consumption of the largest non-ferrous metal industry, some important non-ferrous metal consumption accounted for more than 5 into world.China's industrial production stabilization picks up, certainly will raise the level of new non-ferrous metals demand in a year.

last year.Of copper and copper exports of 707000 tons, up 35.2%;Manganese exports of 238000 tons, up 2.2%;Aluminium and aluminium exports of 3.47 million tons, down 2.4%.Since 2017, the international market demand, competitive advantage is still in China, as well as the depreciation and so on factors to promote, is expected in 2017 the above five kinds of important non-ferrous metal annual output reached 4.6 million tons, growth of 4%, higher than level 2016.

By the troika pulling, is expected in 2017 China's major non-ferrous metals demand (including export) continue to steady increase, an increase of more than 3%.

Smelting and raw materials import growth situation is not changed.Customs statistics show that in September 1, 2016 cumulative, the eight kinds of important raw material for smelting non-ferrous metal and imports of 41.39 million tons, up 4.6% from a year earlier.Imports of copper and copper alloy 3.39 million tons, up 14%;Alumina imports 2.17 million tons, down 31%;Copper ore and concentrate imports 12.24 million tons, up 31.9%;Manganese ores and ore concentrate imports 12.36 million tons, an increase of 5.1%.According to the first nine months of imports, measure is expected in 2016 China's imports of the important raw material for smelting non-ferrous metal and 55 million tons.

Looking forward to the New Year China smelting non-ferrous metals and raw materials import situation, because China needs stable increase, part of domestic resources sharing enterprise production market, the low level of inventory of commercial society (except for national strategic reserves), and "buy don't buy up" cause inventory, risk aversion and speculative buying demand increase, makes 2017 China non-ferrous metal smelting and raw material imports continue to larger scale, the above eight kinds of important raw material for smelting non-ferrous metal and imports will hit 60 million tons of integer level, growth rate of more than 5%.Continued strong China non-ferrous metal smelting and raw materials import, for the non-ferrous metals market, of course, is a good news.

Thirdly, the excess capacity release be suppressed

New Year China nonferrous metals excess production capacity is still some surplus degree is still very serious, but it can be released in full, the real into the reality of supply pressure?But is subject to the administrative measures and inhibition of two aspects of the market mechanism.

From the point of policies and measures, China's competent department in charge of a high-profile non-ferrous metal production, especially by means of environmental protection and quality supervision, to speed up the backward production capacity and zombies repel and enterprise market.According to relevant data, the end of 2015 the country had closed electrolytic aluminium production capacity of 8.15 million tons, the permanent closure of production capacity of 3.36 million tons, other non-ferrous metal excess capacity is restrained.Influenced by its, in September 2016 the national ten kinds of non-ferrous metal production of 38.313 million tons, up 0.7% from a year earlier, only growth than the same period last year fell by nearly eight percentage.The electrolytic aluminium production fell 1.4% year on year.Is expected in 2017 departments continue to capacity high pressure situation remains the same.Due to cutting capacity and realized to keep cutting capacity, 2017 years, continue to reduce excess supply pressure, non-ferrous metal to promote further improve supply and demand.

At the same time, the market mechanism will brake for excessive production.If release too much capacity, is bound to the oppression market prices fall, the high cost of enterprises to cut heavy losses.Earlier in non-ferrous metal prices tumbling, continue to refresh the record in recent 10 years, the national nonferrous metals enterprise is forced to cut capital spending, layoffs and reduce production.Although non-ferrous metal prices are rising dramatically in 2016, but some of the high cost of enterprises still unprofitable, or profit is not much, it will also restrict excessive growth rate for 2017 years.

Fourth, the various cost factors to ascension

New China nonferrous metals of various cost factors within a year, will be appeared rising trend.

The first is the cost of imports.2016 non-ferrous metal prices have relatively substantially rise, the international market price of copper, zinc, nickel, and other products to compare previous low gains generally more than 3, is expected to have higher space.On the other hand, RMB devaluation in 2016, is expected to fall in more than 3% in the whole year of 2016.Due to China's economic slowdown, falling foreign exchange reserve and the federal reserve to raise interest rates and interest rates expected effect, for a period depreciation pressure.Although there is no substantial depreciation of RMB last basis, although in the future continue to fall in the space is limited, although does not take the initiative in devalued their currencies by the competent department, but depreciation has already happened, objectively will also improve the raw material for smelting non-ferrous metal and the cost of imports.

The second is the domestic environmental protection.New Year Chinese environmental law enforcement will be enhanced, the enterprise as a legal person of serious environmental pollution in jail, and even enterprise shutdown threat, certainly will force the domestic mining and smelting non-ferrous metal processing enterprises to increase spending on environmental protection.

Finally, the energy motivation and logistics costs increase.Non-ferrous metal belongs to energy-intensive industries.Oil at home and abroad in 2016, coal prices rose sharply, raise the level of China's overall energy prices.The world bank recently forecast increases in the prices of oil and other energy products by 25% in 2017.Affected by the New Year of China nonferrous metals enterprise energy, power purchasing cost will be increased.Since September 21, 2016, motor transport the New Deal execution, slashed large truck load of check and ratify, will make many enterprises purchasing raw materials, the freight rise.Not only that, in 2016, the national development and reform commission has raised fuel prices many times.In 2017 with the international market oil and gas prices continue to rise, the domestic refined oil prices will further increase, commodity logistics cost increase.In addition, the future China's wage costs rise too.

Fifth, the global astronomical "hot money"

New Year non-ferrous metals market could also face "hot money" hype.Non-ferrous metal prices rose considerably in 2016, in addition to the improvement of relations between supply and demand and cost increase, driven by speculative capital enter bottom also had a great effect.Since 2008 the world financial crisis, in order to avoid a global recession, the world's major countries government generally implement ultra-loose monetary policy, expand the budget deficit, and printing presses, large-scale super hair money, causing worldwide super currency accumulating, eventually formed for nonferrous metals and other commodities eyeing astronomical "hot money".From the world's largest asset manager blackrock's research shows that global investors currently holds more than $50 trillion in cash, more than the United States, China, Japan and Germany in the global economy's economy last (less than us $40 trillion), is the world's central Banks more than double the sum of the balance sheet.Once the money into the commodity market bottom, enters the non-ferrous metals market bottom, as "the elephant foot in a bathtub," is bound to trigger a huge shock.

To sum up, is expected to run 20167 China non-ferrous metal prices remain relatively high, the annual average price level to continue beyond the previous year, of course, in the process of its upward volatility is inevitable, do not rule out "roller coaster" quotation again.