The Zhitong Finance App learned that Guoxin Securities released a research report saying that under the stimulus of macroeconomic policies, they are optimistic that metal prices will strengthen. In terms of industrial metals, industrial metal prices, including copper, rebounded markedly in late September, with favorable domestic policies. Currently, spot processing fees for copper concentrate and zinc concentrate are still at historically low levels. As the fourth quarter approaches the negotiation period for next year's long orders for mines and smelters, it is expected that there will be a lot of supply-side disturbances. In terms of precious metals, the price of gold has repeatedly reached new highs. It is expected that the Federal Reserve will cut interest rates for the second time and the unemployment rate will remain flat month-on-month in October, but the non-agricultural data is far lower than expected. In terms of rare earths, the growth rate of domestic indicators is slowing down, and Myanmar exports may be blocked. Recently, the price of praseodymium oxide fluctuated in the range of 0.42-0.44 million yuan/ton. If rare earths from Myanmar's Kachin State cannot be exported, it will have a big impact on China's rare earth supply.

The main views of Guoxin Securities are as follows:

Industrial Metals: Trade Policies Stimulate, Price Fluctuations Strengthen

In late September, the prices of industrial metals, including copper, were clearly rebounded in a round, stimulated by favorable domestic policies. After monetary policy, it is expected that fiscal policy will strengthen. During this period, copper prices rose to around 78,000 yuan/ton. It was clearly felt that downstream acceptance had declined, domestic copper inventories also accumulated, copper prices fell slightly behind, copper inventories began to degrade again, and the copper price trend fluctuated in a narrow range. At the end of October, six ministries and commissions issued new regulations for the import of recycled copper and aluminum. The new regulations make more clear requirements for imported recycled copper and aluminum, and the import volume may increase slightly.

In terms of commodity prices, aluminum prices fluctuated at the same high level in October, and the price center was around 20,800 yuan/ton. Aluminum inventories continued to decline in October. Coupled with the high rise in alumina prices, the aluminum price trend was relatively strong. The high level of zinc fluctuated greatly in October, mainly due to LME Zinc's continued BACK structure and there were signs of inventory congestion. Shanghai Zinc was driven by this to rise significantly, and as LME Zinc settled its positions, the price fell rapidly. Currently, spot processing fees for copper concentrate and zinc concentrate are still at historically low levels. As the fourth quarter approaches the negotiation period for next year's long orders for mines and smelters, it is expected that there will be a lot of supply-side disturbance.

Precious metals: Gold prices have repeatedly reached new highs. The Fed is expected to cut interest rates for the second time and the unemployment rate will remain flat month-on-month in October, but the non-agricultural data is far below expectations.

The US unemployment rate remained flat at 4.1% month-on-month in October, but the number of non-farm payrolls increased by only 0.012 million in October, far lower than the 0.105 million expected by the market, and far below the monthly average for the past year. The sharp decline in non-agricultural data in October was mainly due to the two hurricanes that hit the US, which had a significant impact on the labor market. Furthermore, negotiations on new labor contracts broke down due to wage and other issues on October 1, and about 0.045 million dock workers went on strike at 36 ports on the east coast of the United States and the Gulf Coast. The strike continued for 3 days, which also had a negative impact on employment data. Looking at it now, the “noise” of October's non-agricultural data will not change the pace of the Federal Reserve's monetary policy for the time being.

The market expects to cut interest rates by another 25 basis points in November. Recently, various US economic data are still resilient, but the pace of the Fed's monetary policy will not change for the time being. The market generally expects the Fed to cut interest rates by another 25 bps in November. Currently, CME forecasts show that the probability of cutting interest rates by 25 bps in November is 98.4%, and the probability of cutting interest rates by 50 bps is 1.6%.

Rare earths: The growth rate of domestic indicators is slowing down. Myanmar exports may be blocked. Recently, the price of praseodymium oxide fluctuated in the range of 0.42-0.44 million yuan/ton, and Myanmar's rare earth exports from Kachin State may be affected.

This year, the first and second batch of domestic target mining was released in February and August respectively, totaling 0.27 million tons, an increase of only 5.9% compared to 0.255 million tons in 2023; the growth rate in 2023 was 21.4%, and China's index growth rate has clearly slowed this year. While the growth rate of domestic rare earth supply is slowing, overseas light rare earth supply showed negative growth. The US Mountain Pass 2024H1 rare earth ore production was 0.0202 million tons, down 6% year on year; Australia's Mount Weld 2024 Q1-Q3 rare earth production was 8,455 tons, down 32% year on year.

As of November 4, 2024, the prices of praseodymium oxide, prosium oxide, and terbium oxide were 0.426 million/ton, 1.69 million/ton, and 5.99 million/ton respectively; the listing price of northern rare earths increased month-on-month in November. The listing price of praseodymium oxide was 0.4166 million/ton, and the price of praseodymium metal was 0.516 million/ton. At the end of October, there was news that Myanmar's Kachin Independence Army recently announced that it had taken control of the country's rare earth mining area. While Kachin State is Myanmar's most important rare earth producer. In the first three quarters of this year, China imported 0.031 million tons of rare earth oxides from Myanmar, accounting for 76% of total oxide imports, accounting for 40% of domestic imports of rare earth products. If Myanmar's rare earths cannot be exported, it will have a big impact on China's rare earth supply.

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Risk warning: The domestic economic recovery fell short of expectations; the marginal slowdown in foreign monetary policy fell short of expectations; the increase in global resource-side supply exceeded expectations.