GF SECURITIES: Expectations of Fed rate cuts causing volatility in metal prices

According to the financial news app, GF SECURITIES released a research report stating that it is waiting for the Fed rate cut to land quietly, expecting a volatile rebound in base metal prices. It is expected that the Fed's rate cut direction remains unchanged, with a preventive rate cut supporting external demand. However, demand expectations continue to fluctuate, and the improvement space for external demand is under pressure. The policy of replacing old with new supports domestic demand, with a tight supply side, and base metal prices are expected to fluctuate and rise. Steel supply and demand are both weak, with steel prices and costs falling, weak profit margin recovery, and continued attention to supply constraints. In terms of precious metals, the Fed is releasing a cautious rate cut signal, and the expected shift is expected to exert some pressure on gold prices. The future monetary and financial attributes are expected to continue to push gold prices higher.

Base Metals: Waiting for the Fed rate cut to land quietly, expecting a volatile rebound in base metal prices. It is expected that the Fed's rate cut direction remains unchanged, with a preventive rate cut supporting external demand. However, demand expectations continue to fluctuate, and the improvement space for external demand is under pressure. The policy of replacing old with new supports domestic demand, with a tight supply side, and base metal prices are expected to fluctuate and rise. Recommended stocks to watch: Luoyang Molybdenum (603993.SH, 03993), Western Mining (601168.SH), Jin Chengxin (603979.SH), Aluminum Corporation of China (601600.SH, 02600), Yun Aluminum Co., Ltd. (000807.SZ), Tianshan Aluminum (002532.SZ), etc.

Steel: Weak supply and demand, with steel prices and costs falling, weak profit margin recovery, continued attention to supply constraints. On the supply side, blast furnace operation rate decreased month-on-month, steel mill profit margin weakly recovered, and iron supply constraints are evident. On the demand side, attention is focused on demand recovery after the off-season. On the cost side, it is expected that low profit margins will continue to suppress raw material procurement demand. In terms of price and profit, the short-term supply and demand pattern weakens, the expected price spread is weak, the expected supply constraints increase, and short-term steel price fluctuations are expected. Recommended stocks to watch: Baosteel (600019.SH), Hualing Steel (000932.SZ), Jiuli Special Material (002318.SZ), Fushun Special Steel (600399.SH), etc.

Precious Metals: The Fed releases a cautious rate cut signal, and gold prices fluctuate in the short term. According to Wind, the US unemployment rate in August was 4.2%, in line with expectations; the non-farm and ADP new additions in August were both lower than expected, and the pressure on US employment continues to show. Last week, Fed officials such as Waller said, "Signs of cooling in the US economy and job market should be interpreted as weakening, not worsening" and "At this stage, still support a cautious rate cut." The market's expectation of a smaller rate cut in September by the Fed has increased (according to CME, the probability that the Fed will cut the federal funds target rate by 25BP to 5.00%-5.25% in September is 70%), and this expected shift is expected to exert some pressure on gold prices. The future monetary and financial attributes are expected to continue to push gold prices higher. Recommended stocks to watch: Chifeng Gold (600988.SH), Zhaojin Mining (01818), Shandong Gold (600547.SH, 01787), Zhongjin Gold (600489.SH), Yintai Gold (000975.SZ), Xingye Silver Tin (000426.SZ), Shengda Resources (000603.SZ), etc Energy Metals: Expecting an Increase in Industry Chain Inventory, Lithium Prices May Receive Some Support. The market's expectation of oversupply of lithium carbonate remains unchanged, while the price of spodumene started a downward trend in August, leading to a decrease in lithium smelting costs. From the perspective of supply-demand balance and cost position, there is still room for lithium carbonate prices to decline. However, with the new energy vehicle industry chain gearing up for the peak sales season, inventory is expected to increase, potentially providing some support to lithium carbonate prices. In September, lithium carbonate prices are likely to stabilize and fluctuate. Recommended stocks to watch: Shengxin Lithium Energy (002240.SZ), Rongjie Shares (002192.SZ), Yongxing Materials (002756.SZ), Huayou Cobalt (603799.SH), etc.

Minor Metals: Rare Earths and Molybdenum Prices Rising, Waiting for Demand Recovery. In the second half of the year, the stability of domestic rare earth quotas on a month-on-month basis boosts industry confidence, with recent orders picking up. The future prices of rare earths are still expected to fluctuate upwards. Recent recovery in downstream orders for rare earths indicates a potential upward price trend. Tungsten prices have slightly declined, with downstream demand awaiting improvement, and prices are expected to remain at high levels. Last week, molybdenum prices rose, with downstream stainless steel destocking, but the supply-demand situation in the industry chain still needs optimization, and molybdenum prices are expected to fluctuate at high levels. Recommended stocks to watch: Jinmoly Shares (601958.SH), Shenghe Resources (600392.SH), Northern Rare Earth (600111.SH), Jinli Permanent Magnet (300748.SZ), Xiamen Tungsten (600549.SH), etc.

Risk Warning: Macroeconomic recovery falling short of expectations; downstream metal demand falling short of expectations; mining supply growth exceeding expectations; unexpected interest rate hikes by the Federal Reserve; downstream demand for military industry falling short of expectations; lower-than-expected production of iron ore, coking coal, and coke; unexpected reduction in crude steel production