Huayuan Securities: Gold price breaks through historical highs, driving a comprehensive rebound in non-ferrous metals

According to the Wisdom Financial APP, Huayuan Securities released a research report stating that the probability of a 50 basis point rate cut by the Federal Reserve in September has increased. Coupled with the unexpected US fiscal deficit, the gold price has broken through to a historic high. In August, the US fiscal deficit exceeded expectations, leading to an increase in inflation expectations. The two logics of US monetary policy and fiscal policy resonate, causing the gold price to reach a historic high.

In the short term for the copper sector, macro factors may dominate copper price fluctuations; on the fundamental side, downstream copper production is increasing, and inventory continues to decrease. In the medium to long term, the issue of a shortage of copper supply has not been alleviated, and it will take a long time for capital expenditures to translate into production. With supply rigidity still present, it is expected that there is significant room for copper price increases in the medium to long term.

For the aluminum sector, pre-holiday downstream inventory demand is increasing, electrolytic aluminum inventory is decreasing, and aluminum prices are rebounding.

Precious Metals Sector: The probability of a 50 basis point rate cut by the Federal Reserve in September has increased, coupled with the unexpected US fiscal deficit, leading to a historic high in gold prices. London spot gold rose by 2.75%, Shanghai gold rose by 1.73%, London spot silver rose by 3.90%, Shanghai silver rose by 2.47%, palladium rose by 11.10%, and platinum rose by 6.64%. This week, both the August CPI and PPI in the US were below expectations. With inflation continuing to decline and weak employment data, the market expects the probability of a 50 basis point rate cut by the Federal Reserve in September to increase. According to Fedwatch, the probability of a 50 basis point rate cut by the Federal Reserve in September is 50% (previously 25%). On the other hand, Harris performed better in the September presidential debate, increasing the probability of winning. The unexpected US fiscal deficit in August raised concerns about the rapid growth of the US fiscal deficit, leading to an increase in inflation expectations. The two logics of US monetary and fiscal policies resonate, causing the gold price to reach a historic high. On Friday night, London gold touched a high of $2586 per ounce. In the short term, the market is gradually pricing in a 50 basis point rate cut by the Federal Reserve in September, awaiting the realization of next week's FOMC interest rate decision. In the long term, Huayuan Securities believes that with the dual easing of US monetary and fiscal policies, US dollar credit contraction, and escalating geopolitical events, gold is expected to be in an upward trend in the medium to long term.

Recommended stocks to watch: Zijin Mining (601899.SH), Zhongjin Gold (600489.SH), Chifeng Gold (600988.SH), Shandong Gold (600547.SH), Shandong Gold International (000975.SZ), Zhuye Group (600961.SH), Hunan Silver (002716.SZ).

Copper Sector: Macro factors dominate short-term fluctuations, downstream production is increasing, inventory continues to decrease, and copper prices rebound. This week, London copper rose by 0.77%, Shanghai copper rose by 1.25%; London copper inventories fell by 1.91%, Shanghai copper inventories fell by 13.86%. The smelting fee is $4.6 per ton; sulfuric acid prices fell by 4.80%, and the gross profit of copper smelting was -1224 yuan per ton, with losses expanding. In terms of macro factors, the market expects the probability of a 50 basis point rate cut by the Federal Reserve in September to increase, leading to a rebound in copper prices. On the fundamental side, this week's electrolytic copper rod operating rate was 81.72%, up 3.57% from the previous period. This week, Shanghai copper inventories were 185,500 tons, down 13.86% from the previous period, London copper inventories were 311,500 tons, down 1.91% from the previous period, and SMM social inventories were 216,900 tons, down 15.17% In the short term, macro factors may dominate the fluctuation of copper prices, with weakening US inflation and employment data increasing the probability of a 50 basis point rate cut by the Federal Reserve in September, leading to a rebound in copper prices. On the fundamental side, downstream copper production is picking up, and inventory continues to deplete. Looking at the medium to long term, the issue of mineral shortage on the copper supply side has not been alleviated, and it will take a long time for capital expenditure to translate into production volume. With supply rigidity still present, it is expected that there is significant room for copper price increase in the medium to long term.

Recommended focus: Zijin Mining (601899.SH), Luoyang Molybdenum (603993.SH), Jinchengxin (603979.SH), Tongling Nonferrous Metals (000630.SZ), and undervalued Hesteel Resources (000923.SZ).

Aluminum Sector: Pre-holiday downstream inventory demand is increasing, electrolytic aluminum inventory is depleting, leading to a rebound in aluminum prices. Tight supply of raw materials combined with production line maintenance has resulted in a relatively strong operation of alumina prices. This week, LME aluminum rose by 1.38%, SHFE aluminum rose by 2.46%; in terms of inventory, LME aluminum inventory fell by 1.51%, SHFE aluminum inventory fell by 0.76%, and spot inventory fell by 5.80%; in terms of raw materials, this week alumina prices rose by 0.89%, anode prices remained stable, and aluminum enterprise gross profit increased by 25.52% to 2471 yuan/ton. This week, domestic aluminum spot inventory decreased significantly, mainly benefiting from the increase in pre-holiday downstream inventory demand, improved spot transactions, and the rise in aluminum prices. Regarding electrolytic aluminum, domestic ore supply is tight, there are expectations of reduced supply from imported ores due to the impact of the rainy season in Guinea, reduced production in many northern regions due to ore issues and equipment maintenance, alumina prices are running at high levels. It is necessary to continue monitoring the demand for electrolytic aluminum production resumption in the southwestern region, as well as the pace of new alumina production capacity release.

Recommended focus: Aluminum Corporation of China (02600, 601600.SH, alumina), Sonton Development (603036.SH, anode materials), Datang International Power Generation (002128.SZ), Tianshan Aluminum (002532.SZ), Yunnan Aluminum (000807.SZ), Shenhua Group (000933.SZ), Jiaozuo Wanfang (000612.SZ).

Minor Metals Sector: Tracking minor metal prices: Cadmium rose by 0.44%, while molybdenum concentrate/titanium concentrate/tungsten concentrate/silicomanganese/vanadium pentoxide/manganese ore fell by 0.79%/1.34%/1.42%/1.72%/1.97%/2.38%.

Minor metal prices generally fell this week. Recommended focus: Antimony: Hunan Gold (002155.SZ), Huaxi Nonferrous Metals (600301.SH), Huayu Mining (601020.SH); Tungsten: Chinatungsten High-Tech (000657.SZ), Zhangyuan Tungsten (002378.SZ), Xiamen Tungsten (600549.SH), Xianglu Tungsten (002842.SZ); Indium: Yunnan Tin (000960.SZ), Zhuye Group (600961.SH), Zhongjin Zinc (000751.SZ); Manganese: Western Mining (601069.SH).

Risk Warning: Risk of downstream production recovery falling short of expectations; risk of sluggish domestic real estate demand; risk of US economic recession; risk of slower-than-expected growth in new energy vehicles; risk of overseas geopolitical tensions