The price of non-ferrous metals fluctuates at a high level as a whole - Q&A at the press conference on the operation of the non-ferrous industry in 2021
February 23, 2022
On February 17, the China Nonferrous Metals Industry Association held a press conference on the economic operation of the nonferrous metal industry in 2021 in the form of video. Jia Mingxing, member of the Standing Committee of the Party Committee, Vice President and Secretary General of the China Nonferrous Metals Industry Association, answered questions from reporters and business representatives.
"Science and Technology Daily": After breaking through 60 million tons, the annual output of ten commonly used non-ferrous metals will continue to grow steadily in 2021. How much room for growth is there in the future? How to ensure the development quality of the non-ferrous metal industry while the output is increasing?
Jia Minxing: This is a major event in the non-ferrous industry. Last year, the output of 10 commonly used non-ferrous metals reached 64.543 million tons, breaking the 60 million tons mark. This output is very large, accounting for more than 50% of the global total.
However, judging from the current situation, the production of non-ferrous metals in my country (including when the price is not good) has been relatively stable in recent years. The main driving force is that with the development of the entire national economy, including the improvement of people's living standards, the demand for non-ferrous metals has grown by a large margin, and the demand for non-ferrous metals has maintained a relatively strong growth. Because the non-ferrous metal industry has some characteristics, one is that the higher people's living standards are, the greater the consumption of non-ferrous metals; the second is that non-ferrous metals are linked to the new energy information industry, the rapid development of the information industry, the consumption of non-ferrous metals will increase To the supporting role; third, the high-tech industries such as national defense and military industry, aerospace and other high-tech industries are very dependent on non-ferrous metals, and the demand for non-ferrous metals will continue to grow. However, it will no longer grow by double digits as in the "Twelfth Five-Year Plan" and "Thirteenth Five-Year Plan" period, because there are several major constraints: one is resource constraints, the other is environmental pressure, and the third is the implementation of the "double carbon" goal , the pressure on the industry is also very large. Therefore, in general, the growth rate will gradually fall, which is a general trend.
"Economic Observer": In 2021, the non-ferrous metal industry will attract attention due to the high price of commodities. In the first half of 2022, from the perspective of macro factors, what kind of environment will the non-ferrous metal industry face? How will its price trend be analyzed?
Jia Minxing: In 2021, the overall price of non-ferrous metals will be at a high level. This is a year with relatively good prices in the past 10 years. Therefore, judging from the economic operation of the non-ferrous metal industry in 2021, the price is good and the revenue of the company is also very high. Well, profits also hit new highs. According to the research of the Nonferrous Metals Association, in 2022, the overall price of nonferrous metals will fluctuate at a high level, there will be fluctuations, and sometimes there will be corrections. So I think the overall will be high volatility.
The specific factors are as follows. First, with the control of the epidemic, the Chinese economy has recovered well, and the global economy is gradually recovering. The recovery of the real economy will increase the demand for non-ferrous metals. Therefore, this is a major driving force for prices to maintain high levels. . The second is the impact of international oil prices on non-ferrous metal prices. Affected by factors such as the European energy crisis, international oil prices rose rapidly, which drove up the cost of all non-ferrous metals and increased rigid costs. The third is the impact of monetary policy. It now seems that the US monetary policy has been tightening, including the US dollar interest rate hike, etc. Once the US monetary policy is tightened and the liquidity of the US dollar weakens, the prices of non-ferrous metals will also rise. Fourth, the development of new energy industry. Including the development of new energy vehicles and the information industry, the demand for non-ferrous metals will increase, so the prediction of the price of non-ferrous metals in the later stage is also better. To sum up, the price of non-ferrous metals will surely fluctuate at a high level in 2022.
"Economic Daily": The Nonferrous Metals Association expects that the prices of major non-ferrous metals will fluctuate at a high level in 2022 as a whole, and the possibility of a volatile correction in the prices of major non-ferrous metals in the middle and late years of the year will become a high probability event. What is the specific performance? For example, which metals will fluctuate at high levels? What is the current price situation for these major metals? Why does the development of shock and callback occur?
Jia Minxing: On the whole, non-ferrous metals including copper, aluminum, lead, zinc and other large varieties will fluctuate at a high level, and the prices of some varieties will continue to rise, such as lithium, cobalt, nickel and other varieties. This is because of the pull of new energy vehicles, the rapid development of new energy vehicles has a great demand for non-ferrous metals, coupled with the difficulty in the development of resources such as lithium and nickel, and the scarcity of resources, so the prices of these large non-ferrous metal varieties will definitely rise. Maintained at a high level, coupled with my country's macro-control policies that strictly control production capacity, it has played a supporting role in prices. But market volatility is inevitable, all markets will have shocks, small events will have small shocks, big events will have big shocks, and the varieties are different. For example, the lead market may be weaker, because new Energy vehicles have some impact on the lead market. Overall, the price of non-ferrous metals will still fluctuate at a high level.
For enterprises, it is necessary to prevent and control risks in this regard. At present, most of the enterprises' inventories are being emptied by a large margin, and the inventories of enterprises are relatively small. So once there are some volatility factors in the market, the price volatility is very obvious. Enterprises still need to predict the general trend, do not blindly expand production capacity, and advocate high-quality green development
"Worker's Daily": The report pointed out that the increase in the export volume of non-ferrous metal products may slow down. What is the reason for the slowdown in growth? Is it because my country's export advantage will weaken in 2022, as the gap between overseas economic supply and demand is expected to be bridged, coupled with the high base effect of exports in 2021? In addition, what is the reason why the import of mining raw materials such as copper and aluminum is expected to maintain the development trend?
Jia Minxing: Judging from the data in 2021, our import and export volume is still increasing. Exports increased by 63% and imports by 46%. However, through prediction, the export value will slow down in 2022. There are several reasons. First, the total output is too large, and it is necessary to try to maintain the production capacity within a reasonable range. Because the non-ferrous metal industry is a raw material industry and due to the shortage of resources, we hope that the non-ferrous metals we produce mainly meet the needs of China's national economy. But the market is the market, and companies also need to make profits, so there is demand in the international market, and we will still export some, but the slowdown in exports is certain. Second, the technical added value of the entire product is too low. We hope to export some technology with high added value, and "bring out" non-ferrous metals in the downstream high-end products, so as to increase the added value of exports and make the industrial structure more reasonable. This requires a process. We also need more investment in scientific research and technological innovation. After the added value of technology is improved, I believe that our exports will recover. Therefore, exports may be affected in this process, but I hope this impact will not be affected. would be too big.
"China Metallurgical News": At present, the iron and steel industry has extended the carbon peak time by 5 years. Is the carbon peak time of the non-ferrous metal industry being researched and adjusted? If it is possible to adjust, what are the main considerations?
Jia Minxing: Currently, the Nonferrous Metals Association has been cooperating with the National Development and Reform Commission, the Ministry of Industry and Information Technology, the Ministry of Ecology and Environment and other ministries and commissions regarding carbon neutralization. We have been working on plans and work, and we have been working closely with non-ferrous companies to do some basic work. We are conducting a thorough investigation of the total carbon emissions of the non-ferrous industry, including the emissions of each species. The non-ferrous industry is gradually achieving the carbon neutralization target within the planned time according to the national policy, and there is no plan to extend the time.
"China Nonferrous Metals News": At the end of 2021, China Rare Earth Group will be established. What impact will the establishment of China Rare Earth Group have on the world rare earth market?
Jia Minxing: On December 23, 2021, China Rare Earth Group was established. This is a major event in the rare earth industry and the non-ferrous metal industry, which has attracted much attention. For many years, we have been hoping that a relatively large rare earth enterprise will be born in China, which is of great significance to the development of the entire industry.
Although the rare earth industry has attracted a lot of attention and has connections with all walks of life, especially in the defense and military industry, the overall output value of the rare earth industry is not large, less than one trillion yuan. There are thousands of enterprises in China, and the degree of dispersion is too high and the degree of concentration is too low, resulting in the failure to implement many macro-control policies, resulting in waste of rare earth resource development and substandard environmental discharge. In addition, it is not conducive to technological innovation in the rare earth industry. Enterprises are too small and too scattered, and many technical bottlenecks cannot be broken through. Therefore, the establishment of China Rare Earth Group has a great impact on the rare earth market. I believe that China Rare Earth Group will drive the progress of the entire rare earth industry, improve the efficiency of resource development and utilization, ensure the implementation of environmental protection policies, and promote enterprises to strengthen the research and development of environmental protection technologies.
In my opinion, the establishment of China Rare Earth Group will actively promote the technology research and development of the rare earth industry. For many companies and even state-owned enterprises involved in the rare earth industry in the past, rare earth was not the main business. In terms of R&D investment, rare earth was not ranked high. After the establishment of China Rare Earth Group, its strength is still relatively strong, and it will definitely increase investment in research and development, so it will have a great impact on the overall technological progress of the rare earth industry.
Second, it will play a guiding role in the orderly development of the rare earth market. The market needs to strengthen supervision, and a completely disordered market is very destructive to the development of the industry. Since the development of the rare earth industry for many years, after scientific research, my country's resource advantages do exist, but they are not as big as they have been said in the past. Our real advantages are reflected in the separation technology.
At the same time, we must also pay attention to the relevant intellectual property rights. In recent years, rare earths from the United States have been imported into China, precisely because my country's separation technology is in a leading position in the world. We must maintain our technological advantages, seek longer-term development, and insist on rational use of resources. I believe that this is the positive significance of the establishment of China Rare Earth Group to the development of my country's rare earth industry.
"China Nonferrous Metals" magazine: In terms of "going out", non-ferrous metal enterprises can be said to be "difficult" and "fruitful", and it is not easy to go all the way. Under such a background, will non-ferrous enterprises continue to maintain their enthusiasm for "going out"? How to predict the layout and development prospects of "going out" of non-ferrous enterprises in the future?
Jia Minxing: "Breakthrough" is fully reflected, because non-ferrous enterprises have achieved remarkable results in "going out", and the development of resources abroad guarantees the supply of domestic non-ferrous metal resources, which is of great strategic significance. At the same time, enterprises encounter many difficulties in "going out". But in any case, non-ferrous enterprises will insist on "going out".
As mentioned earlier, the total output has exceeded 60 million tons, and domestic resources cannot meet the needs of the industry. Everyone must strengthen their confidence, see the direction clearly, and insist on "going out", otherwise, they will suffer losses, resources will not be guaranteed, and corporate profits will not be guaranteed. In terms of industry chain security and market demand, it is also necessary to "go out"
"Going out" is difficult, but also has advantages. Non-ferrous finance has been developing for decades, especially after 2000. The development in the past 20 years has been very fast. It has two characteristics. First, the scientific and technological innovation is very significant. All varieties are supported by scientific and technological innovation, which makes our technological innovation, equipment development, and team training in mining, selection and smelting, which are unique in the world. , laying a strong foundation for us to "go out". The second is that the Chinese are hard-working and hard-working. Many Chinese companies that have “going out” have had a very moving construction process. I have communicated with many “going out” entrepreneurs, and they will all feel that they are “very hard”. Most of the resource locations developed by our company "going out" are places with extremely poor basic conditions. However, as long as there are good resources, the Chinese will definitely be able to develop it, which is beyond the reach of other countries.
From the perspective of industrial development, profitability has always been relatively good. I believe that as long as we insist on "going out" and make a reasonable layout to master resources, the corporate benefits will be guaranteed. Because areas with good resources and good conditions have long been occupied and developed by developed countries, we are still looking for resources, deploying and developing in Africa, Central Asia and other regions, and the possibility of success is relatively high. We use Chinese standards and Chinese technology to gain the initiative. .
Jinchuan Group: Recently, the prices of nickel and cobalt have continued to rise. The price of nickel has reached a high point in the past 10 years, and the price of cobalt has exceeded 500,000 yuan per ton. The LME has also launched a related investigation. What is the driving force behind this round of price increases? Is there a factor of financial speculation? How to prevent risks in the non-ferrous industry in the later stage?
Jia Minxing: In recent years, nickel and cobalt prices have risen sharply. Because nickel and cobalt resources are becoming less and less, and the demand for nickel and cobalt in new energy, national defense and military industries is increasing, the current price trend is right, and I personally think it is reasonable. There is a reason for the recent rise in nickel prices. One of the main reasons is that nickel prices have been rising in recent years, sometimes fluctuating, so domestic and foreign nickel inventories have continued to decline. At present, domestic and foreign nickel inventories are less than 100,000 tons. This amount is very small, less than half a month of global consumption. After the inventory is small, the price will fluctuate greatly. In addition, the demand for nickel and cobalt from new energy sources has grown significantly.
Another reason is that it is rumored that Indonesia will release relevant news that it will impose tariffs on exported nickel products. From the perspective of nickel supply, the nickel ore exported by Indonesia accounts for 40% of the global supply. About 30% of my country's imported nickel ore comes from Indonesia. It can be seen that Indonesia has a great impact on the global supply of nickel.
In the long run, I think nickel and cobalt prices have been undervalued in the past. Because of the scarcity of nickel and cobalt resources and high development costs, I am personally optimistic about the price trend of these two varieties, and the prices of nickel and cobalt will remain high. If Indonesia adopts relevant policies for exporting nickel ore, nickel prices may rise, so enterprises should do a good job of preventing risks.
Jiangxi Copper Group: Global inflation expectations are still strong in 2022, and there is still room for copper prices to rise. International investment banks predict that London copper will rise to US$12,000/ton. In this context, what are the main means of ensuring supply and stabilizing prices in the copper industry?
Jia Minxing: Recently, copper prices have been fluctuating at a high level. Although the total amount of copper is not as large as that of aluminum today, copper is the bellwether in all non-ferrous metal prices. All non-ferrous metal prices are high, and copper prices must be high; copper prices fall, driving all non-ferrous metal prices to change. This has been the rule for many years.
In the past, copper prices were so high. According to the development in recent years, large Western fund companies have the most basic judgment that China's copper consumption supports and drives international copper prices. This fact is correct. Because China's copper consumption has been growing rapidly in recent years, it has supported international copper prices. In addition, this situation has an element of hype. China's copper import proportion and foreign dependence are very high, so copper prices are always hyped up. In fact, this is not good for my country's imports. Reasonable factors also exist, of course, that resources are getting less and less. Nowadays, the development of copper resources is becoming more and more difficult, and the large-scale copper mines in the world are all located in high-altitude areas.
With the recovery of the global economy, including the strong growth of the Chinese economy, the consumer demand for copper is getting higher and higher. It is hoped that copper prices will not rise too high, otherwise it will have a greater impact on downstream enterprises and products, thereby inhibiting consumption.
All in all, the price of non-ferrous metals is still reasonable. However, as a market, due to the pull and support of consumption, coupled with the influence of resource supply, it is expected that copper prices will fluctuate at a high level.
Henan Yuguang Gold and Lead Group: At this stage, on the one hand, the production and sales of new energy vehicles in my country have soared, and companies are scrambling to deploy the new energy industry, and the substitution trend for the downstream lead market is becoming more and more obvious; on the other hand, my country's lead production is still growing faster. How does the association view the impact of the development of the new energy industry on the lead industry?
Jia Minxing: New energy, especially China's new energy vehicles, is developing very rapidly now. The number of new energy vehicles in my country has exceeded the 7 million mark, and the annual output in 2021 will reach 3.54 million, with a growth rate of 145.6%. Many large car companies have high expectations and investment in new energy vehicles; many countries have announced that they will stop the production of fuel vehicles in a few years; the environment is under great pressure, and the urban population is becoming more and more concentrated. Therefore, the rapid development of new energy vehicles is the general trend. In this regard, my country has taken the lead and played a positive role in driving the national economy and non-ferrous metal industry. The development of new energy vehicles is good for the non-ferrous metal industry as a whole, because all non-ferrous metals used in new energy vehicles, such as lithium, cobalt, nickel, etc., are related to aluminum and magnesium in terms of lightweight.
But for lead, there are some negative effects. The domestic electric bicycle market is very large and the transformation is very fast. Now lead-acid batteries are basically eliminated, which will have a great impact on lead in the short term and will have an impact on the price of lead. However, the impact of new energy vehicles on lead is not too great, and there is a positive impact.