In February 2005, China’s output of major non-ferrous metal products grew steadily, with the exception of zinc, which resulted in reduced output due to insufficient imported concentrates and insufficient power supply. On March 23, 2005, the Federal Reserve raised the interest rate by 0.25 percent. The market fears that the United States will accelerate the pace of interest rate increases in the future and the exchange rate of the US dollar will continue to rise. Therefore, the price of non-ferrous metals has declined to varying degrees. However, due to the continuous reduction of inventories, the spot supply is still tight, and the price correction is limited. According to estimates by the International Copper Research Organization, the global supply gap for refined copper was 260,000 tons in 2005 and 90,000 tons in 2006, due to the slowdown in demand for refined copper and the increase in refinery supply. At present, the capacity of the refinery is the bottleneck, so the spot refined copper processing fee TC/RC has risen to 180/18. Output of major copper-producing countries, such as Chile, has decreased, and the United States economy has accelerated its recovery. China's power construction will continue to grow rapidly, and will provide support for the maintenance of high copper prices. The supply of alumina is still tight, with the spot price of imports reaching 460USD, which may increase in the short term. The prices of domestic and international electrolytic aluminum are also slowly rising. However, domestic electricity prices may be raised by RMB0.02/kwh, which makes electrolytic aluminum plants without the advantages of alumina and electricity prices still in a very difficult situation. Electrolytic aluminum plants have ceased production. The price of zinc has risen to 1350USD, which is a strong species in this year's non-ferrous metals. Mainly because of the strong demand for galvanized sheet in China, from a net exporter to a net importer, the shortage of imported concentrates and domestic electricity supply has also increased the tension in the spot market. The price of gold is greatly influenced by the exchange rate of the U.S. dollar, which has fallen due to the appreciation of the U.S. dollar. The price of precious metals has risen sharply and rapidly. Some varieties have room to rise. Last week, Chinalco announced that it will increase the issuance of A-shares and raise 8 billion yuan, which is a great blow to the non-ferrous metal industry stocks in the A-share market. Chinalco is a large-scale company with a low price-earnings ratio, only 8.3 times. However, we believe that Chinalco’s return to the aluminum industry will be a more direct blow, especially for alumina companies, followed by electrolytic aluminum companies, while the share prices of other non-ferrous metals companies will gradually emerge from this dilemma and operate independently, which contains this investment. opportunity. Sea Fortis Fund believes that companies with superior upstream resources, deep vertical integration and outstanding management efficiency will benefit greatly. We maintain the industry rating as "neutral." Sea Fortis Fund Management Company
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