The Zhitong Finance app learned that Huatai Securities released a research report saying that the Federal Reserve's December FOMC resolution suspended interest rate hikes as scheduled, and the meeting raised the issue of when to cut interest rates; the bitmap indicates that interest rates will not be raised in 2023, interest rates will be cut 3 times in 2024, etc., which may benefit the price of gold in the short term. As of December 14, the price of gold had risen to 2,036 US dollars/ounce. Recently, the first quantum Cobre Panama copper mine was unconstitutionally terminated and the 24-25 production guidelines for British and American resources were lowered by 200,000 to 170,000 tons. Copper disturbances continued, and the 24-year supply and demand pattern may have improved in '24 compared to '23. The Economic Work Conference set the tone for 2024. High-quality development is the focus and emphasizes the strength of structural policies, and emphasizes industries with incremental expressions such as high-end manufacturing, double carbon, the three major projects, and export chains. The pattern of strength and weakness in domestic steel sheets may continue.
▍ The main views of Huatai Securities are as follows:
The Economic Work Conference sets the tone for 2024. High-quality development is the focus and emphasizes the strength of structural policies
The Economic Work Conference basically continued the tone of the Politburo meeting on December 8, which “adheres to the general tone of stabilization and progress, and consolidates and strengthens the positive trend of economic recovery.” At the same time, the conference focused on the goal of high-quality development, and placed more emphasis on strengthening structural policies in countercyclical regulation policies, including structural monetary policy, optimization of fiscal expenditure structures, and support for strategic emerging industries, etc., while risk prevention in the real estate and financial sector remains a top priority.
According to Huatai's strategy of December 12, '23, “Improving Quality, and Stabilizing Volume”, the emphasis on expected management and economic cycles guides credit derivation blockages to be overcome, or boosts risk appetite; stylistically, technological growth may be a long-term main line, short-term emerging versus traditional industrial policies are scissor poor or convergence; emphasis is placed on industries with incremental expressions such as high-end manufacturing, double carbon, three major projects, and export chains.
The Fed ends interest rate hikes, which may favor the price of gold in the short term
Because of the end of the strike, the US added 199,000 new non-agricultural workers in November, higher than Bloomberg's unanimous estimate; the unemployment rate fell 0.2 pct to 3.7%, lower than Bloomberg's unanimous estimate. In November, the US CPI rose 0.1% month-on-month, and the forecast was flat; however, the core CPI and CPI increased 4% and 3.1% year on year, respectively, in line with Bloomberg's expectations. The Federal Reserve's December FOMC resolution suspended interest rate hikes as scheduled, and the meeting raised the issue of when to cut interest rates;
The bitmap indicates that interest rates will not be raised in 2023, and interest rates will be cut 3 times in 2024; raising the 2023 growth forecast, lowering the inflation forecast, etc., may benefit the price of gold in the short term. As of December 14, the price of gold had risen to 2,036 US dollars/ounce. According to Huatai Metals “Continual Change, Focus on Response” on November 3, '23, the price of gold may enter a high level of volatility between the end of interest rate hikes and the formation of interest rate cuts.
In 2024, the trend of strength and weakness in China's steel industry may continue. Baosteel raised plate prices in January
According to the Steel Association, the share of demand for steel used in the manufacturing industry in '23 significantly exceeded that of real estate and infrastructure. Moreover, according to the Economic Work Conference, it is expected that high-quality manufacturing and emerging industries will continue to develop vigorously, and fixed asset investment in emerging industries and production demand in emerging industries may continue to drive a positive increase in board demand.
Furthermore, according to the General Administration of Customs, from January to October '23, China exported a total of 74.732 million tons of steel, an increase of 34.8% over the previous year. Recently, according to My Steel, the domestic sales price of Baosteel Steel Co., Ltd. was adjusted in January 2024 from December 2023, and the price increase for medium and heavy plate, hot coil, cold rolled and other products was between 100-200 yuan/ton.
Copper turbulence continues, and the 24-year supply and demand pattern may improve compared to 23
According to Huatai Metal's “First Quantum Perturbation May Cause Improvement in Copper Supply and Demand in '24” on December 8, '23, the first quantum perturbation may have led to improvements in copper supply and demand in '24: the first quantum Cobre Panama copper mine was unconstitutionally terminated, accounting for 1.6% of global production in '22. If this copper mine recovers half of production in 24 (the original guideline is 370,000 to 400,000 tons), then the global copper supply and demand pattern in 23-25 is +0.5%, +0.1%, and +0.1%.
Recently, the 24-25 production guidelines for British and American resources were lowered by 200,000 to 170,000 tons. If this reduction is considered, the 24-25 copper supply and demand pattern may further improve, and the annual shortage may reach 120,000 to 140,000 tons (corresponding to -0.4%, -0.5%). 24H1 copper prices may fluctuate or be strong, and 24H2 beware of downside risks in the US economy.
Risk warning:
Uncertainty about policy implementation, uncertainty about overseas risks. It takes time for policies to reach fundamental improvements.