The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that recently, TC processing fees for copper concentrate, zinc concentrate, and tin concentrate have all fallen rapidly. Spot TC for copper concentrate fell to 34.5 US dollars/dry ton, spot TC for zinc concentrate fell to 80 US dollars/dry ton, and spot TC for tin concentrate dropped to 10,500 yuan/ton. The rapid decline in concentrate processing fees highlights that ore is extremely tight. In the future, it will gradually be transmitted to the tightening of the supply of refined products, and the low inventory pattern will further deteriorate, which will facilitate the rise in prices. Ore tension strengthens the mine side's right to distribute profits, and upstream mineral resources companies should be embraced.

Investment suggestions: In view of the mining side's strong ability to share profits, priority allocation and supply growth falls short of expectations. Upstream copper and tin companies with promising long-term consumption are: Zijin Mining (601899.SH), Luoyang Molybdenum (603993.SH), Jin Chengxin (603979.SH), Tin Industry Co., Ltd. (000960.SZ), etc.

CITIC Construction Investment's views are as follows:

Industrial metals: LME copper, aluminum, lead, zinc, and tin prices changed to 1.0%, -1.9%, 0.8%, -1.4%, and 2.2% last week; industrial metal prices are determined by “financial attributes” and “commodity attributes”. Judging from financial attributes, on December 13, 2023, local time, the Federal Reserve said it would keep the federal funds rate target range unchanged at 5.25% to 5.5%, in line with market expectations. The Fed's interest rate hike is nearing its end; judging from commodity attributes, global copper and aluminum inventories are all relatively low. China's economic recovery can be expected, and new energy can be added Driven by the industry, demand growth expectations for copper and aluminum have improved dramatically. The copper proposal focuses on Zijin Mining, Jin Chengxin, Luoyang Molybdenum, Tongling Nonferrous Metals, etc., while the aluminum proposal focuses on China's Hongqiao, Yunlu Co., Ltd., China Aluminum, and Shenhuo Co., Ltd.

Copper, zinc, and tin: TCs are tight on ores, and spot TC for copper concentrate fell to 34.5 US dollars/dry ton in nearly a month, which is seriously lower than the finalized 2024 long order TC of 80 US dollars/dry ton, and also lower than the smelting costs of domestic copper smelters. The sharp drop in TC highlights that ore is extremely tight. On the one hand, overseas copper mines have passively cut production. On the other hand, the Red Sea conflict delayed the arrival of materials. Material shortages will eventually cause refined copper production to grow less than expected. There is a risk that originally low inventories will fall further. Once pessimistic macroeconomic expectations that suppress prices improve, copper prices will be smoothly driven upward.

Zinc concentrate and tin concentrate are also experiencing tension. The LME zinc pullback to 2,400 US dollars/ton triggered losses and production cuts in some overseas zinc mines, establishing a new supply balance. Imported zinc concentrate fell continuously to 80 US dollars/dry ton, and domestic zinc concentrate was 4,200 yuan/ton, below the average cost line of zinc smelting of 4,500 yuan/ton, and the stimulus to supply would be weaker than expected. 60% tin concentrate processing fees have dropped from 13,000 yuan/ton to 10,500 yuan/ton. As the ban on mining in Wa State continues, the ore supply contraction effect is showing. It is foreseeable that tin concentrate processing fees will drop further. When the tin concentrate falls below the 10,000 yuan mark, the supply of tin ingots will shrink, which is mismatched with the improving global semiconductor demand, and the focus of tin prices will rise.