瑞信-亚太地区-基础材料行业-基础金属预测：对金属需求环境的挑战-2019.6.28-56页.pdf

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES,ANALYST CERTIFICATIONS,LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS.US Disclosure:Credit Suisse does and seeks to do business with companies covered in its research reports.As a result,investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report.Investors should consider this report as only a single factor in making their investment decision.28 June 2019Asia Pacific/Australia/GlobalEquity ResearchDiversified Metals&Mining Base Metals Forecasts CONNECTIONS SERIESThe Credit Suisse Connections Series leverages our exceptional breadth of macro and micro research to deliver incisive cross-sector and cross-border thematic insights for our clients.Research AnalystsMatthew Hope61 2 8205 4669matthew.hopecredit-Conor Rowley44 20 7883 9156conor.rowleycredit-Yang Luo852 2101 6328yang.luocredit-Samuel Catalano44 20 7883 0346samuel.catalanocredit-Sam Webb61 2 8205 4535sam.webbcredit-Michael Slifirski61 3 9280 1845michael.slifirskicredit-Fahad Tariq,CPA,CA416 352 4593fahad.tariqcredit-Caio Ribeiro55 11 3701 6324caio.b.ribeirocredit-Curt Woodworth,CFA212 325 5117curt.woodworthcredit-Prateek Singh91 22 6777 3894prateek.singhcredit-Neelkanth Mishra91 22 6777 3716neelkanth.mishracredit-Challenging demand environment for metalsWe revise our base metal price forecasts in a challenging environment for demand.Given the US-China trade war,tensions and tariffs elsewhere,and the deterioration in global economic conditions especially Europeour revisions to aluminium,alumina and nickel are mainly downwards.Only copper prices have been lifted,largely on supply factors.We have maintained our zinc forecasts unchanged.Figure 1:Revised copper,aluminium,alumina and nickel forecasts2Q193Q194Q192019E2020E2021E2022E LT(real)CopperNewUS$/t6,1186,1806,5006,2556,1735,9505,9506,615NewUS$/lb2.782.802.952.842.802.702.703.00OldUS$/lb2.902.702.702.782.602.602.603.00Chg%-4%4%9%2%8%4%4%0%AluminiumNewUS$/t1,7951,8501,8751,8471,9201,9802,2002,865NewUS$/lb0.810.840.850.840.870.901.001.30OldUS$/lb0.900.900.900.890.900.951.051.30Chg%-10%-7%-6%-6%-3%-6%-5%0%AluminaNewUS$/t363355380372360370390400(spot)OldUS$/t420380380392360375385400Chg%-14%-7%0%-5%0%-1%1%0%NickelNewUS$/t12,22511,91012,34512,20412,90013,22514,33014,775NewUS$/lb5.555.405.605.545.856.006.506.70OldUS$/lb5.806.006.005.856.506.506.506.70Chg%-4%-10%-7%-5%-10%-8%0%0%Source:Credit Suisse estimatesCopper supply has been downgraded this year,particularly in Central Africa,Chile,and Peru.We also expect a lower scrap contribution to supply on tightening import restrictions in China,combined with slow growth in domestic collection.We now forecast a copper deficit of almost half a million tonnes this year,but our forecast price increase is measured,given that macro headwinds are currently outweighing fundamentals in copper.For aluminium,the negative demand environment and oversupply in China continues to weigh on prices.Chinese semis exports are climbing further allowing it to transmit low prices to the globe.We maintain an outlook of stronger prices over time as Chinas capacity utilisation rises,but we have tempered our price increases given a lower China cost curve.For alumina,we maintain a firm price forecast of US$360/t based on price parity with the cost-base in Shanxi,a 23Mtpa producer where the bauxite price has doubled over a year due to the closure of open pit mines.A glut of stainless steel and surging NPI output from Indonesia and China are challenging for nickel prices.We reduce our price forecasts as US$6.50/lb as incentive prices are not justified in the near term.28 June 2019Base Metals Forecasts2Focus charts and tableFigure 2:Revised base metals price forecasts20181Q192Q193Q194Q192019E1Q202Q203Q204Q202020E2021E2022E LT(real)CopperNewUS$/t6,5326,2216,1186,1806,5006,2556,4006,1706,1705,9506,1735,9505,9506,615NewUS$/lb2.962.822.782.802.952.842.902.802.802.702.802.702.703.00OldUS$/lb2.962.822.902.702.702.782.602.602.602.602.602.602.603.00Chg%0%0%-4%4%9%2%12%8%8%4%8%4%4%0%AluminiumNewUS$/t2,1101,8631,7951,8501,8751,8471,9201,9201,9201,9201,9201,9802,2002,865NewUS$/lb0.960.840.810.840.850.840.870.870.870.870.870.901.001.30OldUS$/lb0.960.840.900.900.900.890.900.900.900.900.900.951.051.30Chg%0%0%-10%-7%-6%-6%-3%-3%-3%-3%-3%-6%-5%0%Alumina(spot)NewUS$/t474387363355380372340360360380360370390400OldUS$/t474387420380380392360340340400360375385400Chg%0%0%-14%-7%0%-5%-6%6%6%-5%0%-1%1%0%linkage%22.4%20.8%20.2%19.2%20.3%20.1%17.7%18.8%18.8%19.8%18.8%18.7%17.7%14.0%NickelNewUS$/t13,13012,39312,22511,91012,34512,20412,90012,90012,90012,90012,90013,22514,33014,775NewUS$/lb5.965.625.555.405.605.545.855.855.855.855.856.006.506.70OldUS$/lb5.965.625.806.006.005.856.506.506.506.506.506.506.506.70Chg%0%0%-4%-10%-7%-5%-10%-10%-10%-10%-10%-8%0%0%ZincNewUS$/t2,9232,7072,7692,4002,4002,4772,3002,3002,3002,3002,3002,3402,3602,300NewUS$/lb1.331.231.261.091.091.121.041.041.041.041.041.061.071.04OldUS$/lb1.331.231.091.091.091.121.041.041.041.041.041.061.071.04Chg%0%0%15%0%0%0%0%0%0%0%0%0%0%0%Source:Credit Suisse estimatesFigure 3:Global copper use by sectorFigure 4:Global aluminium use by sectorBuilding/Construction29%Electrical Network Infrastructure20%Industrial Machinery&Equipment10%Transport Equipment13%Consumer and General Products28%Building&Construction,24%Transport,23%Electrical,12%Packaging,12%Consumer Goods,14%Machinery&Equipment,9%Other,6%Source:Credit Suisse estimatesSource:Wood Mackenzie,Credit Suisse estimatesFigure 5:Nickel use by sectorFigure 6:Global stainless steel use by sectorFor Stainless69%Non-ferrous Alloys10%EV Batteries&Energy storage4%steel,plating,Foundry,other17%Architecture,building&construction18%Catering utensils%domestic appliances34%Automotive&transport11%Others&unallocated6%Process&other industries31%Source:Wood Mackenzie,Credit Suisse estimatesSource:Wood Mackenzie,Credit Suisse estimates28 June 2019Base Metals Forecasts3Table of contentsDemand environment for metals is soft4Falling PMIs and trade wars in 20194US-China trade war is the greatest negative for base metals right now4Our approach is just to look at the underlying data5China:sector usage of metals6Overall base metals demand looks rather poor12Copper forecasts132019 copper deficit battling negative macro outlook for price control13Current market indicators do not show tightness15The physical market:copper scrap in China16Copper consumption18Chinas urban population is topping out in copper demand intensity20Mine supply growth21Aluminium forecasts24Prices increase slowed by falling cost curve24We link price forecasts to Chinas capacity utilisation25Aluminium inventories remain large27Semi exports continue to rise in 201928China aluminium consumption29Global consumption:trends in sector use30Alumina forecasts33Shanxi costs should hold the Australian price in the high$300s33Alumina trade flows returning to normal34Setting the alumina price forecasts35Nickel forecasts37Indonesian nickel and stainless steel supply depresses the market37Current market indicators:premiums indicate tightness has gone38Nickel demand:stainless steel ramp-up under threat39Nickel supply:NPI output soaring in China and Indonesia41Zinc forecasts44Surplus approaching as high profits will test smelter discipline44Economics improve for ramping up smelter output45Fundamental S&D suggests a surplus will build in 202047Breaking down the mine supply onset48Demand catching up to trend,but we see headwinds for steel5128 June 2019Base Metals Forecasts4Demand environment for metals is softFalling PMIs and trade wars in 2019We update our base metal prices in a period of great uncertainty from the trade war,and with the global economy starting to look ill.We also flag that our colleague Fahad Tariq is simultaneously Revising Gold Price Forecasts Upward for these and other factors.Europe is looking so critical that Mario Draghi has been forced once again to reiterate whatever it takesWeak demand has caused steel companies to reduce output and idle mills,and as Britain elects a new Prime Minister,the likelihood rises of it crashing out of the EU with no-deal,potentially with a brutal effect on trade.Japan and Chinas manufacturing PMIs sank into contraction territory in May,and even the US,while remaining in expansion territory,is rapidly losing buoyancy,as the stimulus from last years tax cuts has dissipated and trade wars proliferatethe Administrations profligate use of tariffs increases costs for some US manufacturers.And as one trade agreement appears settled,another flares,creating an environment of great uncertainty for manufacturers.Figure 7:Global manufacturing PMIs are sagging464850525456586062Jan-15Mar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19Mar-19May-19China CFISUS ISMEurozoneJapan NikeiSource:The BLOOMBERG PROFESSIONAL service,Credit Suisse researchUS-China trade war is the greatest negative for base metals right nowA macro issue depressing base metals prices at the moment is,of course,the US-China trade war.Copper,in particular,has a traditional role as a financial investment for macro exposure,so the negative outlook on global growth from the trade war has driven down the copper price.Accordingly,any trade resolution would likely see all base metal prices bounce,with copper being the greatest beneficiary as global macro clouds clear.The G20 meeting and any talks between Presidents Trump&Xi look to be the next event that may alter macro sentiment and base metal prices.Given the uncertainties in the timing and resolution of the US-China trade dispute,we have sought to incorporate a neutral view in our forecasts.We accept the trade dispute as it exists at present,and assume a resolution at some point during the year,but focus on the underlying economic environment as it stands.A problem with making a call on the trade dispute is that it is extremely difficult to estimate the effect on base metals consumption.Looking at China,the main impact to base metals demand in the first instance should be the through tariffs on the exports of consumer products.For copper,Lilan Consulting estimated that exported end-use products accounts for 20%of copper consumption in China,and the US accounts for 20%of Chinas exports.Overall the US may end up with 4%of Chinas copper usage.But how much of that trade would be affected by 25%tariffs?Beyond that difficult estimation,there may be other flow on effects and offsets that further cloud the issue.There are several possible outcomes:28 June 2019Base Metals Forecasts5Dovish scenarioThe most dovish scenario may be that the trade dispute has little effect on global exports.US consumers simply switch to appliances from exporters in other countries that are not subject to 25%tariffs.Where there are no other suppliers with the desired products and features,US consumers continue to buy from China,paying the additional tariff.Elements of this scenario may be correct.Some purchasing may be necessary,and China in some cases may be the only feasible supplier,so trading must continue,despite the US Government clipping the ticket.Much of the increased price would undoubtedly be carried by the US consumer,although the Chinese Government has already shifted some of the load to its importers by devaluing the currency.But it seems more likely there will be deleterious effects on global growth,which is the fear being expressed through the copper price:Consumers are likely to defer upgrades of many goods to await the removal of tariffs,or they may cancel purchases where the price has hiked 20%or more.This consumption fall would have a direct impact on global GDP and it seems to be what Chinese manufacturers are expecting.Chinas manufacturing PMI fell 0.7%to 49.4 in May,a sign that factories are experiencing lower sales and production levels.New orders fell to 49.8 from 51.4.But a protracted dispute may have even greater consequences:Firms expecting weaker sales are likely to cease investing in new plants and equipment in China,further impacting metals demand.However,this FAI loss could be offset by firms relocating manufacturing facilities to other nations to avoid tariffs.This is occurring already with Taiwanese firms migrating some manufacturing facilities back home,from the mainland.Bearish scenarioThe most bearish scenario would be to assume flow-on effects in China that local stimulus could not offset:Firms facing lost sales,and closing or migrating overseas,would cause unemployment in China.Other Chinese firms may become wary and increase savings,making domestic subsidies on vehicles and appliances ineffective.The reduced consumption demand in China could then have a snowballing effect,spreading the downturn to other manufacturers and services,causing more firms to fail.The bearish scenario is essentially a recession in China,and may be a little far-fetched,given that the Government should be able to boost employment through infrastructure projects.But one step back from that,with falling sales and deferred FAI for new plants seems already to be the impact of the dispute.Base metals consumption has probably reduced,although the granular data that might illustrate this is not available.Our approach is just to look at the underlying dataWorld-Ex-China:we expect gradual recovery after 2019For the World ex-China,we expect 2019 to be weak,given the dire manufacturing PMIs in the Developed World.However,our European Strategists believe the trough may have already been reached,so we do not push the weakness onwards.We expect gradual recovery over the forecast period 2020 to 2022 and our ex-China base metals consumption forecasts increase over the period.In China,we estimate the trends we can see in data for 2019Our approach to the problem of estimating Chinas base metals demand is to start with the trends we can see already in the data.We assume any further downside caused by expanded tariffs will be offset by domestic stimulus.If there is a trade deal,we expect base metal prices would bounce.But overall demand may not because many 28 June 2019Base Metals Forecasts6of the trends we see look structuralpredating the trade war.We expect base metals demand softness will continue for the year.For China beyond 2019,we follow the implications of our forecast that Chinas steel demand should decline by 1-2%p.a.from 202022,which appeared in our Bulk Commodity Forecasts of 14 May.That slowdown in steel use is assumed to be caused by a fall in housing construction in tier 3 and tier 4 cities together with the related machinery and appliance sectors.That scenario leads us to expect subdued base metal consumption for China in the forecast period.Steel strength versus base metals weaknessWhile the immediate global backdrop seems negative for most industrial commodities,prices are not all falling:iron ore is soaring and metallurg