Marketing feedback - China metals mining

Research evidence excerpt

Marketing feedback - China metals mining

ith battery production scheduling

improving by single digit % MoM in recent months. Since the incremental supply recovery

can take a few months to hit the market, we believe near term lithium price can stay

resilient. However, we are neutral on the stocks as we believe lithium strength has

been mostly priced in. While we do not rule out peak season price potentially spiking to

RMB200k/t+, we are cautious that it can be reflected as a sustainable price.

Copper remains the consensus long. There is no change in its fundamental supply•

demand story, and company valuation (e.g. Zijin, CMOC) is quite attractive, esp when

compared with overseas miners.

Gold price corrected by USD1.4k/oz+ or 25%+ from Jan peak. Investors were curious why•

gold traded like a risk asset during the Middle East conflict. Our interpretation is that the

concern on no rate cut/ potential rate hike, triggered by high oil price as a result of the

war, outweighed gold’s feature as a safe-haven asset. Besides, institutions had to sell

liquid assets, such as gold, during emergencies to get access to capital (esp since gold

price was strong). However, such selling does not mean gold is not welcomed any more,

in turn, it explains why gold is needed to prepare for risk events. From our discussion

with investors, more people continue to worry about short-term headwind from potential

rate hike, although there is no doubt about the positive long-term theme driven by de-

dollarization and central bank purchase etc.

Most frequently asked question: what happened to aluminum? LME/China spot dropped by

4%/1% during week of Jun 15 (i.e after the announcement of peace deal), while Hongqiao/

Chalco-H dropped by ~16%. The de-escalation was a catalyst, as people no longer expect