The fundamentals, including supply and demand side and the forecast of future supply balance, let's take a look at the future balance of fundamentals. I will also try to talk about technical aspects and see some charts. I will talk about the funding situation and the risks in our market. For example, alternative products, requirements, etc. There are also some problems of default, and later make a summary.
Let us first look at the fundamentals of the global economy. There are many economists who have done in-depth research in this area. We have also heard their opinions. But overall, the global economy is now doing well. Of course, people are more worried about inflation and interest rates. In fact, the environment with higher interest rates may come. This is precisely because of the need for rapid growth. Therefore, I think the overall global economic outlook is good, but there are also risks in the global economic outlook. For example, I just mentioned inflation. There are also soaring costs, including the soaring prices of commodities we talk about today. Of course, there is also a problem that everyone does not want to become a reality. It is the massive attacks by terrorist-scale elements, as well as the credit backlog. When it comes to specific countries in China, we are certainly very confident about China’s long-term economic trends and growth. Therefore, the demand for commodities such as copper and aluminum is strong. There are other factors such as China plans to build 50 modern airports and new roads over 100 kilometers. Some people also talked about China’s large-scale emerging cities emerging every two years for the foreseeable future. Demand at these scales is strong. In the coming years, China’s economic growth will gradually shift away from infrastructure investment driven by domestic demand. In order to gradually solve the problem of high domestic savings in China, the larger factor in the next 2-3 years or 3-4 years is saving investment. Not just exports, for example, the United States and European markets are imported from China. Looking at the U.S. GDP figures again shows that the U.S. domestic economy is very good and consumer spending continues to grow. Each year it reaches 8.4%. The demand for copper and aluminum is very good news. Let's look at it in more detail. Looking at the supply side, here are some of the elements just mentioned by John Kemp, seeing that there are endless problems. Especially in the copper industry, there have been many labor disputes in the past one or two years, and some of these issues and disputes will continue. Labor union workers think this is a better lifelong opportunity to renegotiate labor agreements.
People are worried about labor disputes in Canada and elsewhere in the future, all of which may lead to supply disruptions. Especially in the aluminum industry, fortunately in the construction of aluminum refineries, especially Chinese refineries, the increase in domestic production of aluminum in China may make China less dependent on the international market and the import market. We have also heard people say one more Large, potentially more persistent problems. It is sustained investment in mining, exploration, and engineering that lasts for 5-10 years. This problem is also reflected in the near future. BHP said that they expect the shortage of skilled workers and mining equipment will continue to exist in the next two to three years. Some major engineering manufacturers, like the US company Kadepter, said that they will not have the next two years. A lot of production increases. In particular, the investment of some large companies has led to the discovery of projects that have been discovered relatively recently. There are no indications that there may be major new mine discoveries in base metals in the near future. When it comes to the balance between supply and demand, the balance between supply and demand has changed in the past few months, even a few years, and even a few years. At the beginning of each year, people think that there are shortcomings and that there will be surplus by the end of the year. By this year, analysts have put forward the same opinion that the International Copper Research Association said that the shortage of copper in January and February reached 170,000, but we are skeptical about this figure. Maybe you want to see how his data come from, this data source will be affected by this opinion. In a recent report, analysts expect that output this year will be reduced by 500,000 tons. But the balance of demand, I think many analysts' views may be between a slight surplus and a deficiency. About 230,000 tons, there is probably such a difference each year. Therefore, no one estimates that there will be a large surplus in the coming years.
This is also due to the fact that inventory is now very inadequate and there is almost no visible inventory. The situation of aluminum is slightly different, but most analysts believe that there will be insufficient, which makes the existing inventory rapidly reduced. The inventory of aluminum and the global inventory of aluminum smelting are considered to be below 3 million tons, which is a low point of global inventory since September 2004. And it has been declining, the annual inventory is probably reduced by 13%. We believe that the industry is particularly calm for copper supply and demand. Our point of view is different from what Mr. Kemp just said. We are thinking about when this cycle will end and what factors it depends on. I think it depends on the supplier, not the demand side. In the past, we saw that high prices led to the reflection of the market, leading to increased supply.
Let's talk about the impact of capital flows and funds. This point was also mentioned by the spokesman just now. We think it is very important to classify funds. We divide funds into three categories. One is the CTA and the chasing trend of funds, we believe that in the metal this piece of funds will probably account for 40 billion, there are very active banks and institutions free counters and hedge funds and so on. Approximately 15 billion of this portion of funds are invested in the metal trading market. There are also about 800-120 billion U.S. dollars in passive counterparties and index funds, of which 20% are put on the basis of metals, among which copper and aluminum account for a very large amount. We completely agree with them that the price trend is very large, because we think the metal market is still relatively small. We also see that the impact of index funds is very large and it is also a factor behind the rise in oil prices. This makes us say there is a steady trend in this basic metal price, which may continue. People often have a misunderstanding, especially for misunderstandings of index funds. We think that they will not only push prices up. We think this is a misunderstanding. In the nearer we see examples. This kind of capital can both push prices higher and lower prices. In other words, funds may also flow out or flow in from the commodity market. Now we ask whether the inflow of funds will stay in this market. Many analysts believe that metal is a new asset class and therefore these funds will purchase assets for a long time. But others think this is just a flash phenomenon. Our point of view is that we have seen many mutual funds and pension funds have accepted that commodities should account for 3% of their positions, but their more investment is more traditional bonds and stock investments. This makes sense. But apparently these funds will not be fully invested in commodities, as long as the price of commodities declines among many such investors, because their investment in commodities is originally new capital, and they may withdraw or do not hold these bulk commodities. commodity.
The difference between us and John Kemp's point of view is that it is not difficult at all to find evidence in our market. I just said that it depends on where you find the data. The key is that we do not think there is a large-scale substitution phenomenon. There is no substitute for copper or aluminum. We do not think that there will be a disintegration of demand. The industry that talks about substitution of copper does, for example, use materials such as plastics for water pipes, etc., and are affected by alternative materials. However, many copper and aluminum users do not have much choice in selecting materials. And aluminum is an alternative product, the other is plastic. We know that plastics are to be produced from oil. The price of oil is also high now.
But material substitution is not a simple matter. It is not just changing copper to aluminum or plastic. You have to remodel this product and some products may not be suitable for these cycles.
We believe that we must first prepare for this, that is, the market may be good or bad. I just saw a report saying that in the history of aluminum futures, 10 times prices have soared, and 8 of them have occurred in the past two months. Let’s look at the history of aluminum futures in the history of the ten major price plunges, which have occurred only once in the past half year. This means that we have seen more soaring and more plunge. If we look back at the price of copper and aluminum in the next few years, for example, today's copper is 8,000 tons, while aluminum is 4,000. After a few years we saw that the price is very high, but in the future this price is very cheap.
Gas Analyzers Analyzing air pollution is the first step toward preserving a clean atmospheric environment. FUJI developed the first infrared gas analyzer in Japan to use mass-flow sensors. Since then, we have supplied customers with various types of gas analyzers to support environmental preservation and control efforts.as Analyzer comes in a hard case with all accessories as a complete, ready-to-use gas analyzer. Turn on the power switch, connect the hose and probe, push the Zero button. When the Zero is complete, the analyzer is ready to measure exhaust emissions gas. There are three power input options which will recharge the internal batteries.
Gas Analyzers,Portable Multi Gas Detector,Alarm Portable Analyzer,Infrared Gas Analyzer
Xi'an Lonn M&E Equipment Co., Ltd. , https://www.smartmeasurer.com