1、Global Commodities ResearchMetals Outlook PresentationGlobal Commodities ResearchNatasha KanevaGregory ShearerExecutive DirectorVice President(1-212)834-3175(44-20)7134-8161 JPMorgan Chase Bank NAJ.P.Morgan Securities plcSee the end pages of this presentation for important disclosures.J.P.Morgan doe
2、s 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 deci
3、sion.March 2019Image sources:UC Rusal,World Gold Council,Glencore plc,Nornickel.Used with permission.M E T A L S O U T L O O K P R E S E N T A T I O N1The soft patch in global growth looks likely to persist at least through mid-year,but the dovish turns by major central banks and increasingly aggres
4、sive policy support from China has fuelled expectations of an improved growth profile.Some signs of stabilization have emerged in recent months,but the data flow remains choppy.Source:J.P.Morgan Source:J.P.Morgan J.P.Morgan Real GDP Forecast Revision IndexIndex,4Jan2002=100;Changes reflect%-point re
5、vision to 4-quarter rolling percent change forecastJ.P.Morgan Economic Activity Surprise IndexPercent92.592.792.993.193.393.593.789.589.789.990.190.390.590.790.991.191.391.5Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19Mar-19DMGlobalEM(RHS)-30-20-100102030Jan-18Feb-18
6、Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19Feb-19Mar-19EASI DMEASI EMEASI GlobalM E T A L S O U T L O O K P R E S E N T A T I O N2Industrial metals have anticipated stabilization in the global growth momentum.More specifically,at current spot levels,metals are trading at a 20%
7、premium to the current global PMI of 50.6.This premium is rare,occurring only three times in the last ten years:1H08,mid-2011 and early 2015.In all cases,it was a precursor for lower prices.Source:Bloomberg,J.P.Morgan Commodities ResearchBloomberg Industrial Metals Subindex TR premium/discount to gl
8、obal manufacturing PMIPercent-25-20-15-10-50510152025Jan-14Mar-14May-14Jul-14Sep-14Nov-14Jan-15Mar-15May-15Jul-15Sep-15Nov-15Jan-16Mar-16May-16Jul-16Sep-16Nov-16Jan-17Mar-17May-17Jul-17Sep-17Nov-17Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19M E T A L S O U T L O O K P R E S E N T A T I O N3By any rate
9、 such divergence is unsustainable,and mean reversion should come about.To converge with spot metals prices,global industrial production has to rebound to a solid 3%pace over the next six monthsa needed condition for the manufacturing PMI to track around 53.Source:Bloomberg,J.P.MorganSource:Bloomberg
10、,J.P.Morgan Global PMI and Bloomberg Industrial Metals Subindex TRLHS:PMI Index;RHS:BCOMINTR IndexGlobal Industrial Production growth and manufacturing PMILHS:Global IP growth percent;RHS:Global PMI,index17019021023025027029031049505152535455Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16Jan-17Apr-
11、17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19PMIBCOM4748495051525354550.00.51.01.52.02.53.03.54.0Jan-14May-14Sep-14Jan-15May-15Sep-15Jan-16May-16Sep-16Jan-17May-17Sep-17Jan-18May-18Sep-18Jan-19Global IPGlobal PMIM E T A L S O U T L O O K P R E S E N T A T I O N4However,we do eventually see Chinas mon
12、etary-driven stabilization ultimately working to drive growth back up to 6.4%by 3Q19.As firmer growth becomes more apparent and demonstrable later in the year,we,in turn,see metals,for the most part,once again setting new year-to-date highs in 3Q19.Source:J.P.Morgan JPM Global Economic ForecastsM E
13、T A L S O U T L O O K P R E S E N T A T I O N5Further forward,with US 1-year forward recession risks still oscillating around 44%,we still factor in the significant likelihood of a macro rollover in 2020 for the time being and continue to see a major 4Q19 correction in industrial-linked metals price
14、s.Source:Various government and non-government sources,J.P.Morgan Probability of US recession beginning within a year and two yearsPercentProbabilities of US recession within 1 year from economic indicatorsSource:J.P.Morgan.Historical average unconditional probability is the historical average proba
15、bility of a recession starting within 12 months when beginning in an expansion,unconditional on any data.All other probabilities are based on regression models.Indicators enter the models as the deviation from their two-year average,and the sample is 1955-present excluding the periods from 7 months
16、after the beginning of a recession to 18 months after the end,except for the SLOOS,which is a weighted average of the standards indexes for C&I;and CRE loans,1990-present.Indicators are backcast based on related series where necessary to extend the sample back to 1955.The sentiment indicators are co
17、mposites of multiple series.Residential building permits is single-family permits plus the 3-month average of multi-family permits.Payrolls is the 3-month average of nonfarm payroll gains.All near-term economic indicators above is the probability from a model based on the first principal component o
18、f the indicators in the table.Background risk indicators is the one-year probability from a model based on the first principal component of our medium-run recession indicators.All economic indicators is the probability from a model including the first principal component of our near-term indicators
19、and the first component of the medium-term indicators.0%10%20%30%40%50%60%70%80%Jan 13May 13Sep 13Jan 14May 14Sep 14Jan 15May 15Sep 15Jan 16May 16Sep 16Jan 17May 17Sep 17Jan 18May 18Sep 18Jan 19within 1 yearwithin 2 yearsM E T A L S O U T L O O K P R E S E N T A T I O N6If we are correct and accommo
20、dative monetary policy and looser financial conditions manage to stabilize and then lift global growth by early-2Q,we expect bond yields to move decisively higher,weighing on precious metals in the coming months.Source:J.P.Morgan Commodities Research Source:Bloomberg,J.P.Morgan Golds premium/discoun
21、t to 10-yr real yieldsUS$/ozMarket Expectations for Fed hikes in 2019 and 2020Percent-$50$0$50$100$150$200Jan-18Mar-18May-18Jul-18Sep-18Nov-18Jan-19Mar-191.92.12.32.52.72.93.15-Nov12-Nov19-Nov26-Nov3-Dec10-Dec17-Dec24-Dec31-Dec7-Jan14-Jan21-Jan28-Jan4-Feb11-Feb18-Feb25-Feb4-Mar11-Mar20202019M E T A
22、L S O U T L O O K P R E S E N T A T I O N7Despite the unfavorable short-term valuation metrics,we continue to stay bullish gold over the medium term given its unique late-cycle characteristics.Source:CME,NBER,J.P.Morgan Source:World Bank,NBER,J.P.Morgan.Last Observation in Jan 2018.Framework adopted
23、 from J.P.Morgan Long-Term Investment Strategy team.Gold prices during expansions and recessionsMeasures change in the price of gold throughout the cycle with the beginning of expansion normalized to zero.We assume the current cycle will last 10 years.Monthly data since Jan 1960.Average gold returns
24、 by quintile of expansionPercent change.Monthly data since Jan 1970-2%6%22%14%44%18%-10%0%10%20%30%40%50%0-20%20-40%40-60%60-80%80-100%Recession-100%0%100%200%300%400%500%0%20%40%60%80%100%1961197019751982199120012009RecessionExpansionM E T A L S O U T L O O K P R E S E N T A T I O N8JPM base and pr
25、ecious metals price forecastsSource:J.P.Morgan Commodities Research.Forecasts as of 11 March 2019.Industrial metals are LME cash in US$per metric tonne.Precious metals are spot prices in US$per troy ouncePrice and forecasts are quarterly and annual averagesM E T A L S O U T L O O K P R E S E N T A T
26、 I O NCurrentMar 151Q192Q193Q194Q1920192020202120222023Past 1moPast 3mosYTDPast 12mosBase MetalsAluminumUS$/mt1,8751,8901,8502,0021,8801,9061,8331,8131,9212,3062.3%-1.8%0.6%-9.1%CopperUS$/mt6,4466,2356,2006,4005,6006,1095,4165,3626,1667,5845.3%5.2%8.4%-6.4%NickelUS$/mt12,84412,40012,69013,00011,2001
27、2,32310,00011,00013,75016,5004.2%16.7%21.1%-5.4%ZincUS$/mt2,8312,6702,5002,4502,3002,4802,1001,9802,2202,5509.2%10.2%12.4%-12.5%Precious MetalsGoldUS$/t oz.1,3021,2901,2601,3461,4051,3251,4601,3721,3041,369-0.3%5.1%1.6%-1.0%SilverUS$/t oz.15.2915.4515.0016.6217.3516.1017.6016.1015.8016.90-1.8%4.8%-1
28、.3%-6.8%PlatinumUS$/t oz.8328168209009508729809008709205.7%5.7%4.5%-12.9%PalladiumUS$/t oz.1,5531,3951,3301,4001,1501,3191,0359201,0001,10011.1%24.9%23.1%57.3%Quarterly and annual averagesActual change9Weaker USD(bullish base and precious)The main risk to our view is that as global growth stabilizes
29、,the US dollar could weaken meaningfully,which could lead to residual commodities strength.Chinese Stimulus(bullish base)Our outlook for China had envisioned that the continued policy support would offset trade war drags,allowing GDP growth to stabilize slightly above 6%this year.With trade war tail
30、 risks fading,a key question is whether the policy stimulus will ultimately deliver larger boosts to growth than expected.Similarly,if deleveraging efforts are rolled back,stimulus couldhave more immediate bullish feed-through.PBOC Benchmark Rate Cut(bullish base)Similar to the point above,a benchma
31、rk rate cut would considerably advance monetary stimulus,opening further upside for China-linked assets.Cycle Extension(bullish base,mixed precious)If the recent dovish turns by central banks do indeed mean the cycle has longer to run and recession risks begin materially dropping this would be clear
32、ly bullish for growth-dependent base metals.While a lower risk of a recession would hurt safe haven demand for precious,the ultimate price impact would be more influenced by the Feds actions(see below).Fed Hawkish Rethink(bearish precious and base)Expectations have solidly shifted towards the Fed be
33、ing more tolerant of above 2%inflation given the recent embrace of average inflation targeting.However,if the Fed is not as dovish as expected in regards to inflation(i.e.continuing its current hiking cycle without clear signs of stronger inflation),this would clearly be bearish for precious metals
34、as it would likely lead to some major repricing in rates.Risks to our outlook skew bullish for base metals but are more balanced for precious metals.Source:J.P.Morgan Risks to the outlook:bullish base,balanced preciousM E T A L S O U T L O O K P R E S E N T A T I O N10Copyright Glencore plc.Used wit
35、h permission.CopperM E T A L S O U T L O O K P R E S E N T A T I O N11Headlines of copper supply disruptions have accelerated in recent weeks.In total,we have removed 165 kmt from our mine supply forecast as a result,yet our global copper mine production estimate for 2019 is running only 83 kmt lowe
36、r than our November 2018 estimate.Source:Company reports,Government and Industry data,USGS,Antaike,CRU,Wood Mackenzie,J.P.Morgan Commodities ResearchDifference between JPM estimates and realized copper mine productionThousand mt-900-800-700-600-500-400-300-200-10001002002013201420152016201720182019M
37、 E T A L S O U T L O O K P R E S E N T A T I O N12On a contained basis,Chinas copper scrap imports declined only 30 kmt last year.However,changes to scrap imports in China will likely continue to be an important factor for cathode demand this year given the full ban on category 7 scrap imports and t
38、he existing 10%tariff on scrap from the US.Source:China Customs,LME China copper scrap imports on contained basisThousand mt020406080100120140Jan-17Feb-17Mar-17Apr-17May-17Jun-17Jul-17Aug-17Sep-17Oct-17Nov-17Dec-17Jan-18Feb-18Mar-18Apr-18May-18Jun-18Jul-18Aug-18Sep-18Oct-18Nov-18Dec-18Jan-19M E T A
39、L S O U T L O O K P R E S E N T A T I O N13In China,we see demand growing 2.7%this year(vs.5%last year)driven by strong political intentions to support the domestic economy.Infrastructure investment will continue to be the main driver of copper demand through electrical grid and railway projects.Sou
40、rce:LME,SHFE,CMX,CRU,Metals Bulletin Source:China State Grid China State Grid investmentBillion RMBChina Yangshan copper premiumThousand mt35455565758595105115125135Jan-15Jan-16Jan-17Jan-18Jan-1901002003004005006002011 2012 2013 2014 2015 2016 2017 2018 2019PlanActualM E T A L S O U T L O O K P R E
41、S E N T A T I O N14Demand outside of China is not particularly strong,especially in Europea view reflected in continued low regional cathode premiums.Source:CRU,J.P.Morgan Commodities Research Copper demand growth,2019EPercent change,YoYM E T A L S O U T L O O K P R E S E N T A T I O N15Inventories
42、on global exchanges are still running below 5-year averages,but unlike 2018,the draws are taking place outside of China.We continue to estimate that the global copper market will register a slight deficit of about 140 kmt in 2019,which,for all purposes,should be considered a balanced market.Source:S
43、HFE,CRU,Metals Bulletin Source:LME,SHFE,CMX,CRU,Metals Bulletin Global copper inventories(exchange and bonded)Thousand mtChina copper inventories(SHFE and bonded)Thousand mt4006008001,0001,2001,4001,6001,800Jan Feb Mar Apr May JunJul Aug Sep Oct Nov Dec5 year range5 year average201820194005006007008
44、009001,000Jan Feb Mar Apr May JunJul Aug Sep Oct Nov Dec5 year range5 year average20182019M E T A L S O U T L O O K P R E S E N T A T I O N16Over the long term,behind nickel,EVs present the second greatest relative demand growth potential for copper.BEVs contain around 83 kg of copper,on average,or
45、60 kg more than a pure ICE vehicle.Source:CRU Source:International Copper Association,J.P.Morgan Commodities Research Copper contained in light vehicles by powertrain KilogramsCopper intensity per EV charger type Kilograms0102030405060708090BEVPHEVFull+MildHybridsICEAdditional copper relative to an
46、ICE1.14.5360510152025303540Level 1Level 2Level 3M E T A L S O U T L O O K P R E S E N T A T I O N17We estimate that additional copper demand from EVs(including charging port infrastructure)will grow from around 130 kmt in 2017 to roughly 965 kmt by 2025.This 965 kmt represents around 4%of annual ref
47、ined copper production.Source:CRU,International Copper Association,Bloomberg New Energy Finance,J.P.Morgan Estimates Copper consumption in EV sector(Thousand mt)M E T A L S O U T L O O K P R E S E N T A T I O N0100200300400500600700800900201620172018E2019F2020F2021F2022F2023F2024F2025FBEVPHEVFull+Mi
48、ld HybridsCharging infrastructureChina BEV18Copper supply and demand balance,thousand metric tonnesSource:Company reports,Government and Industry data,USGS,Antaike,CRU,Wood Mackenzie,J.P.Morgan Commodities Research.Published:11 March 2019.Alternative scenarios to JPM copper base-case viewSource:J.P.
49、Morgan Commodities ResearchM E T A L S O U T L O O K P R E S E N T A T I O NMine Production18,65119,22520,18020,06520,60420,75421,62222,34523,25223,170 growth2.4%3.1%5.0%-0.6%2.7%0.7%4.2%3.3%4.1%-0.4%Refined Production21,81822,16722,73722,95023,56424,07324,71225,30625,64125,918 growth5.5%1.6%2.6%0.9
50、%2.7%2.2%2.7%2.4%1.3%1.1%Refined Use21,54821,76722,33222,90023,64624,21524,32725,17425,57725,979 growth3.8%1.0%2.6%2.5%3.3%2.4%0.5%3.5%1.6%1.6%Balance27040040551-82-14238513264-612023F2019E201420152016201720182020F2021F2022FRisk biasForecast range under risk scenarioBearish:$5,680/t for 2H2018Bullis
