China Postal Securities: US CPI data continues to weaken, gold price breaks through USD 3,000 per ounce

According to the research report released by China Postal Securities, based on the Pring's Clock strategy, gold is optimal during stagflation periods. The main logic supporting gold's upward movement is the sustained high inflation under the impact of tariffs. Therefore, it is believed that the weakness in the U.S. CPI is a short-term phenomenon, and in the long term, the impact of tariffs may continue to elevate the U.S. CPI central tendency. Additionally, regarding the expectations for the end of the Russia-Ukraine conflict, contrary to market views, if the conflict ends with the division of Ukraine, it would be a significant negative for the U.S. credit system and beneficial for gold.

In terms of tin metal, the Bisie tin mine is currently affected by local conflicts and has confirmed the suspension of mining operations. It is expected that tin prices will maintain a strong oscillation in the short term, influenced by changes in the situation in the Democratic Republic of the Congo and the expected progress of production resumption in Wa State.

The main views of China Postal Securities are as follows:

Precious Metals: U.S. CPI data continues to weaken, gold prices briefly break through $3,000/ounce

China Postal Securities believes that even if the Russia-Ukraine conflict ends, it will not have a significant impact on gold prices. Last week, gold prices continuously broke through under the stimulus of weakening U.S. CPI. According to the Pring's Clock strategy, gold is optimal during stagflation periods, and the main logic supporting gold's upward movement is the sustained high inflation under the impact of tariffs. Therefore, it is believed that the weakness in the U.S. CPI is a short-term phenomenon, and in the long term, the impact of tariffs may continue to elevate the U.S. CPI central tendency. Additionally, regarding the expectations for the end of the Russia-Ukraine conflict, contrary to market views, if the conflict ends with the division of Ukraine, it would be a significant negative for the U.S. credit system and beneficial for gold.

Copper: Trade pricing is stronger than macro factors; whether destocking represents improved demand is debatable

Under the premise of TC turning negative, there are rumors that Chinese smelters may reduce production. With the significant rise in sulfuric acid and gold and silver prices, smelting profits are actually stronger than in 2024, so the possibility of production cuts is low. At the same time, under tariff expectations, marginal stockpiling behavior may lead to price increases and inventory declines, and whether this represents improved demand needs to be verified. LME copper prices rose last week, and future trading focus on copper prices will center on demand expectations following Trump's administration, requiring continuous observation of the fiscal spending plans of the Trump government.

Aluminum: Aluminum prices steadily rise

Last week, Shanghai aluminum maintained a steady upward trend. On the supply side, it has basically remained stable with an upward trend, and the commissioning of Chalco's Qinghai project has released certain production capacity. On the demand side, last week, the output of aluminum rods and aluminum plates increased compared to the previous week, and the operating rate improved, reflecting an increase in theoretical demand for electrolytic aluminum, indicating that downstream demand has improved. Attention should be paid to the recovery of downstream industry demand after the Two Sessions, as a strong supply side may lead to a β market in the electrolytic aluminum sector.

Antimony: Antimony prices rise as expected, will continue to challenge previous highs in the short term

Last week, antimony prices surged to over 200,000 yuan/ton, with manufacturers continuously raising quotes and showing obvious reluctance to sell. Downstream industries such as flame retardants and photovoltaics are still forced to replenish stock under rising prices, and rigid orders must be procured as prices rise. It is expected that the supply side will ease somewhat with the resumption of some antimony mines in the north. The operating rate of photovoltaic glass has dropped below 50% in January-February, and high antimony prices may continue to decline. In the short term, supply tightness remains the main driving force behind the rise in antimony prices Cobalt: Cobalt prices surge significantly, maintaining an upward trend

Last week, cobalt prices rose by 26.24%. Although the supply of electrolytic cobalt is relatively sufficient, most smelters are holding back on sales, coupled with some traders liquidating their positions, leading to strong speculative sentiment in the market and continuous increases in spot prices. Additionally, due to the previous low cobalt prices, market inventories are low, and downstream inquiries are increasing, with high-priced orders driving cobalt prices up. Currently, cobalt prices still have a significant gap compared to the peaks in 2021-2022, and it is expected that prices will maintain an upward trend before the Democratic Republic of the Congo relaxes export controls.

Tin: Bisie tin mine announces suspension of production, tin prices soar

Last week, tin prices surged, reaching over 290,000 yuan/ton. This is mainly due to the deteriorating situation in eastern Democratic Republic of the Congo, where the anti-government armed group "M23 Movement" has invaded several important towns, including Goma, the capital of North Kivu Province, approaching the Bisie large tin mine. The Bisie mine is the third-largest tin mine in the world, with a tin concentrate output of 17,300 tons in 2024, accounting for about 6% of global tin supply. Currently, the mine is affected by local conflicts and has confirmed the suspension of mining operations. On the supply side, although the Wa State is about to resume production, considering the impact of physical taxes, the annual increase may be less than expected. Indonesia plans to raise tax rates on tin and other metals, exacerbating supply disruptions. In addition, tin processing fees have continued to decline by 2,500 yuan/ton since the end of last year, reflecting a continued tight supply side. It is expected that short-term tin prices will maintain a strong oscillation, while mid-term prices will be influenced by changes in the conflict situation in the Democratic Republic of the Congo and the expected progress of production resumption in the Wa State.

Investment Recommendations

It is recommended to pay attention to Zhongjin Gold (600489.SH), Zijin Mining (601899.SH), Xingye Silver Tin (000426.SZ), Shenhuo Co., Ltd. (000933.SZ), and Yun Aluminum Co., Ltd. (000807.SZ).

Risk Warning

Significant fluctuations in the macro economy, demand not meeting expectations, supply releases exceeding expectations, and company project progress not meeting expectations