With the Fed's interest rate hike landing, the monetary risk of suppressing metal prices has been released. Basic metals are returning to the supply and demand fundamentals. At the current price level, more than 60% of enterprises in the electrolytic aluminum industry are experiencing cash flow losses. We are optimistic about the subjective willingness of electrolytic aluminum enterprises to stop production and maintain prices, as well as the implementation effect of industry capacity exit. It is worth noting that the tungsten concentrate quotation has been rising for several consecutive weeks. In addition to being related to the national storage and collection plan in the short term, what is more important is that the current price is still lower than the vast majority of mining costs. At the same time, due to the WTO's defeat, the cancellation of tariffs and quotas is expected to force supply side integration and new policy expectations. There are three promising directions in the medium to long term. Firstly, it is expected to replicate the high-end industries of the "high-speed rail model", such as nuclear power and large aircraft related industry chains; Secondly, the direction of small market value transformation and qualitative change; Thirdly, small metal varieties with high supply concentration and weak correlation between pricing mechanism and bulk commodities, such as rare earth and tungsten varieties.

Industry perspectives and recommended combinations

Core portfolio: Changaluminum Co., Ltd., Jiuli Special Materials Co., Ltd., Tin Industry Co., Ltd., and Zhangyuan Tungsten Industry Co., Ltd. Short term suggestions: Yunnan Aluminum Corporation, Zhongjin Lingnan, Jiangxi Copper, and Minfa Aluminum.

Last week's market review

Last week, the Shanghai and Shenzhen 300 Index closed at 3767.91, with a weekly increase of 4.43%. The non-ferrous metal index closed at 3902.93, up 5.06% for the week. Last week, the top three gainers in sub sectors were other rare small metals (8.86%), non-metallic new materials (8.81%), and copper (5.61%). In terms of individual stocks, the top five gainers were Gene Nickel Industry (33.62%), Jiangte Electric Machinery (27.88%), Yunnan Aluminum Co., Ltd. (22.89%), Yunnan Copper Industry (20.67%), and Lianshi Nonferrous Metals (16.06%); After the increase, Dongfang Tantalum Industry (-3.39%), Jianxin Mining (-2.39%), Tianqi Lithium Industry (-1.09%), Luoyang Molybdenum Industry (-0.63%), and Zhuzhou Metallurgical Group (-0.08%) ranked fifth.

Industry and company information

1. The Federal Reserve raised interest rates by 25 basis points

2. China's GDP growth forecast for 2016 is 6.8%

3. In 2015, domestic stainless steel production capacity increased by 2.4 million tons

4. Since November 2015, China's alumina production capacity has been reduced by 3.47 million tons

5. India Continues to Impose 5-Year Anti Dumping Duty on Cold Rolled Stainless Steel Plates from China

6. ISNG correction: Global nickel market supply turned into a shortfall of 400 tons in October

7. WBMS: Over supply of 266000 tons in the global copper market from January to October 2015