[SMM Guide] Corresponding to the downturn in China's economy, the price of non-ferrous metals continued to adjust in the first half of the year, and there have been risks of falling inventory prices, triangular bonds, and falling profits.

　　 [Bad situation]

　　◆ HSBC’s August PMI fell to a 9-month low and new export orders hit a 41-month low. HSBC’s August PMI was 47.8, a 9-month low. In terms of breakdown, manufacturing output has shrunk, new orders have shrunk faster, and new export orders have shrunk faster; employment shrinks the same as last month; backlog work turns to shrink; ex-factory prices and input prices accelerate decline; purchase inventories shrink faster, and finished goods inventories accelerate Expansion; accelerated shrinkage of procurement; supplier delivery time turned to delay.

　　◆In the first half of the year, the profit of the non-ferrous metal industry fell by 13.9% year-on-year. In the first half of the year, the non-ferrous metal industry achieved a profit of 86.5 billion yuan, a year-on-year decrease of 13.9%. Among them, the profit of non-ferrous metal mining and dressing industry was 33.8 billion yuan, an increase of 1.2%; the profit of non-ferrous metal smelting and rolling processing industry was 52.8 billion yuan, a decrease of 21.4%.

　　◆ 1.92 trillion inventory topped the non-ferrous industry into inventory impairment losses “severely hit areas” in the first half of the year, the rare earth market was sluggish and product prices fell year-on-year. Baotou Rare Earth’s asset impairment losses in the first half of the year were 157 million yuan, accounting for 6.44% of the total profit, an increase of 429.82% year-on-year; the company explained that at the end of the reporting period, the prices of most rare earth products were lower than the level at the end of the previous year, and the company made up for inventory price declines for some inventories.

　　 Zhuzhou Metallurgical Group's asset impairment loss in the first half of the year was 274,431 million yuan, a year-on-year increase of 219,166,600 yuan, mainly because the price of zinc and lead products at the end of the period fell sharply, and the net realizable value of the inventory at the end of the period was lower than the book cost, resulting in an increase in the provision for falling prices.

　　◆Corporate“triangular debt”The problem is making a comeback. At present, there is a serious phenomenon of mutual arrears in accounts between enterprises. As of March 2012, the accounts receivable of industrial enterprises nationwide were 7.12 trillion yuan, an increase of 17.74% over the same period of the previous year; "Account receivables accounted for 12.47% of total credit", which was the highest level in the same period since 2009 . From January to May 2012, the accounts receivable of industrial enterprises nationwide rose to 7.54 trillion yuan.

　　As of August 23, the total accounts receivable of the 1,437 listed companies that have been reported in the interim report reached 803.9 billion yuan, a sharp increase of about 45% from the 555 billion yuan in the same period last year.

　　[Experts said]

　　 Haitong Securities: This round of destocking started in October 2011, and is currently at the end of the active destocking. From the perspective of the industry, the mining industry is under great inventory pressure, and the destocking has just begun. The raw material industrial inventory is expected to require 4-8 months of inventory destocking, and the processing industry is expected to have about 4 months of inventory destocking time.

　　Analysts: The inventory of raw materials is a leading indicator, reflecting the willingness of manufacturers to expand production; the inventory of finished products is a lagging indicator, which is the inventory backlog caused by the downturn in demand caused by the economic downturn. The increase in raw material inventory in the first half of the year reflects the lack of confidence in the future and the lack of willingness to start production; the increase in finished product inventory reflects the significant decline in downstream demand, and listed companies are still facing the obvious problem of "slow sales".

　　Industry insiders: The third quarter is the off-season for traditional industries at home and abroad. Most downstream industries will maintain a low operating rate and high inventories will put pressure on the price of non-ferrous metals. In the near future, the overall volatility of non-ferrous metals will trend downward. Mainly, especially copper prices.

　　 Zhu Hong, Customer Service Director, Kunming Sales Department, Beijing Capital Futures Co., Ltd.: China's economy may be bottoming out, and infrastructure investment and loose monetary policy have already shown a boost to the economy. While downstream demand remains weak, the process of destocking in the lead and zinc industry will continue. Under the multiple effects of oversupply, policy regulation and economic recovery in the third quarter, zinc prices are expected to maintain an upward trend in August.

　　[SMM Comment]

　　 At present, the price of non-ferrous metals continues to fall, indicating that destocking in the upper and middle reaches is still continuing, but it is expected to have entered the destocking “midfield” stage, but the inventory digestion speed has slowed down. Whether downstream demand can recover will become a key factor affecting the scale of corporate procurement and inventory levels.

　　For smelting companies and traders, if the inventory increases, it will affect the efficiency of the use of funds to a certain extent. Especially when the number of finished products in the inventory increases significantly, it indicates that the products are unsalable, which will have an impact on operations. When the market price reaches an inflection point, a large amount of inventory will increase profit volatility. Especially when the economic growth slows down, inventory prices and finished products are in a state of falling prices, and inventory becomes a "burden".

　　The debt problem of the non-ferrous metal industry is more serious in small and medium-sized enterprises and private enterprises. Tracing back to the root, local investment and financing platforms and large-scale infrastructure projects have become one of the sources of triangular debt. While the company was defaulting on loans, it also began to default on loans to upstream companies. The potential "triangular debt" crisis has begun to spread to upstream companies. Industry insiders pointed out that if improper handling during the economic downturn or the business environment of large companies continues to deteriorate, a potential crisis may break out