Soochow: The non-farm data in the United States is lower than expected, weakening the labor market and causing a decline in industrial metals.

Soochow released a research report stating that with the release of lower-than-expected US employment data, market concerns about economic recession have increased, suppressing the rise in copper prices. Both domestic and overseas copper prices have fallen this week, with short-term copper prices expected to be impacted by recession and rate cut expectations, maintaining a volatile trend. Similarly, affected by US economic data, London aluminum prices have fallen due to weak demand, while domestic aluminum prices have also dropped as Sichuan electrolytic aluminum production resumes and safety inspections lead to decreased demand. Soochow believes that the Federal Reserve is reducing its tolerance for weakness in the labor market and has signaled continuity in future rate cuts. Looking back at the market this week (September 2nd to September 6th), the non-ferrous sector fell by 5.13% this week, ranking among the lowest in all primary industries. In terms of secondary industries, within the Shanghai Securities Classification, energy metals fell by 3.35% this week, metal new materials fell by 3.82%, precious metals fell by 3.93%, minor metals fell by 3.96%, and industrial metals fell by 6.38%. In terms of industrial metals, the lower-than-expected number of job vacancies and non-farm employment indicates weakness in the US labor market, causing concerns about the future economic growth of the US. Precious metals, due to weak data in the US labor market, have sparked concerns about deflation, leading to a fall in gold prices both domestically and overseas. The world's gold ETF recorded a significant net inflow in August, showing optimism for the future trend of gold. Weekly Outlook: Copper: The weakening of the US labor market led to a significant fall in copper prices this week. As of September 6th, LME copper closed at $8,954 per ton, a decrease of 3.22% compared to the previous week; SHFE copper closed at 73,050 yuan per ton, a decrease of 1.58% compared to the previous week. At the supply side, as of September 6th, the average TC of imported copper ores this week fell to $5.5 per ton, copper ore supply remained stable, and domestic electrolytic copper production was 214,000 tons this week, a decrease of 3.62% compared to the previous week. In terms of demand, with the decline in copper prices, demand in the East China market has increased slightly while the Southwest region has remained stable. This week, the fundamentals maintained a dual weak balance between supply and demand, with continuous destocking domestically and a slight decrease in overseas inventories. On a macro level, with the release of lower-than-expected US employment data, market concerns about economic recession have increased, suppressing the rise in copper prices, leading to a widespread decline in copper prices both domestically and overseas. It is expected that short-term copper prices will be influenced by expectations of recession and rate cuts, maintaining a volatile trend. Aluminum: Slight resumption of production in Sichuan, combined with downstream aluminum company inspections, led to a decline in electrolytic aluminum prices. As of September 6th, LME aluminum closed at 2,342 yuan per ton, a decrease of 4.27% compared to the previous week; SHFE aluminum closed at 19,310 yuan per ton, an increase of 2.19% compared to the previous week. On the supply side, this week, some electrolytic aluminum plants in Sichuan resumed production, with this portion of production to be shut down by 2022. Currently, China's electrolytic aluminum industry has an operational capacity of 43.476 million tons, an increase of 50,000 tons compared to the previous week. On the demand side, due to insufficient orders and large-scale safety checks, the operating rate of aluminum plate enterprises decreased by 0.21% compared to the previous week, while the operating rate of aluminum bar enterprises decreased by 48%, resulting in a slight decrease in theoretical demand for electrolytic aluminum. This week, due to lower-than-expected US economic data, London aluminum prices fell, while domestic prices also dropped as Sichuan's electrolytic aluminum production resumed and demand decreased due to safety inspections. Soochow believes that China's electrolytic aluminum supply has reached its theoretical peak for the year; in terms of demand, with the arrival of the peak consumption season, the demand for electrolytic aluminum is expected to increase, leading to a positive trend in aluminum prices. Gold: Weakness in the US labor market data has raised concerns about deflation, leading to a decline in gold prices domestically and overseas. As of September 6th, the COMEX gold closing price was $2,526.80 per ounce, a decrease of 1.09% compared to the previous week; SHFE gold closing price was 573.68 yuan per gram, a decrease of 0.07% compared to the previous week. This week, in the US, there were 7.673 million job vacancies in July, lower than the expected 8.1 million; the ADP employment change in August recorded an increase of 99,000, lower than the expected 145,000; initial jobless claims in the US for the week ending August 31st were 227,000, lower than expected 230,000; non-farm employment change in August in the US adjusted seasonally showed an increase of 142,000, lower than the expected 160,000; the unemployment rate in the US in August was 4.2%, in line with expectations. Although the August overall non-farm data in the US showed an increase compared to the previous month, it was still lower than Bloomberg's expectations, and the market's expectations for a US economic recession have not diminished. Additionally, the lower-than-expected number of job vacancies and ADP employment figures suggest that the US labor market is weakening. This has raised concerns about the future economic growth of the US, leading to a general decline in gold prices throughout the week. On Friday of this week, just before the September meeting, Federal Reserve Governor Powell reiterated the necessity of "pre-emptive rate cuts," indicating the Fed's reduced tolerance for weakness in the labor market and signaling continuity in future rate cuts. In terms of funds, global gold ETFs saw a net inflow of 28.5 tons in August, maintaining a rapid inflow trend, with gold prices expected to further move out of volatility and trend upwards. Risk Warning: Continued strength of the US dollar; lower-than-expected downstream demand.