Key investment points:
Steel:
In December, the overall supply and demand of the steel industry was weak, the inventory fell, and the gross profit fell under the rising pressure of raw materials. The rigidity of the supply side is obvious under the dual carbon target. At the same time, under the influence of factors such as production restriction of the Winter Olympic Games and shutdown maintenance, it is expected that the supply will be tight in the first quarter. In the short term, under the attitude of stabilizing the economic policy, the infrastructure is expected to start in advance, and the steel fundamentals may be improved or repaired with the downstream demand margin. In the long term, attention should be paid to the field of growth special steel.
Industrial metals:
In December, copper smelting / processing output improved month on month, but it was weak as a whole. Imports improved significantly month on month, and the decline was reduced. Inventories were at a low level, processing fees fell slightly, and copper prices corrected slightly under the expectation of interest rate hike by the Federal Reserve. The output of aluminum smelting / processing improved month on month, but it was weak as a whole, and the inventory rebounded. The raw material side of electrolytic aluminum was significantly profitable, while the price was supported by the expectation of production reduction due to the European energy crisis, and the profit side was significantly improved. In the short term, stabilizing the economic tone will provide a certain support for the price of industrial metals. The supply side will only decrease but not increase in 2022. The boom of aluminum may pick up under the demand driven by infrastructure such as UHV power grid.
New energy metals:
In December, the output of lithium carbonate increased by 32.83% year-on-year, the import volume increased by 53.07% year-on-year, and the export volume decreased by 27.28% year-on-year. The supply and demand continued to be tight, and the price of electric carbon / lithium hydroxide / industrial carbon increased by 35.37% / 14.94% / 32.32% month on month. In the short term, the supply side enters the centralized maintenance period, and the price center may continue to rise under the replenishment demand of downstream manufacturers. It is expected that the supply and demand gap will continue to expand in 2022 to maintain the high prosperity of the lithium industry.
Rare earth:
In December, the price chain ratios of praseodymium and neodymium oxide / dysprosium oxide / terbium oxide were – 1.17% / – 1.20% / + 0.45% respectively. In the short term, the demand for goods prepared before the festival will support the price. In the long term, the demand for magnetic materials under the framework of energy-saving motors and new energy will gradually expand, but the supply growth rate is small, and the upward direction of the industry will not change.
Investment advice
It is suggested to pay attention to Zhejiang Yongjin Metal Technology Co.Ltd(603995) (603995), Yongxing Special Materials Technology Co.Ltd(002756) (002756). For industrial metals, it is recommended to pay attention to Guangdong Jiayuan Technology Co.Ltd(688388) (688388), Shandong Nanshan Aluminium Co.Ltd(600219) (600219). It is suggested to focus on Ganfeng Lithium Co.Ltd(002460) (002460), Tianqi Lithium Corporation(002466) (002466), Qinghai Salt Lake Industry Co.Ltd(000792) (000792). It is suggested to pay attention to China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) (600111), China Minmetals Rare Earth Co.Ltd(000831) (000831).
Risk tips
The risk of price fluctuation of raw materials, the risk that downstream demand is lower than expected, and the risk that covid-19 epidemic spread is higher than expected.
