Key investment points
[Key words this week]: the Fed’s expectation of raising interest rates continues to rise; China has created new forces, with a bright sales performance in January; Chile plans to promote the nationalization of lithium resources, and the unit price of lithium concentrate in Pilbara in the first quarter reached US $2600-3000 / ton; The Ministry of industry and information technology issued the first batch of rare earth production indicators in 22 years; Qingshan high nickel matte was officially delivered.
Market review: 1) in terms of small metals, the sales volume of new energy vehicles in China reached a new high in October, and the penetration rate of new energy passenger vehicles was close to 20%. The prosperity of the industry continued to rise. The prosperity trend of cobalt, lithium and rare earth in the upstream of new energy vehicles was clear and continued to be optimistic: ① the inventory of lithium ore in the industry was low, the reluctance to sell in the upstream was obvious, the price accelerated, and the lithium concentrate was flat month on month before the festival, Battery grade lithium carbonate rose 7.0% month on month, and the price of electric carbon has been close to 400000; ② With the outbreak of the epidemic in South Africa, cobalt prices accelerated upward, and metal cobalt rose by 0.4% before the festival; ③ In terms of rare earths, the shortage of raw materials continued, and the demand of downstream enterprises increased by the end of the year. The quotation of praseodymium and neodymium oxide before the festival increased by 2.7%. 2) The US non farm data in January exceeded expectations, and the European Central Bank maintained the three major interest rates unchanged, but the policy attitude changed from “Dove” to “Eagle”; Low inventories supported the price of base metals, while tensions in Russia and Ukraine and soaring energy prices continued to support the price of gold: ① base metals, LME, aluminum and copper increased by 0.9% and 4.0% respectively; ② The real yield of 10-year US bonds rose from – 0.59% → – 0.48%, and Comex gold closed at US $1807.8/oz, up 1.19% month on month. 3) During the Spring Festival, the stock market rose as a whole. The trend of Hang Seng China enterprise index was stronger than that of the global stock market and developed markets. Among them, Hang Seng China enterprise index, Nikkei 225, MSCI Emerging Markets, India nifty50 and South Korea composite stock price 200 index led the rise, while commodities and pro cyclical assets performed better, Copper > tin > nickel > crude oil > Gold > Aluminum > zinc > lead > natural gas.
Macro “three factors” summary: China’s official manufacturing and Caixin manufacturing PMI fell in January; The US ism manufacturing PMI fell in January, and the new non-agricultural employment in January exceeded expectations; The European Central Bank kept the three major interest rates unchanged, and the manufacturing PMI in the euro zone rebounded in January, with the epidemic warming up; Specifically: 1) in China, the PMI of official manufacturing and Caixin manufacturing fell in January. In January, the PMI of China’s official manufacturing was 50.1 (expected 50.1, previous value 50.3), of which the PMI of production was 50.9 (previous value 51.4), the PMI of new orders was 49.3 (previous value 49.7), the PMI of finished products was 48.0 (previous value 48.5), the PMI of ex factory price was 50.9 (previous value 45.5), and the PMI of employees was 48.9 (previous value 49.1); In January, China Caixin manufacturing pmi49 1 (previous value 50.9). 2) In the United States, ISM manufacturing PMI fell in January, and the number of new non-agricultural employment in January exceeded expectations. In January, Markit manufacturing PMI in the United States increased by 55.5 (the previous value was 57.7); The ISM manufacturing PMI in January was 57.6 (the previous value was 58.8); In the United States, 57000 new houses were sold in December (the previous value was 51000), with a month on month ratio of 11.86% (the previous value was 11.71%); In December, the core PCE price index was 4.85 year-on-year (the previous value was 4.66%, and the expected value was 4.80%); In December, the quarterly adjustment of us personal consumption expenditure was US $16.306 trillion (the previous value was US $16.402 trillion); Us ADP employment in January was – 0.24% quarter on quarter (previous value: 0.62%); The unemployment rate in January was seasonally adjusted by 4.0% (the previous value was 3.9%, expected to be 3.9%); The number of new non-agricultural employment in January was 467000 (the previous value was 510000, and it is expected to be 238000). 3) The European Central Bank kept the three major interest rates unchanged, the manufacturing PMI in the eurozone rebounded in January, and the epidemic warmed up. The European Central Bank kept the three major interest rates unchanged, and the UK raised interest rates continuously for the first time since 2004; The initial value of real GDP in Q4 euro area in 2021 was 0.3% (the previous value was 2.3%, the expected value was 2.2%) quarter on quarter, and 4.6% (the previous value was 3.9%, the expected value was 3.7%) year on year; In December, the EU PPI was 26.2% year-on-year (previous value 23.7%), the eurozone PPI was 2.9% month on month (previous value 1.8%, expected 2.8%), and the eurozone PPI was 26.2% year-on-year (previous value 23.7%, expected 26.1%); January euro zone manufacturing pmi58 7 (the former value is 58.0, the expected value is 58.0), and the initial value of comprehensive PMI is 52.3 (the former value is 53.3, the expected value is 52.4); This week, the United Kingdom, Germany and France added a total of 717669.8 cases of covid-19 on a daily basis, an increase of 109723.8 cases compared with last week, and the epidemic is heating up. 4) The rhythms of various economies are different, but the decline direction of the global overall prosperity remains the same. In January, the global pmi51 4. It fell 2.9 month on month.
Base metals: a race between China’s steady growth and the contraction of overseas liquidity
With China’s policy tone turning to steady growth at the end of the year, it is expected that China’s credit data will gradually stabilize. However, with the recovery of overseas economy and high inflation, liquidity contraction is inevitable. The main pattern of basic metals in the future is the race between China’s steady growth and overseas liquidity contraction. Lower inventories this week pushed up the prices of base metals such as copper and nickel, but gains were limited by concerns that the central bank’s interest rate hike would curb growth and metal demand. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose or fell by 4.0%, 0.9%, – 1.8%, – 0.1%, 3.4% and 3.3% respectively this week. Prices rose or fell.
1. For electrolytic copper, the world is still in the logic of low inventory. Under the condition of continuous downward revision of Shanghai Lun ratio, the accumulated inventory before the festival is significantly lower than that in previous years due to the continuous export of smelters. Under the logic of low inventory, there is still some support below the copper price. Before the festival, the social inventory of electrolytic copper in the three places was 94200 tons, and the weekly cumulative inventory was 10200 tons.
2. For electrolytic aluminum, on the supply side, the operating capacity of electrolytic aluminum in China rose slowly in January, and the resumption of production capacity was released in Yunnan, Inner Mongolia and other regions; On the demand side, the demand is low before the festival. Affected by the rising price of power coal this week, the immediate cost of electrolytic aluminum was 18285 yuan / ton, up 2.52% month on month, and the profit per ton of aluminum was 2227 yuan, down 4.25% month on month. Before the festival, China’s eight aluminum ingot inventories totaled 726000 tons, unchanged month on month.
3. For zinc ingots, overseas, from the face-to-face state between the United States, Russia and Ukraine, the passing of Beixi No. 2 can not be completed in a short time, the European energy problem is expected to continue, and the high electricity price and LME inventory that continues to go to the warehouse still provide support to Lun zinc; In terms of Shanghai zinc, the downstream before the festival successively entered the holiday shutdown period, and the pre Festival reserve warehouse officially came to an end. The total quantity of zinc ingots in the warehouse this week is 160500 tons, and the cumulative inventory is 1.52 million tons.
Upstream lithium battery raw materials: the prosperity of the global new energy industry continues to rise, the electric vehicle market in China, the United States and Europe resonates, and the upward trend of upstream raw material prices continues to strengthen:
1. The sales volume of China’s new car building forces in January was outstanding. Xiaopeng delivered 12922 cars in January, with a year-on-year increase of 115% and a month on month decrease of 19.2%; 12268 ideal one vehicles were delivered, with a year-on-year increase of 128% and a month on month decrease of 12.9%; Weilai delivered 9652 vehicles in January, with a year-on-year increase of 33.6% and a month on month decrease of 8%; Nezha delivered 11009 vehicles in January, with a year-on-year increase of 400% and a month on month increase of 8.7%.
2. Lithium carbonate prices accelerated upward again. 1) On the price side, before the festival, the price of battery grade lithium carbonate increased by 7.6%, and the quotation of battery grade lithium hydroxide increased by 7.0%. Pilbara expects the long-term single price of 22q1 lithium concentrate to reach 2600-3000 US dollars / ton. 2) On the supply side, due to the centralized maintenance of Chinese smelters at the end of the year, China’s lithium carbonate output was 16620 tons in January, with a month on month ratio of – 5.19%; In January, the output of lithium hydroxide was 16312 tons, with a month on month ratio of – 2.75%; 3) Lithium salt inventory: lithium carbonate inventory decreased by 1.04% month on month from 4996 to 4944 tons; The inventory of lithium → hydrogen decreased by 46.6% from 346 tons. 4) For overseas lithium resources, Chile’s constitutional assembly preliminarily adopted a proposal submitted and adopted by the parliamentary Environment Committee, which aims to promote the nationalization of copper, lithium and other strategic assets.
3. With the tightening of raw materials, the price of cobalt may rise further. 1) On the price side, the quotations of MB cobalt (standard grade) and MB cobalt (alloy grade) increased by 0.2% and 0.4% month on month respectively, while China’s metal cobalt and cobalt sulfate increased by 0.4% and 2.4% respectively. 2) On the supply side, Glencore produced 7900 tons of cobalt in Q4 in 2021, with a year-on-year increase of 36% and a month on month decrease of 8%; The annual cobalt output was 31300 metal tons, a year-on-year increase of 14%.
4. Reshaping the pattern of rare earth permanent magnet industry. 1) In the spot market and pre holiday spot market, the quotation of praseodymium and neodymium oxide in China rose 2.7% to 953000 yuan / ton; In terms of medium and heavy rare earths, the prices of dysprosium oxide and terbium oxide increased by 0.7% and 3.1% respectively. 2) In terms of policy, the Ministry of industry and information technology and the Ministry of natural resources issued the first batch of Rare Earth total amount index control plan in 2022. No unit or individual shall produce without and beyond the index. The total amount control indexes of the first batch of rare earth mining, smelting and separation in 2022 are 100800 tons and 97200 tons respectively. A year-on-year increase of 16800 tons of REO (YoY + 20%), of which the increment is all light rare earth indicators, medium and heavy rare earth indicators have no growth, and the supply and demand structure is still tightening.
5. Nickel: Qingshan high nickel matte was delivered, and the nickel price fluctuated greatly. On January 24, Castle Peak announced that its high matte nickel had been sent from Indonesia to China, resulting in sharp fluctuations in nickel prices. SHFE nickel closed at 165100 yuan / ton, down 6.57% month on month.
Investment suggestion: maintain the “overweight” rating of the industry
1. Base metals: China’s economic work in 2022 will be “stable”, which will support the price of base metals to some extent. However, from the global dimension, 1) changes in the structure of overseas economic demand before, during and after the epidemic, and 2) the global liquidity taper trend remains unchanged, and the downward trend of base metals may not have been fundamentally changed.
2. The upstream raw materials of new energy, such as lithium cobalt rare earth copper foil, aluminum foil and magnetic materials, are still strong in the short cycle, and the general direction of the medium and long-term three-year boom upward cycle will not change. The industrial boom is the most clear and firmly optimistic.
Core target: 1) new energy vehicle industry chain: Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Sinomine Resource Group Co.Ltd(002738) , Yongxing Special Materials Technology Co.Ltd(002756) , Sichuan Yahua Industrial Group Co.Ltd(002497) , Zhejiang Huayou Cobalt Co.Ltd(603799) , China Molybdenum Co.Ltd(603993) , China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Shenghe Resources Holding Co.Ltd(600392) , Yantai Zhenghai Magnetic Material Co.Ltd(300224) , Jl Mag Rare-Earth Co.Ltd(300748) , Earth-Panda Advanced Magnetic Material Co.Ltd(688077) , Jiangsu Dingsheng New Material Joint-Stock Co.Ltd(603876) , Nuode Investment Co.Ltd(600110) , Guangdong Jiayuan Technology Co.Ltd(688388) etc. 2) Base metal: Yunnan Aluminium Co.Ltd(000807) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Tianshan Aluminum Group Co.Ltd(002532) , Sunstone Development Co.Ltd(603612) , Zijin Mining Group Company Limited(601899) , Tongling Nonferrous Metals Group Co.Ltd(000630) etc. 3) Precious metals: Shandong Gold Mining Co.Ltd(600547) , Shengda Resources Co.Ltd(000603) etc.
Risk tips: macroeconomic fluctuation, import and environmental protection policy risk, gold price fluctuation risk, lower than expected risk of new energy vehicle sales, lower than expected risk of premise assumption of supply and demand calculation, etc.
