Base metals: fundamentals remain strong
1. Copper smelting profit increased. The US inflation rate in January rose to 7.5% higher than expected, and the overall and core CPI rose to the highest level in 40 years. China's capital is expected to be fully relaxed. The increment of social financing scale in January was 6.17 trillion yuan, 984.2 billion yuan more than the same period last year. According to SMM statistics, China's social inventory accumulated 86600 tons during the Spring Festival, which was lower than expected last year and at a low level in previous years. Overseas copper concentrate is expected to remain loose, China's copper concentrate reserve is sufficient, and copper TC is expected to continue to improve, driving the improvement of smelting profits.
2. The contradiction between aluminum supply and demand is prominent. During the week, aluminum prices rose significantly, up 3.28%. During the week, LME aluminum accumulated 119000 tons in a day, with an increase of 16%, the largest since March 2021. However, the overseas energy crisis continues, Russia Ukraine relations are tense, and overseas supply problems occur frequently. Baise, Guangxi, China, has a slow recovery of electrolytic aluminum production capacity due to the epidemic. At the same time, in terms of consumption, after the Spring Festival, China ushered in the recovery of seasonal demand, the recovery of real estate and infrastructure operation rate, and aluminum is expected to remain in short supply.
3. Overseas profits of zinc have rebounded. Due to tense relations between Russia and Ukraine, Russia is unlikely to resume its natural gas supply to Europe. However, at present, the price of electricity in Europe has dropped and the cost of zinc has decreased. The profits of Chinese smelters are at a low level, and the increase in supply is not obvious.
New energy metals: the price rise is transmitted to the downstream
The rise in raw material prices began to be transmitted to the downstream gradually. Since the Spring Festival, the prices of lithium carbonate, nickel and cobalt have increased, and the profits of downstream ternary precursors and cathode materials have been squeezed. At present, the profits of precursors and cathode materials have suffered losses, and some enterprises take the initiative to reduce production. For the rise of costs, the enterprises of precursors and cathode materials have begun to raise their quotations.
Recommended stocks: China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Lizhong Sitong Light Alloys Group Co.Ltd(300428) , Tianqi Lithium Corporation(002466) , Sinomine Resource Group Co.Ltd(002738)
Risk warning: the risk of demand exceeding the expected decline; Risks of drastic changes in industrial policies; Risk of epidemic deterioration beyond expectation
