Introduction to this report:
After the festival, the demand for metal terminals recovered slowly, but the rhythm of processing links was normal, and the weakness of supply and demand continued; Credit volume, infrastructure support expectation and industrial chain inventory replenishment support prices. The acceleration of downstream resumption of work may bring greater demand and price elasticity.
Summary:
Cycle research and judgment: the expectation of interest rate increase in the United States is gradually digested, and the metal price is fully priced; Local geopolitical tensions may affect risk appetite to a certain extent, but also push up the demand for hedging of precious metals. In January, China’s PPI fell due to the high base. After December 2021, a new round of rise in commodities, especially metal commodities, may cause PPI to fluctuate at a high level. At present, China’s metal demand is still recovering after the year. After the extreme destocking in 2021, the whole metal industry chain will replenish inventory to support demand in the short term after the year. Therefore, the accumulation of explicit inventory is lower than that in the same period in history. The industrial chain of overseas developed countries in Europe and the United States continues to be repaired, the demand for metals is strong, and together with the shortage of energy, prices continue to rise; The narrowing of the internal and external price difference led to the closing of the import window, which partially hedged the growth of China’s supply.
Electrolytic aluminum: the interference between supply and demand continued, and the high profit fell slightly. ① Supply side: the resumption of production continues, and the operating rate is still relatively low. In mid February, the operating capacity of electrolytic aluminum was about 38.2 million tons / year (Baichuan information). The impact of the epidemic in Guangxi on electrolytic aluminum and alumina production was weakened, the outbreak in Inner Mongolia slightly interfered, and the overall production of electrolytic aluminum in China continued to be repaired. Overseas electrolytic aluminum is affected by the continuous high energy price; China’s import supply window is relatively stable and closed. ② Demand and inventory: downstream processing starts accelerated and processing fees rebounded. After the year, the terminal demand was relatively weak, but aluminum processing rebounded rapidly. As of the 18th, the operating rate of aluminum processing recovered to 65.4%, close to the level in mid January, and the sector, strip and profile remained at a high level; The high processing fee of aluminum sector, strip and foil rebounded, reflecting the structural improvement of terminal demand under low inventory. Electrolytic aluminum continued to accumulate in the second week after the festival, but the aluminum rod and factory warehouse decreased. The spot aluminum ingot, aluminum rod and factory warehouse in 12 places were 103.9 (+ 9), 26.46 (- 0.29) and 16000 (- 0.3) tons respectively. ③ Profit side: the flat aluminum price and the rising cost side dragged down the gross profit by about 300 yuan to 4700 yuan / ton.
Copper: it fluctuates in a narrow range and does not break the balance of power in the short term. The copper market returned to calm after last week’s sharp fluctuations. The US dollar index fell due to the US Federal Reserve’s position bias, which underpinned the copper price to a certain extent with the expectation of high inflation. China’s demand recovery is slow, downstream processing and terminal demand are still relatively weak, and the inventory increased greatly in the previous period; Before China’s demand starts to verify the pulling effect of stable growth expectation on copper demand, the expectation of good Chinese demand will still be the leading factor of copper price. The global copper supply release in 2022 is relatively certain, but the elasticity of recycled copper will be lower than last year; In the first half of the year, the shutdown of Las bambas will continue to be disturbed, and the implementation of value-added tax in China’s waste copper industry on March 1 will also affect the supply of recycled copper. Therefore, we believe that it is difficult to have a decisive force to break the shock pattern near the current copper price of 70000 yuan / ton in the short term.
Maintain the overweight rating of aluminum industry. Recommended targets: Henan Shenhuo Coal&Power Co.Ltd(000933) , China Hongqiao, Henan Mingtai Al.Industrial Co.Ltd(601677) , Shandong Nanshan Aluminium Co.Ltd(600219) , Yunnan Aluminium Co.Ltd(000807) , Tianshan Aluminum Group Co.Ltd(002532) etc; Beneficiary objects: Aluminum Corporation Of China Limited(601600) , Zijin Mining Group Company Limited(601899) , Western Mining Co.Ltd(601168) , Jiangxi Copper Company Limited(600362) , Anhui Truchum Advanced Materials And Technology Co.Ltd(002171) , Ningbo Boway Alloy Material Co.Ltd(601137) , Zhejiang Hailiang Co.Ltd(002203) , etc.
Risk tips: the downstream demand is weaker than expected, the Fed’s interest rate increase and contraction table is higher than expected, the effect of stabilizing China’s economy is lower than expected, and the growth rate of new energy vehicles is lower than expected.
