Core view
\u3000\u30001. Downstream industry boom, rare earth price index hit a record high. On February 18, 2022, the rare earth price index reached 427.00, a record high. Since April 2020, rare earth prices have continued to rise, with the rare earth price index rising from 129.30 to 427.00, an increase of 230.2%. In terms of praseodymium and neodymium, as of February 18, 2022, praseodymium oxide reported 1.09 million yuan / ton, a year-on-year increase of 165.9%, and neodymium oxide reported 1.21 million yuan / ton, a year-on-year increase of 111.2%. Limited supply outside China is one of the reasons why rare earth prices continue to rise. Abroad, Myanmar, an overseas rare earth country, was affected by the epidemic, resulting in a decline in global rare earth supply. In China, there are restrictions on rare earth mining and smelting indicators. At present, the total control indicators of new batch of rare earth mining, smelting and separation are only 100800 tons and 97200 tons. In addition, in terms of inventory, according to the data of Baichuan Yingfu, as of February 18, 2022, the inventory of praseodymium and neodymium oxide was about 3351 tons, a year-on-year decrease of 19.21%. From the situation in recent three years, the current inventory of praseodymium and neodymium oxide is only at the quantile level of 9.9% in recent three years. Under the tight balance of supply and demand, rare earth prices are expected to continue to rise in the future. In the short term, although the rare earth mining and smelting index has increased in 2022, it is difficult to expand the output in a large amount in a short time, and the tight supply side is difficult to be effectively alleviated. In the long run, under the dual carbon policy, the rapid development of emerging fields such as wind power and new energy vehicles will lead to a strong demand for rare earths in the future. Under the tight balance of supply and demand, rare earth prices still have upward momentum.
\u3000\u30002. In the past week, most of the prices of major non-ferrous metals rose, including lithium metal up 12.8% and SHFE zinc down 2.1%. In terms of metal lithium, as of February 18, 2022, the price of metal lithium was reported at 2.29 million yuan / ton, up 12.8% week on week. The main reason for the rapid rise of metal lithium price is that the demand for lithium as the core material of new energy battery continues to grow under the continuous growth of production and sales of new energy vehicles; In terms of SHFE zinc, as of February 18, 2022, the settlement price of SHFE zinc futures in the Chinese market was reported as 25000 yuan / ton, down 2.1% this week. The main reason for the decline in China’s zinc price is due to the impact of the Winter Olympics. The downstream galvanizing enterprises are expected to start construction in late February, reducing the demand for zinc. A large amount of zinc accumulated in the warehouse last week, with an inventory of 105000 tons, up 40.7% this week.
\u3000\u30003. Diplomatic conflict broke out between the United States and Russia, and the price of gold rose. On February 17, Russia expelled Bart Gorman, the US Deputy Ambassador to Russia. According to the spokesman of the US State Department, the United States believes that this move is a step to promote the escalation of the current situation. With the intensification of geographical conflicts, the demand for gold hedging will increase rapidly, which is expected to support the rise of gold prices. On February 17, Comex gold closed at US $1899.50/oz, the highest price since June 11, 2021. For the whole week, as of February 18, 2022, Comex gold futures closed at $1896.8/oz, up 2.0% for the week.
\u3000\u30004. Market review. All nine CITIC nonferrous metals sub sectors rose in the past week. Among them, the top three sectors were lithium, rare earth and magnetic materials and nickel cobalt tin antimony, with increases of 12.4%, 9.4% and 7.9% respectively. In terms of individual stocks, the top three weekly gains were Sinomine Resource Group Co.Ltd(002738) , Youngy Co.Ltd(002192) , Lizhong Sitong Light Alloys Group Co.Ltd(300428) , with weekly gains of 25.6%, 20% and 18% respectively; The top three weekly declines were Shanghai Huafon Aluminium Corporation(601702) , Zhuzhou Smelter Group Co.Ltd(600961) , Chongyi Zhangyuan Tungsten Co.Ltd(002378) , with weekly declines of 6.9%, 4.3% and 4.2% respectively.
Investment advice
The prices of rare earth, gold and other metal varieties continue to rise, and relevant production enterprises may benefit, such as:
China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Zijin Mining Group Company Limited(601899) , Chifeng Jilong Gold Mining Co.Ltd(600988) etc.
Risk tips
The sales growth of new energy vehicles was lower than expected, the international epidemic was repeated, and the safety and environmental protection policies changed.
