[Key words this week]: the meeting of the Political Bureau of the CPC Central Committee set the tone of the overall broad monetary and policy, China’s comprehensive RRR reduction was implemented, and the central economic work conference set the tone of “stabilizing the economy”; Us CPI hit a new high in recent 40 years; China’s new energy sales in November exceeded expectations; Qingshan high nickel matte production line is put into operation; At the end of the year, the stock of lithium carbonate accelerated the rise; The epidemic intensified the shortage of raw materials, and the price of cobalt approached 500000 yuan / ton.
Market review: 1) in terms of small metals, the sales volume of new energy vehicles in China reached a new high in October, the penetration rate of new energy passenger vehicles was close to 20%, the prosperity of the industry continued to rise, and 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 increased by 5.3% month on month this week, Battery grade lithium carbonate rose 3.8% month on month, and the price of electric carbon has exceeded 200000; ② With the outbreak of the epidemic in South Africa, cobalt prices accelerated upward, and MB standard cobalt rose 4.6% month on month this week; ③ In terms of rare earth, the supply of raw materials was tight. The Ministry of industry and information technology disclosed the motor energy efficiency improvement plan and raised the demand expectation of rare earth. The quotation of dysprosium oxide rose by 0.3% this week. 2) This week’s meeting of the Political Bureau of the CPC Central Committee set the tone of overall monetary and policy easing, and the central economic work conference made it clear that the economic work in 2022 will be “stable”; At the same time, the central bank decided to cut the reserve requirement by 0.5% in an all-round way. The rise in US consumer prices boosted the attraction of gold for risk avoidance: ① the rise and fall of base metals, LME, aluminum and copper were – 0.2% and 0.4% respectively; ② The real yield of ten-year US bonds increased from – 1.08% → – 0.96%, and Comex gold closed at US $1784.8/oz, up 0.05% month on month.
Macro “three factors” summary: China’s steady growth direction is clear; The CPI of the United States in November was the highest level in 40 years; Specifically: 1) in China, the central economic work conference stressed that “stability should take the lead and strive for progress while stability”, China’s comprehensive RRR reduction was implemented, and stressed that the counter cyclical policy should strengthen and stabilize growth. 2) In the United States, CPI in November was the highest level in 40 years, The United States disclosed this week that in November, the quarter on quarter CPI was 0.8% (the previous value was 0.9%), the year-on-year CPI was 6.8% (the previous value was 6.2%), the quarter on quarter core CPI was 0.5% (the previous value was 0.6), and the year-on-year core CPI was 4.9% (the previous value was 4.6%); it was disclosed this week that 184000 people applied for unemployment benefits, down 43000 month on month. 3) GDP in the euro area rebounded in the third quarter, and the epidemic cooled down. The final value of GDP in the euro area in the third quarter was 2.2% (the previous value was 2.1%) quarter on quarter, and the actual GDP (final value) was 3.7% quarter on quarter (the previous value was 14.2%); the EU unemployment rate was 6.7% in October, unchanged month on month; the number of confirmed covid-19 cases increased daily in Britain, Germany and France this week was 146298.2, down 6925.8 from last week. 4) the rhythms of economies are different, but the decline direction of the global overall prosperity remains unchanged. In November, the global PMI was 54.8, up 0.30.
Base metals: the decline of the US dollar index, China’s RRR reduction and easing policies support the price of base metals
The meeting of the Political Bureau of the CPC Central Committee set the tone of the overall monetary and policy easing. At the same time, the central bank decided to comprehensively reduce the reserve requirement by 0.5%. On the whole, the liquidity of funds was strongly supported; The risk of the new mutant virus on the market demand side still exists, but the market is gradually digesting the negative impact of the new mutant virus; At the same time, the US dollar index fell back, making the price of basic metals pick up. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose and fell by 0.4%, – 0.2%, 4.4%, 4.5%, 0.1% and – 1.2% respectively this week. The overall price rose and fell.
1. For electrolytic copper, China’s imports of copper ore and copper concentrate surged in November, but with the re fermentation of epidemic problems and the scarcity of local truck drivers, the logistics problems in Africa have increased again; On the demand side, as the North turns cold, orders from engineering and real estate terminals continue to decline, and the demand enters the seasonal off-season around the Spring Festival. On Wednesday, the social inventory of electrolytic copper was 85600 tons, and the weekly inventory increased by 6200 tons.
2. For electrolytic aluminum, on the supply side, the Winter Olympics will affect the production reduction possibility of relevant electrolytic aluminum enterprises in Inner Mongolia, and the accident electrolytic aluminum enterprises in Yunnan are still resuming production; On the demand side, the consumption recovery after the easing of power rationing brought about a significant destocking in the week, and the contribution of primary and recycled alloys increased, mainly due to the recent stable trend of aluminum price and the recovery of demand in the downstream market of alloys. This week, China’s aluminum ingot inventory in eight places totaled 952000 tons, and 50000 tons went to the warehouse every week.
3. For zinc ingots, the overseas fundamental logic still lies in the short-term unsolved electricity price; In terms of Shanghai zinc, the continuous decline of processing fees and the rise of electricity prices are increasing the pressure on smelters; Production reduction and shutdown in Guangxi due to environmental events. The total inventory of zinc ingots in seven places this week was 125300 tons, with a weekly drop of 4800 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 demand boom continued to rise, and the price transmission was smooth: 1) the State Council issued the 2030 carbon peak action plan. In that year, the proportion of new energy and clean energy powered vehicles reached about 40%, and the global trend of electrification was further clarified; 2) In November, China produced and sold 434000 and 427000 new energy vehicles respectively, with a year-on-year increase of 1.3 and 1.2 times respectively; 3) The US Shanxi Guoxin Energy Corporation Limited(600617) policy was further strengthened. The house of Representatives passed President Biden’s $1.75 trillion social expenditure and climate bill, of which $1.25 trillion was used for electric vehicle tax credit, which will be considered by the Senate in the next step; 4) According to SMM, the price of China’s battery industry has basically increased uniformly recently. Recently Byd Company Limited(002594) , GuoXuan, Penghui and Funeng have successively issued price increase letters. The production scheduling of new energy vehicle industry chain continued to increase.
2. The end of the year is approaching, and the price of lithium carbonate is accelerating upward again. This week, battery grade lithium carbonate increased by 3.8% over last week, battery grade lithium hydroxide quotation increased by 1.0% over last week, and spodumene quotation increased by 5.3% over last week to US $2000 / ton. 1) There is a shortage of hard lithium concentrate, Pilbara’s third lithium concentrate auction was finally concluded at the price of US $2350 / ton (FOB), which was 5% higher than the last auction price, and the freight was US $80 / ton (CIF, 6.0% grade) is about US $2644 / ton, pushing up the production cost of lithium carbonate to about 175300 yuan / ton LCE. 2) on the supply side, overseas is gradually entering the New Year holiday, and the port shipping schedule may be delayed. China’s lithium carbonate smelter is about to enter the year-end maintenance period, and the upward sentiment is obvious in the upstream; 3) on the demand side, downstream manufacturers, especially some lithium iron phosphate, have a strong sentiment of goods preparation , the quotation of battery grade lithium carbonate goes up to RMB 230000-245000 / ton; 4) Lithium salt inventory: lithium carbonate inventory decreased by 4.14% month on month from 6428 to 6162 tons; Lithium hydroxide inventory increased by 28.57% month on month from 266 to 342 tons.
3. With the tightening of raw materials, cobalt prices may rise further. MB cobalt (standard grade), MB cobalt (alloy grade) quotations increased by 4.6% and 5.1% month on month, respectively. The tax price of China’s metal cobalt has exceeded 520000 yuan / ton; China’s metal cobalt, cobalt sulfate and cobalt trioxide increased by 6.4%, 2.7% and 3.4% respectively. 1) on the supply side, the import of cobalt intermediate products in October was about 5700 metal tons, a month on month decrease of 30% and a year-on-year decrease of 44%. According to the feedback of the industrial chain, the uncertainty of shipping schedule will continue until at least 2022 First quarter; 2) A new variant strain of Omicron was found in South Africa, spreading faster than before, Congo (gold) cobalt raw materials are mainly transported through Durban port, South Africa, which further aggravates the shortage of raw materials; 3) ternary material enterprises begin to return to work, lithium cobaltate enterprises have increased their willingness to purchase, and the demand for aerospace and military industry has warmed up, the demand for overseas stock replenishment has increased, the trading has been booming, and the overseas cobalt price has increased. 4) the inventory of cobalt intermediate products of smelting enterprises has remained low, and the production scheduling of electric cobalt enterprises has been reduced According to SMM, the output of cobalt sulfate is about 700 tons, accounting for about 12% of the total supply of the industry, and cobalt chloride is 600 tons, accounting for 13.6% of the total supply of the industry in the current month.
4. Rare earth and permanent magnet have entered the stage of “rising both in quantity and price”. 1) In the spot market, the quotation of praseodymium and neodymium oxide in China operated steadily. The listing price of praseodymium and neodymium oxide was 816900 yuan / ton in December, up 7.12% month on month. The spot circulation in the market is limited, and large manufacturers are willing to support the price. 2) On the demand side, the output of Nd-Fe-B enterprises in October was 20445 tons, an increase of 18.83% month on month and 5.09% year-on-year; 3) In terms of inventory, the inventory of praseodymium and neodymium oxide increased by 25 tons to 2760 tons compared with last week, an increase of 0.91% month on month. 4) Overseas mines, Myanmar mines imported 23 tons of REO in October, of which mixed rare earth carbonate mines were not imported; U.S. mineral imports were 2145 tons (about 1287 tons of REO), a month on month decrease of 62% and a year-on-year decrease of 77%; Lynas praseodymium and neodymium production decreased by 10% in the third quarter. 5) in terms of policy, the Ministry of industry and information technology issued the motor energy efficiency improvement plan (2021-2023) , if the penetration rate of rare earth permanent magnet motor among the new high-efficiency motors gradually increases to 50%, the annual demand for new magnetic materials will be more than 20000 tons, and the demand will jump to another level.
5. Nickel: the supply of raw materials is tight and the price remains strong. 1) SHFE nickel closed at 148800 yuan / ton, down 1.80% month on month. 2) On the supply side, the Indonesian President reiterated his plan to stop the export of all bulk commodity raw materials. Previously, the Indonesian government planned to restrict the construction and export of FeNi and NPI smelters and encourage the construction of nickel sulfate, stainless steel and other smelters locally; 3) On the demand side, according to the production plan of each steel plant in December, the total output of stainless steel crude steel of 30 steel plants was about 2.71 million tons, an increase of 95000 tons compared with that in November.
6. Lithium positive and negative current collectors: copper foil and aluminum foil industries maintain a high business cycle. 1) Aluminum foil: Contemporary Amperex Technology Co.Limited(300750) it is expected that a sodium ion battery production line will be put into production in 22 years, and a basic industrial chain will be formed by 2023. Compared with lithium-ion batteries, both positive and negative electrodes need aluminum foil. Aluminum foil has entered a high business cycle, with limited new production expansion, and the processing fee is easy to rise but difficult to fall. 2) Copper foil: subject to the supply bottleneck of core production equipment such as cathode roller, the new effective capacity of lithium copper foil is limited, and the supply and demand structure is mismatched. Under the general trend of lightness and thinness, the processing fee of extremely thin copper foil will generally rise by 5000-10000 yuan in 2021, which is easy to rise but difficult to fall.
7. Antimony: the shortage of raw materials remains unchanged. The price of antimony concentrate in China was 56500 yuan / ton, unchanged from last week; The price of antimony ingot was 73000 yuan / ton, up 1.4% from last week. At present, the Hunan Gold Corporation Limited(002155) Anhua Zixi mine has resumed production, and the resumption of production in Lengshuijiang area is relatively slow. It is difficult for most smelters to replenish raw materials, and the price has stopped falling and stabilized.
Investment suggestion: maintain the “overweight” rating of the industry
1. For base metals, China’s economic work in 2022 will be “stable”, which will provide some support for the price of base metals. However, from the global dimension, 1) changes in the structure before, during and after the outbreak of overseas economic demand, and 2) the global liquidity taper trend remains unchanged, and the downward trend of base metals may not have been fundamentally changed.
2. For the upstream raw materials of new energy, such as lithium cobalt rare earth copper foil, aluminum foil and magnetic materials, the short-term prosperity is still strong, the general direction of the medium and long-term three-year prosperity upward cycle will not change, and the industrial prosperity is the most clear! Firmly watch!
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, new energy vehicle sales less than expected risk, premise assumption of supply and demand calculation less than expected risk, etc.
