The 154 environmental protection and public utility stocks we tracked lost 1.23 percentage points to the Shanghai index this week and outperformed the Shanghai index by 20.41 percentage points since the beginning of the year. This week Jiangsu Jiangnan Water Co.Ltd(601199) , Huadian Power International Corporation Limited(600027) , Guangzhou Hengyun Enterprises Holdings Ltd(000531) rose by 20.79%, 17.51% and 16.14% respectively; Top Resource Conservation & Environment Corp(300332) , Beijing Water Business Doctor Co.Ltd(300055) , Gcl Energy Technology Co.Ltd(002015) fell by 10.73%, 8.61% and 8.09% respectively, with poor performance.
Further promote the energy revolution, and new energy is expected to further develop.
From December 8 to 10, the central economic work conference was held in Beijing. The president Xi Jinping pointed out at the meeting that it is necessary to correctly understand and grasp carbon peaking and carbon neutralization. Realizing carbon peak and carbon neutralization is the internal requirement of promoting high-quality development. We should unswervingly promote it, but it is impossible to accomplish its work in one battle. We should adhere to the principles of national overall planning, giving priority to economy, two-wheel drive, smooth internal and external flow and risk prevention. The gradual withdrawal of traditional energy should be based on the safe and reliable substitution of new energy. Based on the basic national conditions of coal, we should pay attention to the clean and efficient utilization of coal, increase the consumption capacity of new energy, and promote the optimal combination of coal and new energy. China’s energy consumption is still dominated by fossil energy. Although the proportion of coal consumption continues to decrease in recent years, it will still reach 56.8% in 2020. To achieve the goal of carbon peak and carbon neutralization, we must accelerate the transformation and substitution of traditional energy to clean energy. The meeting also stressed the need for scientific assessment, excluding the use of new renewable energy and raw materials from the total energy consumption control, creating conditions to realize the transformation from “double control” of energy consumption to “double control” of total carbon emission and intensity as soon as possible, accelerate the formation of an incentive and restraint mechanism for reducing pollution and carbon, and prevent simple layer by layer decomposition. In the future, the “double control” of carbon will change from simply looking at “quantity” to looking at “source” and “structure”, and the future “double control” of carbon renewable energy will not be under control, which will be conducive to the development of renewable energy, especially new energy dominated by wind and light.
The price of lithium carbonate is still strong, and lithium salt continues to rise in the future.
On December 9, fastmarkets evaluated the price of battery grade lithium hydroxide in China at 195000-205000 yuan / ton, an increase of 5000 yuan / ton compared with last week; The quotation for China’s battery grade lithium carbonate was 21500-23000 yuan / ton, up 7500 yuan / ton month on week. Recently, due to the increasingly serious mood of goods preparation at the end of the year, the stock of raw materials continues to increase, the output at the end of Qinghai Salt Lake has been reduced in winter, and the manufacturer’s inventory has declined rapidly, resulting in the shortage of lithium carbonate, the price continues to rise, and it is expected that the price will still rise in the future. Lithium salt prices in the East Asian market remained stable this week, but the trend of tight spot supply became more and more obvious. Fastmarkets evaluated the CIF price of battery grade lithium carbonate in China, Japan and South Korea at US $31-33 / kg, unchanged last week, and the CIF price of battery grade lithium hydroxide in China, Japan and South Korea at US $30-32 / kg, unchanged last week. On December 10, fastmarkets data showed that the CIF price of 6% lithium concentrate in Asia was US $2300 / ton, far exceeding the fourth quarter long-term agreement price signed by current enterprises. It is expected that the long-term association price of 2022q1 lithium concentrate will continue to rise under the background of strong demand and insufficient supply. As the supply shortage will continue, and the Spring Festival this year is half a month earlier than last year, the price of lithium salt will rise rapidly again under the combined action of cost support (rising price of lithium concentrate long-term association), supply contraction (reduction of production in Salt Lake in winter and power limitation in Qinghai, centralized maintenance of lithium concentrate processing plant in December) and downstream goods preparation (spring festival goods preparation will begin in December).
The overall price of thermal coal is weak and downward, and the future price may remain weak.
This week China Shipbuilding Industry Group Power Co.Ltd(600482) coal prices are generally weak and downward, and the market trading atmosphere is not strong. In terms of origin, most of the coal mines in China’s main production areas produced normally this week, and the mainstream coal mines continued to honor the long-term association and guarantee the supply of resources; Affected by the slowdown in the transportation rhythm of downstream users, the market coal mine mouth price is under pressure. Among them, the coal mines in Shanxi are mainly local mines; Affected by the delayed procurement of power plants and the heavy wait-and-see mood of traders in Shaanxi and Inner Mongolia, the inventory of some coal mines increased and the pit mouth price decreased significantly. At present, some coal mines continue to hold bearish expectations for the future market, and the rebound power of coal prices is insufficient in the short term, or the weak trend may continue. In terms of downstream demand, the daily consumption of China’s power plants was relatively stable this week, and the coal delivery rate of long-term association and guaranteed supply was high. The daily coal input of some power plants was still higher than the daily coal consumption, and the accumulation work continued; In some areas, individual long-term associations account for a relatively low user market, coal also has centralized arrival, and end users have strong intention to lower prices.
China’s average LNG price continued to decline, and the overall weak and volatile operation of the U.S. natural gas market
The average LNG price in China continued to decline this week. In terms of supply, the operating load of Chinese factories has decreased slightly recently, and the quantity of sea and gas arriving at the port has increased month on month compared with last week. In terms of demand, although some parts of the north have ushered in rainy and snowy weather one after another, the temperature drop range and impact range are limited, and the short-term transportation is limited. The demand for natural gas replenishment by urban fuel is still insufficient. Although the impact of environmental protection is weakened, industrial users in the early stage are affected by high price LNG and switch pipeline natural gas more, so the demand for LNG is not good. The overall weak and volatile operation of the US natural gas market in this cycle. As the temperature in the United States continues to be mild, which is not conducive to the demand for natural gas heating, during the cycle, more meteorological institutions predict that the warm weather in the United States will continue until Christmas, which undoubtedly escalates the pressure on the market. On the whole, the natural gas supply in the United States was abundant and the price performance was weak during the cycle.
Investment advice
At present, countries all over the world regard lithium resources as strategic mineral resources. It is very important to ensure the supply security of lithium metal minerals and establish a local supply chain. At the same time, with the continuous rise in the price of lithium concentrate, the profits of non integrated lithium salt processing enterprises are gradually thinning, and the profits have largely moved to the resource side. A typical example is aokuang, which is highly dependent on China’s lithium salt processing plants. In the last cycle, it only earned 30% of the profits of the industrial chain, and 70% – 80% of the profits in this cycle have been transferred to aokuang, which just confirms aokuang’s expectation that the profits of this cycle and China’s lithium salt plants will open at the beginning of the year. Under the current background, the competitiveness of integrated enterprises with upstream resource guarantee and incremental resources is obviously stronger. It is recommended to pay attention to the ongoing Lijiagou spodumene mining and beneficiation project. In the future, it will join hands with Dongchuan energy investment to integrate and develop the lithium resources in Ganzi and ABA. The beneficiary targets include [ Youngy Co.Ltd(002192) ] which is promoting the 2.5 million T / a lithium ore beneficiation project in yuanyangba. The greenbushes mine will increase production in the next five years and can achieve a large output of [ Tianqi Lithium Corporation(002466) ] through OEM, According to the report of China Securities Network of Shanghai Securities News, the 20000 ton lithium carbonate precipitation workshop under construction is expected to be completed by the end of the year, with a large volume of [ Qinghai Salt Lake Industry Co.Ltd(000792) ] in 2022. It is expected that the expansion of Huashan mining and beneficiation in Zhongbai city will be completed next year [ Yongxing Special Materials Technology Co.Ltd(002756) ].
During the “14th five year plan” period, water enterprises are expected to attract more capital investment, improve operation scale and generate benefits with the help of local governments under the promotion of policies. It is recommended to pay attention to the low value and high growth sewage treatment enterprises [ Anhui Zhonghuan Environmental Protection Technology Co.Ltd(300692) ] and [ Guangdong Liantai Environmental Protection Co.Ltd(603797) ].
Waste incineration is an industry encouraged and supported by the national industrial policy. Promoting the integrated construction and professional operation of urban domestic waste treatment facilities is the development trend of the industry, and the professional waste treatment service providers providing integrated investment, construction and operation services will have a competitive advantage. Under the policy background of “carbon neutralization and carbon peak”, the waste incineration power generation project will continue to benefit. We recommend paying attention to the leading waste incineration projects [ Dynagreen Environmental Protection Group Co.Ltd(601330) ] and [ Chongqing Sanfeng Environment Group Corp.Ltd(601827) ].
Risk statement
1) The implementation of carbon neutralization related policies is less than expected;
2) The demand for thermal coal and natural gas decreased seasonally;
3) Major changes in power policy;
4) The development progress of lithium mine in Sichuan is less than expected.
