Event: the high nickel matte production line in Qingshan Industrial Park, Indonesia was officially put into operation.
The high matte nickel delivered in October was finally put into operation. Basically, the current conversion of ferronickel to high matte nickel is driven by two reasons:
Insufficient economic benefits. Previously, Huayou announced that Qingshan high matte nickel had not been delivered. At that time, it was mainly due to the lack of power to convert ferronickel to high matte nickel. After entering October, the price difference between nickel sulfate and ferronickel was only 15000 yuan / ton, while the cost from ferronickel to high matte nickel to nickel sulfate was about 30000 yuan / ton. In recent two months, the price difference between nickel sulfate and ferronickel has continued to expand. After entering December, the price difference between nickel sulfate and ferronickel has exceeded 30000 yuan / ton. At this time, the overall profit of switching to production has been guaranteed.
Huayou nickel sulfate will be put into production soon. Previously, we predicted that the rhythm of Qingshan’s delivery of high nickel matte should match the construction rhythm of Huayou nickel sulfate production line. Huayou has a nickel sulfate production capacity of 10000 / metal ton, and the “30000 ton power battery grade nickel sulfate project” under construction is expected to be basically completed by the end of this year. Equivalent to about 53000 tons of high nickel matte, which basically matches the 60000 tons of high nickel matte contract signed by Qingshan. In addition, Huayou also has a production capacity of 50000 tons of nickel sulfate, with a planned construction period of 2 years, which will further improve the self supply rate of nickel.
Investment strategy and key recommendations:
Precious metals: the price of precious metals has gradually stabilized in this period. In the current period, affected by US inflation significantly exceeding expectations, the decline in precious metal prices narrowed, and the performance of silver was lower than that of gold. It is suggested to pay attention to the interest rate meeting on December 14-15. At present, the influence of Omicron is expanding, and the rhythm of the Fed’s policy may change. If the “hawks” are still expected, precious metals will be further under pressure.
Base metal:
Copper: Fundamentals, supply side disturbance still exists, Minmetals lasbambas road closure continues, Highlandvalleycopper of Tektronix resources (guidance on copper output in 2021: 275000-29000 tons) transportation is also disturbed by extreme weather. Affected by the epidemic, many ports in northern China have poor customs clearance, which has an impact on the import of copper mines from Russia and Mongolia. On the demand side, the Winter Olympic Games is approaching, environmental protection policies are becoming stricter, and some enterprises in North China and Shandong and Henan are facing limited production suspension. New energy orders are good, but the base is not high, which is not good for China Consumption pull is limited. On the whole, global inventories accumulated slightly in the current period, Chinese inventories rebounded, and price support was insufficient in the short term.
Aluminum: aluminum prices fluctuated in a narrow range this week. On the supply side, previously affected by environmental protection, the production capacity of limited enterprises gradually recovered, and the overall pace of resumption of production was slow. Alumina overall overcapacity, prices continued to fall. In the context of dual control of energy consumption, the supply is still tight. On the demand side, the downstream consumption remained stable, the demand of profile and plate, strip and foil enterprises was stable, and the alloy demand increased. In terms of inventory, the trend outside China is differentiated. China is characterized by destocking, LME is characterized by accumulation, and the price will still be dominated by shock in the short term.
Lead: on the supply side, affected by the accidental maintenance of the primary lead refinery, there is a regional tight situation in the Chinese market. On the consumer side, the downstream lead-acid battery enterprises started smoothly, the finished product inventory was low, and the superimposed social inventory decreased, which supported the lead price.
Zinc: both supply and demand are weak. On the supply side, the overseas smelting capacity has narrowed due to the impact of energy prices, the recent capacity release of Chinese refineries has also been restrained, and the capacity utilization rate has decreased by 0.88% compared with the previous period. On the demand side, China’s consumption has gradually entered the off-season, but China’s inventory continues to decline. In the short term, the zinc price will still be low.
New energy metals:
Cobalt: the price of electrolytic cobalt continued to rise in this period, and the price difference outside China narrowed. The disturbance at the supply side is still on, the purchasing intention of the downstream precursor enterprises at the demand side is enhanced, and the inquiry and trading volume are increased; The demand for digital terminals continued to pick up, driving manufacturers’ purchase intention to increase. With the addition of the year-end stock period, the demand increased. Subsequent prices may still have room to rise.
Nickel: the nickel price in this period is affected by the economy and Qingshan high matte nickel, and the trend is weak. The supply and demand of nickel ore market are weak. The price of high ferronickel in this period has fallen sharply, which has touched the cost line of ferronickel plant, and the profit squeeze is transmitted to the ore end. With the ramp up of MHP capacity, Qingshan high nickel matte is put into operation, and the supply of nickel sulfate raw material end is increased. On the demand side, the ternary precursor went to the warehouse at the end of the year, the demand for nickel sulfate declined, and the price of nickel nitrate was under pressure.
Lithium: the price of metal lithium and lithium salt continued to rise in this period. On the supply side, lithium resources are in short supply. At present, the operation of Chinese manufacturers is divided. The operation of large factories with guaranteed raw materials is stable, while small factories are limited by the short-term operation of raw materials, and the market supply continues to be tight. The downstream demand for ternary and iron lithium is still, and the superposition is about to enter the preparation period, and the subsequent market price is still strong.
Market review:
As of the closing on December 10, the non-ferrous metal sector fell 0.4%, losing 3.5pct and 2.0pct respectively compared with the Shanghai and Shenzhen 300 index and the Shanghai Composite Index. The non-ferrous metal sector ranked 21st among the 28 sectors of Shenyin Wanguo. The three sub sectors with the best performance among the non-ferrous metal sub sectors this week are: Aluminum rose by 4.7%, new metal materials rose by 1.2% and copper rose by 1.1%.
The top five stocks rose: Ningxia Orient Tantalum Industry Co.Ltd(000962) , Baiyin Nonferrous Group Co.Ltd(601212) , Aluminum Corporation Of China Limited(601600) , Fuda Alloy Material Co.Ltd(603045) , Shenzhen Sunxing Light Alloys Materials Co.Ltd(603978) .
The top five stocks fell: Jiangsu Dingsheng New Material Joint-Stock Co.Ltd(603876) , Ningbo Yunsheng Co.Ltd(600366) , Guocheng Mining Co.Ltd(000688) , Hubei Feilihua Quartz Glass Co.Ltd(300395) , Jiangsu Asia-Pacific Light Alloy Technology Co.Ltd(002540) .
Portfolio: Chengxin Lithium Group Co.Ltd(002240) Ye Chiu Metal Recycling (China) Ltd(601388) Tianqi Lithium Corporation(002466) Zhejiang Huayou Cobalt Co.Ltd(603799) Ganfeng Lithium Co.Ltd(002460) 20% each.
Risk warning: epidemic resurgence; The demand is less than expected; Policy risk.
