1. The rare earth industry ushered in good integration, and the high prosperity of the industry is expected to be maintained. On December 22, China Minmetals Rare Earth Co.Ltd(000831) strategic integration plan was submitted to the State Council for approval. This integration includes many upstream, middle and downstream companies, and the main body after integration is controlled by the SASAC of the State Council. There are two advantages of integration: on the one hand, the price is good. The integration improves the concentration of China’s rare earth industry and prevents blind expansion of production capacity and vicious low-price competition; On the other hand, the industry is favorable. The integration will help further upgrade China’s rare earth resource advantages and improve the foreign competitiveness of China’s rare earth industry. The world-class rare earth giant is expected to be born in the future. China’s rare earth industry was previously dominated by six groups, namely China rare earth, China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Xiamen Tungsten Co.Ltd(600549) , China Minmetals Rare Earth Co.Ltd(000831) , Guangdong rare earth and southern rare earth. The three enterprises in this integration account for half of China’s rare earth industry. China is a big exporter of rare earths. In 2020, China’s rare earth output will be 140000 tons, accounting for more than 58% of the global total output. In the future, China’s rare earth industry is expected to produce a world-class giant company. The industry is expected to continue to prosper with the simultaneous growth of supply and demand and the superposition of industry integration. In terms of supply, China’s rare earth metal output generally shows an upward trend. According to wind data, the annual compound growth rate of China’s total output of rare earth metals from 2017 to 2020 was 10%. In terms of demand, the explosive growth of new energy vehicles in recent years has led to a significant increase in the demand for rare earths. According to the statistics of China Automobile Industry Association, the sales volume of Shanxi Guoxin Energy Corporation Limited(600617) vehicles is expected to reach 3.4 million in 2021, with a year-on-year increase of 160%. With the double increase of supply and demand and the superposition of this integration, the boom of rare earth industry is expected to continue.
2. In the past week, in terms of new energy metals, lithium metal increased by 4.7%, battery grade lithium carbonate increased by 6.7% and cobalt sulfate increased by 0.8%. In terms of base metals, Comex copper rose 2.4%, LME aluminum and zinc rose 5.7% and 4.4% respectively. In terms of rare earth metals, neodymium oxide rose 0.6%. Among the metals with obvious gains and losses, lithium hydroxide rose 7.3%, and China’s lead futures fell 1.6%. On the one hand, the price of spodumene and lithium carbonate remains high, and the tight supply of goods is difficult to alleviate; On the other hand, at the end of the year, the demand for cathode materials is strong due to the concentration and large volume of new energy vehicles. The decline of metal lead futures was mainly affected by the weakening demand for downstream batteries.
3. Inflation expectations remained high, driving the price of precious metals to rise again. As of December 23, the settlement price of Comex gold futures was reported at US $1809.20/oz, up 0.1% for the week. COMEX silver futures settled at $22.84 an ounce, up 1.6% this week. As of December 24, China National Gold Group Gold Jewellery Co.Ltd(600916) futures settlement price was reported at 372.84 yuan / g, a weekly increase of 0.6%.
4. Market review. Last week, 7 of the 11 Shenwan nonferrous metal plates rose or were flat, and 4 plates fell. Among them, the aluminum plate increased the most, with an increase of 2.2%; Copper plate fell the most, down 4.3%. In terms of individual stocks, the top three gainers were Henan Mingtai Al.Industrial Co.Ltd(601677) , Anhui Xinke New Materials Co.Ltd(600255) , Jiangsu Pacific Quartz Co.Ltd(603688) , with increases of 19.83%, 13.04% and 11.69% respectively; The top three weekly declines were Western Metal Materials Co.Ltd(002149) , Tianqi Lithium Corporation(002466) , Shanghai Zhongzhou Special Alloy Materials Co.Ltd(300963) , with declines of 14.90%, 14.62% and 13.84% respectively.
Investment advice
It is suggested to pay attention to relevant beneficiary targets under the background of continuous prosperity of rare earth industry, such as China Minmetals Rare Earth Co.Ltd(000831) , China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) .
Risk statement
The sales growth of new energy vehicles was lower than expected, the international epidemic was repeated, and the safety and environmental protection policies changed.
