Raise interest rates and seize the opportunity of oversold. This week, the Federal Reserve raised interest rates by 25 basis points. At the same time, the median value of the Federal Reserve’s dot matrix shows that it is expected to raise interest rates seven times in 2022. The interest rate will be 1.9% by the end of 2022 and 2.8% by the end of 2023. The interest rate hike fell to the ground and did not exceed market expectations, and the short-term restraining factors of commodities were relieved. In addition, China’s economic data from January to February exceeded market expectations, the international situation also tended to ease, and the impact of short-term disturbance factors on the market weakened. However, high inflation expectations and low metal inventories cannot be reversed in the short term, which will still form a strong support for metal prices. On the one hand, with the high operation of metal prices and the higher than expected growth of metal enterprises’ performance in the first quarter, the repair of enterprise valuation will continue; On the other hand, the demand for asset hedging and hedging of precious metals continued to increase. In addition, it is suggested to focus on the layout opportunities of new material enterprises benefiting from the steady increase of new energy demand, and pay attention to Poco Holding Co.Ltd(300811) , Lizhong Sitong Light Alloys Group Co.Ltd(300428) , Baoji Titanium Industry Co.Ltd(600456) , etc.
Aluminum prices are still supported by fundamentals, while copper prices are still supported upward. This week, SHFE aluminum price rose 4% to 22935 yuan / ton, and the average gross profit of the industry rose 12.6% to 5212 yuan / ton. According to wind data, aluminum ingot inventory decreased by 51000 tons to 1058000 tons, and the inventory inflection point began to appear. Aluminum prices returned to macro and fundamentals this week. From January to February, China’s industrial added value increased by 7.5% year-on-year, indicating that the endogenous kinetic energy of the economy has been repaired. After that, the 25bp interest rate increase by the central bank and the US Federal Reserve landed as scheduled this week, and the landing price of short-term repressive factors of commodity prices rebounded. In terms of fundamentals, the rhythm of early production reduction and capacity resumption continues, and the decline of social inventory is driven by the traditional peak demand season. On the other hand, this round of epidemic is mostly concentrated in aluminum processing areas, and the arrival of goods is reduced due to the impact of logistics. The initial appearance of the inventory inflection point shows that the downstream demand has warmed up. Although the relationship between Russia and Ukraine on the supply side has eased, it is not ruled out that there are still fluctuations. The supply of electrolytic aluminum and alumina is difficult to be loose, and the aluminum price is still supported. SHFE copper price rose 1.7% to 73350 yuan / ton, LME + SHFE inventory went to 4369213000 tons. This week, copper price was mainly affected by the macro. This week, the interest rate meeting of the Federal Reserve hit, and the expectation of raising interest rate at the beginning of the week suppressed the fluctuation of copper price. This week, the central and US Federal Reserve raised interest rate by 25bp as scheduled. The short-term bad landing superimposed that China’s economic growth was better than expected and the conflict between Russia and Ukraine eased, the risk aversion decreased, and copper price rebounded. It is expected that the short-term copper price is still mainly affected by the macro level, the landing superposition of negative factors, the economy can be vivid and repaired, and the upward copper price is expected to be supported.
Weaken lithium price expectations and focus on valuation repair. This week, the price of lithium carbonate in Wuxi fell by 6.6% to 460000 yuan / ton, the price of industrial carbon and electric carbon in Baichuan remained 497500 yuan / ton, the price of lithium hydroxide increased by 2.5% to 493900 yuan / ton, and the price of spodumene increased by 1.5% to 2775 dollars / ton. This week, the price of lithium carbonate began to move sideways. Traders were more willing to ship goods. The Ministry of processing and information technology issued a public voice to severely crack down on hoarding and strange behavior. As the weather in Qinghai warmed up and the production capacity was gradually released, some traders sold goods at low prices. This week, the operating rate of lithium salt enterprises increased, the operating rate and output of lithium carbonate increased by 2.5% to 46.13% and 4176 tons, and the operating rate and output of lithium hydroxide increased by 1.2% to 47.62% and 3507 tons, and their inventories increased by 0.45% and 4.12% to 4862 and 758 tons respectively. On the demand side, according to SMM research, the demand of the head battery factory has moved forward due to the forced installation in the early stage, so the orders to the high nickel material factory remained at a low level from January to February. The stacking days are less, so the demand for lithium hydroxide decreases by 2%. In March, the high nickel output of mainstream manufacturers in China increased, and the demand for high nickel is expected to recover in March. Although the supply margin has increased, the demand is still strong. At the same time, the long-term single price of spodumene will increase significantly in the second quarter, and the spot price of lithium salt still has strong support. This week, some lithium salt enterprises announced their operations from January to February, and their performance achieved higher than expected growth. If the annual calculation shows that the valuation of some enterprises has been lower than 10 times PE, the valuation repair of the sector will continue.
The reduction of rare earth prices has expanded. Rare earth prices were generally lowered this week. Praseodymium and neodymium oxide fell by 3.76% to 1.025 million yuan / ton, and metal praseodymium and neodymium fell by 4.51% to 1.27 million yuan / ton. Due to the outbreak of the epidemic in many places in China, the magnetic material enterprises fed back that some terminal enterprises asked to postpone orders, the original delay in delivery was superimposed, the new orders were sluggish, and the trading volume of the rare earth market continued to be depressed.
Short term bearish landing superimposed inflation will continue to remain high, and precious metal prices will still rise. SHFE gold fell 2.3% to 395.14 yuan / g and SHFE silver fell 1.3% to 5080 yuan / kg. The real yield of us 10-year Treasury bonds rose 22pct to – 0.72%; SPDR’s gold position increased by 18 tons to 1082 tons, and SLV’s silver position increased by 200 tons to 17100 tons, basically the same as last week. The Federal Reserve’s interest rate meeting this week is the main disturbance factor of precious metal price fluctuations. The Fed’s interest rate meeting hit, the expectation of interest rate increase suppressed the price of precious metals, superimposed the signs of easing Russia Ukraine relations, the decline of risk aversion, superimposed the expectation of interest rate increase, and the shock of precious metals fell; This week, the interest rate meeting of the central bank and the US Federal Reserve raised interest rates by 25bp as scheduled. The short-term bad landing superimposed the third interest rate increase of the Bank of England and the continuous rise of crude oil prices, indicating that high inflation has gradually put pressure on the economy. The short-term bad landing superimposed inflation continues to remain high, and the price of precious metals will still rise.
Investment suggestions: in the context of the “double carbon” goal, pay attention to the historic investment opportunities of new energy and new materials, and focus on new energy metals with strong demand and weak supply pattern and new metal materials benefiting from industrial upgrading and domestic substitution. The strong constraints on the supply of metal resources caused by long-term low capital expenditure will support the high operation of non-ferrous metal prices in the next few years. At the same time, with the upward inflation expectation and the continuous easing of China’s monetary policy, non-ferrous metal resource enterprises will usher in investment opportunities for value revaluation. Lithium suggests paying attention to Tianqi Lithium Corporation(002466) , Ganfeng Lithium Co.Ltd(002460) , Chengxin Lithium Group Co.Ltd(002240) , Sinomine Resource Group Co.Ltd(002738) , Yongxing Special Materials Technology Co.Ltd(002756) , etc; It is suggested to pay attention to Poco Holding Co.Ltd(300811) , Lizhong Sitong Light Alloys Group Co.Ltd(300428) , Guangdong Haomei New Materials Co.Ltd(002988) , Guangdong Hoshion Aluminium Co.Ltd(002824) , Jiangsu Pacific Quartz Co.Ltd(603688) , Ningbo Boway Alloy Material Co.Ltd(601137) , etc. for new materials; Titanium suggests paying attention to Baoji Titanium Industry Co.Ltd(600456) , Sichuan Anning Iron And Titanium Co.Ltd(002978) , Western Metal Materials Co.Ltd(002149) , etc; ; For industrial metals, it is suggested to pay attention to Yunnan Aluminium Co.Ltd(000807) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Western Mining Co.Ltd(601168) , Zijin Mining Group Company Limited(601899) , Sunstone Development Co.Ltd(603612) , etc.
Risk factors: the downstream demand has fallen more than expected, the supply side constraint policy has shifted, and China’s liquidity easing is less than expected; The US tightened liquidity more than expected; Metal prices fell sharply.
