The industrial economy continues the recovery trend since last year. From January to February, the profits of Industrial Enterprises above designated size increased by 5.0% year-on-year, 0.8 percentage points higher than that in December last year. Supported by the steady growth policy, the industrial economy recovered steadily and the profits of enterprises increased slightly. Among them, the energy and raw materials industry made a great contribution to the profit growth of industrial enterprises. From January to February, the profit of the mining industry increased by 1.32 times year-on-year, the growth rate was significantly higher than the industrial average, and the profit of some raw materials industries increased rapidly. We expect that in the environment of high inflation, with the support of China’s stable growth policy, the price of low inventory metals will remain high, and the profits of the industrial chain will continue to focus on resources. At the current time point, we should weaken our expectations for metal prices and focus on the achievement of enterprise performance and future growth.
The upward trend of aluminum price is still supported, and copper price is still dominated by shock in the short term. SHFE aluminum price rose 0.8% to 23125 yuan / ton this week, and the average gross profit of the industry rose 7.6% to 5608 yuan / ton. According to wind data, the aluminum ingot inventory decreased by 46000 tons to 1012000 tons, and the inventory continued to go to the warehouse. This week, aluminum prices are jointly affected by geographical conflicts and fundamentals. Putin decided to settle its natural gas supply in rubles to European countries. The sharp rise in European natural gas led to a single day rise in the price of lunaluminum by 5.15% to US $3685 / ton. At present, the conflict between Russia and Ukraine and its energy crisis are still the main factors affecting aluminum prices. The reduction of electrolytic aluminum production in Europe caused by the energy crisis is good for China’s electrolytic aluminum export (according to customs data, China’s net export of primary aluminum in February was 80.349 million tons, the first net export since November 2019). Although China’s primary aluminum export is mainly aluminum ingots in bonded areas, if the conflict continues to escalate, The continued expansion of the internal and external price difference will improve the export enthusiasm of Chinese manufacturers and support the price of aluminum. In terms of raw materials, Australia announced a ban on the export of alumina to Russia. Considering that the layout of Russian Aluminum production capacity is mainly based on industrial supporting, while Ukraine’s 1.75 million T / a alumina production capacity has been suspended. It is expected that Russian aluminum will increase the import of alumina in order to maintain the smooth operation of its electrolytic aluminum production capacity, and the raw material end still supports the price of electrolytic aluminum. Overall, on the premise of the continuation of the current conflict between Russia and Ukraine, the shortage of overseas electrolytic aluminum and alumina will support the upward trend of aluminum price. SHFE copper price fell by 0.1% to 73250 yuan / ton, LME + SHFE inventory went to 12000 tons to 201000 tons. At present, the macro level is still the main influencing factor of copper price. The Russian Ukrainian conflict continues and the inflation expectation caused by the continuous rise of crude oil price is strengthened. Under the intertwined of long and short, the overall operation of copper price is stable. Considering that the commencement of downstream copper processing is limited due to the impact of the epidemic, the macro level still needs to observe the situation of Russia and Ukraine and the rhythm of interest rate increase by the Federal Reserve, Short term prices are still dominated by shocks.
Car prices may have limited impact on sales. This week, the price of lithium carbonate in Wuxi rose by 1.74% to 468000 yuan / ton, the price of lithium in Baichuan remained stable, the price of spodumene remained at 2775 US dollars / ton, and the prices of industrial carbon, electric carbon and lithium hydroxide remained at 4975, 5175 and 493900 yuan / ton respectively. The operating rate of lithium salt enterprises was poor this week. The operating rate and output of lithium carbonate increased slightly by 0.5pct to 46.35% and 4199 tons, while the operating rate and output of lithium hydroxide decreased by 6.4pct to 44.45% and 3281 tons, and their inventories increased by 0.47% and 8.71% to 4885 and 824 tons respectively. Impacted by the sharp fluctuation of nickel price, some ternary material manufacturers are pessimistic, and the purchase volume of lithium hydroxide is greatly affected. On the demand side, according to EV volumes, the global sales volume of new energy vehicles in February was 558400, an increase of 100% year-on-year and a decrease of 10.67% month on month. The production and sales volume met the expectation. Tesla Berlin plant was officially put into operation on March 22. It is estimated that the production capacity will be 54000 in 2022, 280000 in 2023 and 500000 in 2025. Since March, according to incomplete statistics of SMM, 20 new energy vehicle enterprises have announced to raise the price of more than 40 models. On the 23rd, ideal one announced that it would raise the price by 3.49% to 349800 yuan / vehicle. The rise of raw material prices is gradually transmitted to the downstream. Under the background of high inflation of crude oil prices, the price increase of vehicle manufacturers may have a limited impact on sales. Under the high level of lithium salt, the valuation of some enterprises has been less than 10 times PE, and the valuation repair of the sector will continue, focusing on companies with high growth on the resource side.
The purpose of the market is to actively ship, and the price of Rare Earth continues to decline this week. Praseodymium and neodymium oxide decreased by 2.93% to 1.01 million yuan / ton, and terbium oxide decreased by 3.50% to 13.8 million yuan / ton. Some downstream enterprises may enter before the Qingming Festival. Therefore, the profit transfer of rare earth small and medium-sized enterprises is a routine operation. However, the lower reaches began to purchase in small quantities, and the new orders of metal factories can be seen one after another. The decline of rare earth prices showed a narrowing trend, and the prices tended to stabilize in the second half of the week.
In the short term, it is expected that the geopolitical conflict will still support the price of precious metals. SHFE gold rose 1.6% to 401.54 yuan / g and SHFE silver rose 2.7% to 5216 yuan / kg. The real yield of us 10-year Treasury bonds rose 25pct to – 0.47%; SPDR’s gold position increased by 10 tons to 1093 tons, and SLV’s silver position was basically the same as last week. Precious metal prices this week were mainly affected by geographical conflicts. This week, the central and US Federal Reserve raised interest rates by 25bp as scheduled. Although Powell stressed that it would raise interest rates by 50bp in May when necessary, Russia Ukraine relations continued to be tense. The sharp rise in crude oil prices caused by some European countries’ increased sanctions against Russia has become the main factor affecting the fluctuation of precious metal prices. It is expected that the short-term geopolitical conflict will still support precious metal prices, but we still need to be vigilant about the rhythm of the Fed’s interest rate increase.
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; It is suggested to pay attention to Sino-Platinum Metals Co.Ltd(600459) , Chifeng Jilong Gold Mining Co.Ltd(600988) , Yintai Gold Co.Ltd(000975) , etc. for precious metals; 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.
