The epidemic put pressure on demand in the short term, and inflation supported metal prices. The US non farm employment in March was slightly lower than expected, but the unemployment rate fell more than expected. The non farm data remained strong as a whole. The Fed’s expectation of raising interest rates remained unchanged. The probability of raising interest rates by 50 basis points in May was 76.6%. Although the price of crude oil and precious metals is still strongly supported by inflation, the price of precious metals is still under great pressure. Affected by the impact of the epidemic and the decline of exports, China’s manufacturing and service PMI fell below the critical point in March. It is expected that the prosperity will gradually rise with the easing of the epidemic and geopolitical conflict. The annual economic growth target remains unchanged, and the implementation of follow-up policies remains the focus of attention.
The gradual opening of the aluminum export window will still support the aluminum price, while the copper price is supported by rigid demand. Last week, SHFE aluminum price fell by 1.9% to 22640 yuan / ton, and LME aluminum price fell by 0.8% to 3412 yuan / ton during Qingming holiday; The average gross profit of the industry decreased by 4% to 5368 yuan / ton. According to wind data, aluminum ingot inventory decreased by 2000 tons to 1.01 million tons. The current aluminum price is mainly affected by China’s supply and demand fundamentals. The resumption of production of electrolytic aluminum in China has accelerated. Although the output is still lower than that in the same period in 2021 (according to the data of Baichuan Yingfu, the output of electrolytic aluminum last week was about 792000 tons, 30000 tons less than that in the same period in 2022), the resumption of production is expected to increase, superimpose the sudden interference of the epidemic in the downstream processing concentration, delay the delivery of some downstream products, and narrow the inventory of aluminum ingots. Although the current epidemic interferes with China’s processing demand, considering the overseas geographical and energy conflicts, it is still a constraint on the supply of electrolytic aluminum. It is expected that with the advent of the traditional peak construction season, the gradual opening of the aluminum export window will still support the aluminum price. SHFE copper price fell by 0.65% to 73160 yuan / ton, LME copper price rose by 1.5% to 10419 yuan / ton during the Qingming Festival holiday, LME + SHFE inventory accumulated 56000 tons to 210000 tons, the Russian Ukrainian conflict continued, the expectation of interest rate increase strengthened under the superimposed inflationary pressure, and the copper price fluctuated. Considering the current impact of the epidemic, copper supply and demand are both weak, but rigid demand on the demand side still supports copper prices.
The price of lithium concentrate is still in an upward trend. Last week, the price of lithium carbonate in Wuxi fell by 2.56% to 456000 yuan / ton, the price of lithium in Baichuan remained unchanged, 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. Last week, the operating rate of lithium salt enterprises increased, benefiting from the increase of temperature in Qinghai and the upward supply of lithium mines. The operating rate and output of lithium carbonate increased slightly by 0.4% to 45.58% and 4217 tons, and the operating rate and output of lithium hydroxide increased by 12.23%, 20.33% to 50% and 3948 tons respectively, but both operating rates are lower than the level of previous years. On the demand side, in the short term, under the influence of the epidemic, the orders of cathode materials in April weakened slightly. Affected by the suspension of some terminal models, the orders of lithium iron phosphate weakened, while the impact of nickel price on ternary batteries still existed, and the demand for spare parts of material manufacturers declined. In the long run, the sales volume of new energy vehicle enterprises continued to exceed expectations. Among the new forces of vehicle manufacturing, the sales volume of Xiaopeng, ideal and Weilai in March were 15400, 11000 and 10000 units respectively, with a year-on-year increase of 202%, 125% and 37.6%. At present, the capacity expansion of vehicle manufacturers has formed a rigid demand for lithium salt. Vehicle manufacturers and battery enterprises have cooperated with lithium salt enterprises to layout the development of lithium resources in order to seek deterministic and diversified raw material supply channels. The integration trend of lithium industry chain may be further promoted in the future. The price of lithium ore is still in the upward trend, which continues to form a strong support for the price of lithium salt. According to allkem’s announcement, the selling price of Q1 lithium concentrate is 2218 US dollars / dry ton. At the same time, it is estimated that the selling price of Q2 lithium concentrate is 5000 US dollars / ton, the sales volume is 50000 tons, and the corresponding cost of lithium carbonate is more than 300000 yuan / ton. The high operating trend of lithium price remains unchanged, and the repair of sector valuation continues.
The correction of rare earth prices accelerated. Last week, the correction speed of praseodymium and neodymium oxide prices accelerated, falling by 9.05% to 905000 yuan / ton. Magnetic material enterprises generally lowered the ex factory price of blanks, and trade enterprises continued to sell goods at a profit. The price of praseodymium and neodymium oxide fell by 20000 yuan / ton per day. At the same time, it also accelerated the adjustment back of gadolinium and holmium and other products, and the price of holmium oxide fell by 9.94% to 1.63 million yuan / ton. In the short term, the market inertia trend may continue next week. It is suggested to pay attention to the listing price in the north after the holiday, or there may be some guidance on the price of praseodymium and neodymium. Rare earth prices fell, and the profits of magnetic materials enterprises improved.
Gold and silver remained volatile due to the expected impact of risk aversion and interest rate increase. SHFE gold fell 0.52% to 396.26 yuan / g, and SHFE silver fell 1.87% to 5038 yuan / kg; During the Qingming Festival, Comex gold fell 0.6% and silver fell 0.6% to $1935 and $24.6 per ounce. The real yield of us 10-year Treasury bonds rose 6pct to – 0.41%; SPDR’s gold position decreased by 2 tons to 1091 tons, and SLV’s silver position was 17400 tons. Precious metal prices fluctuated, mainly affected by the expectation of risk avoidance and interest rate increase. Doubts about the conflict between Russia and Ukraine have not disappeared, and Germany’s relations with Russia are becoming increasingly tense due to natural gas settlement and supply interruption; The US PCE price index continued to rise and the inflationary pressure remained unabated. Williams said that when necessary, the Federal Reserve may raise interest rates by 50bp at one time. Under the high inflation data, the expectation of raising interest rates increased, and gold and silver remained volatile. At present, geopolitical conflict and high inflation are still the main supporting factors for precious metal prices. It is suggested to pay attention to the rhythm of the Fed’s interest rate hike under inflationary pressure.
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.
