Core view
Industrial metals: the market continues to trade, the conflict between Russia and Ukraine, and the Chinese epidemic affects economic activities
Copper: the global monetary policy is tight outside and loose inside. Copper is an industrial metal with the strongest financial attribute and has a large foreign pricing weight. The market is worried that the continued high inflation data in the United States may make the tightening of monetary policy of the Federal Reserve exceed expectations. At the same time, the conflict between Russia and Ukraine also reduced the market risk appetite and restrained the trend of copper price. Several upward breakthroughs since the second half of last year have failed to make the copper price form an upward trend. However, as the global dominant copper inventory is at an all-time low, the support below the copper price is strong.
Aluminum: the factor that dominates the trend of aluminum price in the near future is the conflict in foreign regions. The trend of China’s foreign aluminum price is also continuing the trend of external strength and internal weakness, which will continue to benefit China’s aluminum export and is not conducive to foreign aluminum import. At the same time, with the loose power consumption index in Yunnan, the electrolytic aluminum enterprises in the region accelerated the resumption of production, and the operating capacity of electrolytic aluminum in China rebounded. In terms of energy prices, the national development and Reform Commission continued to regulate coal prices and set pit mouth guidance prices for the main coal producing areas. The cost side of electrolytic aluminum is more controllable than last year. China’s electrolytic aluminum is expected to continue high smelting profits.
New energy metals: the price increase slowed down in March, but the supply and demand fundamentals are still tight
Lithium: on the supply side, the output of lithium extraction from Qinghai Salt Lake in China declined in winter, and the capacity utilization rate has not been fully restored at present; On the demand side, China’s production and sales of new energy vehicles in February reached 368000 and 334000 respectively, with a year-on-year increase of 2.0 and 1.8 times respectively. The pace of lithium mine resumption and expansion in Western Australia is earlier than the previous plan, but the overall impact on the supply side this year is limited. It is expected that the tight supply and demand situation of global lithium ore will be difficult to alleviate in the short term, and the lithium price is expected to remain high.
Cobalt: in the first quarter of this year, the epidemic in South Africa repeatedly delayed the delivery of raw materials, and the shipping schedule was generally extended by 2-2.5 months. China’s Cobalt raw material inventory is still tight. It is expected that this tension may remain for some time. With the stability of the epidemic in the middle of the year, the degree of shortage of raw material supply may be alleviated.
Rare earth: rare earth prices rose and fell in March. Since the Ministry of industry and information technology interviewed rare earth enterprises, market sentiment has changed significantly, the enthusiasm for purchasing and replenishment in the downstream has weakened, there is a willingness to support prices in the upstream, and inventory has accumulated. With the strengthening of the game between upstream and downstream, the price of rare earth has decreased.
Steel: steady growth boosts expected improvement
Supply side: in March, affected by the limited production in the heating season, the Winter Olympic Games and the epidemic situation, the steel production was running at a low level, and the market had strong expectations for the continuation of the dual control policy of production capacity and output. Demand side: the performance of steel consumption is weak, the weak real estate demand is superimposed with the disturbance of the epidemic situation, and the inventory removal speed of “gold, silver and four” is much weaker than that in the same period of previous years. However, with the implementation of the steady growth policy and the relaxation of the real estate policy, the improvement expectation of steel consumption is gradually heating up.
Recommended targets: Henan Shenhuo Coal&Power Co.Ltd(000933) , Yunnan Aluminium Co.Ltd(000807) , China Hongqiao, Zijin Mining Group Company Limited(601899) , Jchx Mining Management Co.Ltd(603979) , Ganfeng Lithium Co.Ltd(002460) , Sinomine Resource Group Co.Ltd(002738) , Baoshan Iron & Steel Co.Ltd(600019) , Hunan Valin Steel Co.Ltd(000932) .
Risk tip: repeated outbreaks have led to economic recovery less than expected; The turning point of monetary policy normalization of major foreign central banks is faster than market expectations; Supply increased more than expected.
