The 154 environmental protection and public utility stocks we tracked lost 0.36 percentage points to the Shanghai index this week and outperformed the Shanghai index by 17.26 percentage points year to date. This week, Nanjing Public Utilities Development Co.Ltd(000421) , Bohai Water Industry Co.Ltd(000605) , Huaneng Lancang River Hydropower Inc(600025) increased by 24.11%, 6.87% and 6.48% respectively, showing good performance Tianjin Motimo Membrane Technology Co.Ltd(300334) , Shenyang Jinshan Energy Co.Ltd(600396) , Jilin Electric Power Co.Ltd(000875) decreased by 9.81%, 9.30% and 9.26% respectively, showing poor performance.
The price of lithium salt in China is basically stable, and the East Asian market is stronger.
On April 7, fastmarkets assessed the price of China’s battery grade lithium carbonate at 495000 yuan / ton, unchanged month on month; The price of lithium / hydrogen oxide battery in China remains unchanged at 49000 yuan / ton. The evaluation price of battery grade lithium carbonate in the East Asian market is 76.5 US dollars / kg, an increase of 5 US dollars / kg month on month; The evaluation price of battery grade lithium hydroxide in the East Asian market was US $80.25/kg, an increase of US $2.7/kg month on month. This week, the price of lithium salt in China was basically stable. Among them, lithium carbonate declined slightly, and the price of lithium hydroxide remained unchanged. We judge that as the temperature rises, the output of lithium carbonate in Qinghai recovers and the supply increases slightly. At present, the price is at a high level, and the downstream procurement maintains rigid demand, which has weak support for the price. In terms of lithium hydroxide, due to the failure of the maintenance capacity to return to the normal level, there is a shortage of spot goods, and the gap between supply and demand is still, supporting the price trend. In the East Asian market, under the condition of tight spot supply and strong demand from end users, the price of marine lithium salt continued to rise. In the future, due to the substantial increase in the price of lithium concentrate in the second quarter, the cost will support the lithium salt price to maintain a high level, especially the lithium hydroxide processing production line with spodumene as raw material. Even if Q2 is in the off-season of downstream procurement, the superimposed upstream supply shows a slight increase month on month, and the price fluctuation is small under the effect of rising costs. To sum up, we expect future prices to remain high and volatile.
The evaluation price of lithium concentrate continues to rise, and min will increase the production of MT wodgina and MT Marion.
On April 7, the evaluation price of fastmarkets lithium concentrate was USD 5750 / ton, which remained unchanged compared with the quotation on March 31. On April 8, Platts energy information estimated that the price of lithium concentrate (SC6) remained at US $5350 / ton (FOB, Australia), an increase of US $350 / ton compared with last week. On April 1, allkem issued an announcement expressing the guidance on the pricing of 2022q2 lithium concentrate. The company said that the strong situation of spodumene market is supporting in-depth discussion on the pricing of Q2 spodumene concentrate of about 5000 US dollars / ton (SC6%, CIF), with a sales volume of about 50000 tons. At present, due to the long development cycle of mines at home and abroad and the slow overall progress, the supply growth rate of lithium concentrate is less than that of demand. We judge that the long-term association price of 2022q3 lithium concentrate will continue to rise sharply month on month. The cost of processing plants using spodumene to process lithium salt continues to rise, and it is difficult to make a correction in the price of lithium salt.
On April 5, min announced that in April 2022, the production capacity of MT Marion will be increased from 450000 T / A to Shanghai Pudong Development Bank Co.Ltd(600000) T / a (grade 4% – 6%), and to 900000 T / a (grade 4% – 6%) at the end of 2022, which is about Shanghai Pudong Development Bank Co.Ltd(600000) t / a after being converted into 6% standard grade. Previously, the company expected to increase the production capacity to Shanghai Pudong Development Bank Co.Ltd(600000) T / a by the end of 2022, indicating that the overall production capacity planning goal of the company has not changed and the production capacity climbing speed has been accelerated. MT Marion’s existing capacity of 450000 tons of lithium concentrate includes 65-70% of 6% grade lithium concentrate and 30-35% of 4% grade lithium concentrate. After being converted into 6% standard grade, the capacity is about 400000 tons of lithium concentrate. After the expansion is completed at the end of the year, that is to increase the capacity of 200000 tons of 6% standard concentrate, corresponding to 25000 tons of LCE capacity. In addition, the company is ready to restart the operation of production line 1. As previously announced, the first batch of spodumene concentrate of the plant is expected to be launched in May 2022, which was previously estimated to be 2022 Q3, which is ahead of schedule. The company will also accelerate the capacity recovery of 250000 T / a of mtwodgina production line 2. The first batch of spodumene concentrate of line 2 is expected to be launched in July 2022. Historically, MT wodgina mainly sold raw ore, and basically stopped production after the completion of three concentrate concentrators. It still needs a long ramp up period from the production of the first batch of concentrate to the real production. We judge that whether Marion increases production or the restart of wodgina production line 2 will not form a major increment in 2022. The specific impact on the supply of lithium concentrate depends on the overall climbing of production capacity in 2023.
Entering the critical period of transformation, the construction of new power system needs to be accelerated.
Yang Kun, Secretary of the CPC Committee and executive vice chairman of the China Power Council, said at the 2022 economic situation and power development analysis and prediction meeting that the “14th five year plan” is a critical period of transformation. Accelerating the construction of new power systems is the top priority of the current power industry. We should steadily promote the transformation of coal power from main power supply to regulated power supply, vigorously promote the clean and green transformation of power source structure, and actively promote the construction of new power systems, Accelerate the construction of a unified national power market system and continuously improve the electrification level of the whole society. Yang Kun said that the “14th five year plan” and some time in the future are the key period of energy and power transformation, and renewable energy will gradually become the main energy for installation. Maintain the rapid development of wind power and Cecep Solar Energy Co.Ltd(000591) power generation, accelerate the construction of a number of eco-friendly large-scale photovoltaic base projects, actively promote the distributed development of wind power and photovoltaic, and actively promote the scale and development of offshore wind power. It is estimated that by 2025 and 2030, the installed capacity of wind power in China will reach 400 million KW and 580 million KW respectively, and the installed capacity of Cecep Solar Energy Co.Ltd(000591) power generation will reach 500 million KW and 780 million KW respectively. In addition, we should take multiple measures to vigorously develop new energy storage on the power supply side, power grid side and user side. Promote the integrated development of source, network, load and storage, support energy storage applications such as electric vehicles, renewable energy and large-scale hydrogen production, strengthen the construction of energy storage standards, improve detection capacity and ensure the safety of energy storage. Accelerating the development of new energy is conducive to optimizing China’s energy structure, making China’s energy transition from fossil fuels to clean energy, constantly expanding the Chinese Shanxi Guoxin Energy Corporation Limited(600617) market and promoting the sustainable development of new energy industry.
The overall power coal market is weak and downward, and the short-term coal price will still be under pressure.
This week, the China Shipbuilding Industry Group Power Co.Ltd(600482) coal market was weak and downward as a whole. In terms of origin, most coal mines in China have maintained normal production recently, and major mainstream mines continue to actively fulfill the long-term association; In some areas, some coal mines mainly selling coal in the market adjusted their production plans due to the increase of sales pressure, and the output decreased slightly. On the demand side, downstream users have a strong wait-and-see mood. In addition to just demand, the pace of procurement has slowed down.
In addition, there are still difficulties in auto shunting in some areas, and the turnover efficiency has not been significantly improved; There is no improvement in the situation of train invitation by fire transportation, and the inventory of some platforms is high. In terms of downstream demand, the demand side’s support for the market weakened this week. The heating season in the North has ended one after another, and the residential power load has dropped. Some power plants have started maintenance in spring, the daily consumption of power plants has decreased, the replenishment of storage is dominated by long-term cooperation, and the coal demand in the procurement market is low; Cement and other non power users have low purchasing enthusiasm due to weak demand. At the same time, the supplementary role of hydropower in some southern provinces has also been strengthened, and the demand for coal consumption of fire and power has also been restrained to a certain extent. We judge that the short-term coal price will still be under pressure.
The average price of LNG in China maintained a narrow adjustment, and the price of natural gas in the United States rose.
In terms of LNG supply in China this week, the output decreased month on month, and the quantity of sea and gas arriving at the port increased slightly month on month; In terms of demand, local traffic restrictions are still obvious, and the cross regional circulation of resources is not smooth. At the same time, with the end of the heating season, the demand for urban fuel decreases, and the industrial demand is still in the recovery stage. In particular, some areas of Hebei are still limited by construction, and the demand for point supply still needs to be improved. LNG supply may decline steadily next week, and demand may continue to run at a low level. Therefore, Zhuo Chuang information expects that the LNG price may fall slightly in the later stage. This week, market panic increased as Russia announced that it would use rubles to settle the export of natural gas to unfriendly countries on April 1. The rising spot price of natural gas in the main producing areas of North America is mainly due to the large increase of natural gas orders in the United States and other places in Europe to prevent the sudden interruption of natural gas supply in Russia, which also promotes the rise of natural gas prices in the North American market.
Investment advice
At present, the Australian mining enterprise Min has increased the production of MT wodgina and MT Marion, but the main incremental contribution will not be in 2022. The specific incremental contribution to 2023 remains to be seen, depending on the capacity climbing of MT wodgina and MT Marion. The long-term association price of 2022q2 lithium concentrate has reached $5000 / ton, and the cost of lithium salt has reached 320000 yuan / ton. In the context of tight supply and demand, we expect the price of Q3 Australian lithium concentrate to rise further, and lithium salt is difficult to callback under the support of high cost.
As early as the beginning of 2021, Pilbara minerals, which sold lithium concentrate overseas, and Galaxy resources, which had not been merged at that time, publicly stated that the upstream resource side was the strongest in this round of shortage, and advocated that the downstream processing of upstream resources should be a profit sharing model of 73%.
In 2021, due to the price rise of lithium carbonate in China one quarter earlier than that of overseas lithium concentrate and the inventory effect of lithium concentrate, the single ton profit of processing plants and integrated enterprises did not show very differentiation. However, in 2022, especially q2-3 in 2022, it is difficult for China to have lithium concentrate inventory to dilute the cost of externally extracted lithium concentrate. At the same time, the long-term agreement price of 2022q2-3 lithium concentrate will rise sharply. In these two quarters, under the condition of high fluctuation of lithium salt price, the profit differentiation per ton of lithium salt processing plants and integrated enterprises will become more and more obvious. It is suggested to pay attention to the enterprises integrating upstream and downstream. It is recommended to pay attention to the mining and beneficiation project of Lijiagou spodumene mine under construction. In the future, [ Sichuan New Energy Power Company Limited(000155) ], which will work with Dagu Dongchuan energy investment to integrate and develop lithium resources in Ganzi and ABA, will benefit from [ Tianqi Lithium Corporation(002466) ], which has been increasing production in the next five years and can achieve large-scale output through OEM, and [ Youngy Co.Ltd(002192) ], which is promoting the 2.5 million T / a lithium ore beneficiation project in yuanyangba, with rich reserves of lithium mica resources, [ Jiangxi Special Electric Motor Co.Ltd(002176) ] is being processed for the exploration and mining of Xikeng lithium mica mine.
In the process of accelerating the transformation of energy structure to green and low-carbon, the installed capacity of new energy is expected to grow rapidly, and new energy operators benefit from the increase of scale, the improvement of operation efficiency and the thickening of performance. We recommend paying attention to the new energy target of thermal power transformation [ Huaneng Power International Inc(600011) ]; At the same time, [ Cecep Solar Energy Co.Ltd(000591) ], [ Cecep Wind-Power Corporation(601016) ], and the Hong Kong stock targets benefiting from the new energy operation include [Longyuan Power], [China Resources Power] and [China power].
Risk tips
1) the implementation of carbon neutralization related policies is less than expected;
2) the demand for power coal and natural gas decreases seasonally;
3) major changes in power policy;
4) the development progress of lithium mine in Sichuan is less than expected.
