The central economic conference set the tone for steady growth, the central bank comprehensively lowered the reserve requirement, and the prosperity of the non-ferrous metal industry rebounded. China’s economic momentum continued to improve. In November, the year-on-year growth rate of industrial added value reached 3.80%. In December, the PMI index rebounded to 50.30, and has returned to the withered and prosperous line for two consecutive months. China’s central economic conference set the policy guidelines for steady growth next year, appropriately leading infrastructure investment, relaxing real estate policy and carbon peak carbon neutralization to prevent one size fits all power and production restrictions, which is conducive to the marginal recovery of non-ferrous metal demand. In addition, on December 6, the Central Bank of China comprehensively reduced the reserve requirement by 0.5 percentage points, which supported the price of non-ferrous metals in terms of liquidity. Although the Federal Reserve’s interest rate meeting in December determined that the taper process was accelerated and there may be three interest rate increases in 2022, Federal Reserve Chairman Powell also stated that the Federal Reserve’s interest rate increase process would carefully consider the economic situation, and released dove information under hawk expectations, raising the risk of the market. With many positive blessings, the prosperity of the non-ferrous metal industry rebounded.
Investment suggestion: the new energy vehicle industry chain is booming, the demand for ternary materials, lithium iron phosphate and other downstream products is strong, the downstream manufacturers are active in asking for orders, and the manufacturers will stock up for the Spring Festival at the end of the year, and enlarge the demand for lithium salt in the short term. On the supply side, there is a continuous shortage of lithium concentrate in Australia. After China’s salt lake lithium extraction entered the winter, the output declined. The shutdown and maintenance of large lithium salt plants in Jiangxi, Sichuan and other places at the end of the year will also aggravate the tight supply of lithium salt in China. In December, the price of battery grade lithium carbonate in China increased from 207900 yuan / ton at the beginning of the month to 282400 yuan / ton at the end of the month. However, the effective supply increment of global lithium resources is still small in 2022. Driven by the significant release of new energy vehicles and new production capacity of cathode materials, the shortage pattern of lithium resources will continue. It is expected that the supply gap of lithium industry will expand to 47000 tons of LCE in 2022, and the lithium price is expected to remain high, accompanied by intermittent disturbance of supply and seasonal expansion of consumption, There is a possibility of further explosive height. It is recommended to pay attention to Ganfeng Lithium Co.Ltd(002460) (002460), Tianqi Lithium Corporation(002466) (002466), Chengxin Lithium Group Co.Ltd(002240) (002240), Yongxing Special Materials Technology Co.Ltd(002756) (002756), Qinghai Salt Lake Industry Co.Ltd(000792) (000792), Tibet Mineral Development Co.Ltd(000762) (000762), Keda Industrial Group Co.Ltd(600499) (600499), Sinomine Resource Group Co.Ltd(002738) (002738). The State Council established China rare earth group to integrate and restructure the rare earth resources under Chinalco, Minmetals and Ganzhou rare earth. The new round of integration of the rare earth industry shows that the state attaches great importance to the rare earth industry, which will improve the concentration of China’s rare earth industry and its control over rare earth prices, so that rare earths can reflect their real value. Under the dual carbon cycle, the rapid development of new energy industry drives the incremental release of rare earth demand, and the supply and demand pattern is improving. The rare earth industry may enter a continuous supply shortage pattern, promote the stable upward price, drive the performance release of rare earth stocks and reshape the value. Under the continuous tension of supply and demand in the industry, the price of Rare Earth continues to rise steadily to drive the performance of rare earth companies, while carbon neutralization era new energy opens a broad growth space for rare earth. In line with China’s policies, building the rare earth industry into China’s resource trump card is conducive to the improvement of the valuation of rare earth stocks. The rare earth industry is expected to usher in the double growth of performance + valuation. It is suggested to pay attention to China Minmetals Rare Earth Co.Ltd(000831) (000831) China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) （ 600111）、 Inner Mongolia Baotou Steel Union Co.Ltd(600010) （ 600010）、 Rising Nonferrous Metals Share Co.Ltd(600259) （ 600259）、 Shenghe Resources Holding Co.Ltd(600392) （ 600392）。
Risk improvement: 1) the contraction progress of the Fed’s monetary policy exceeded expectations; 2) Omicron mutant virus worsened the global covid-19 epidemic beyond expectations; 3) The production and sales of new energy vehicles are lower than expected; 4) The downstream demand of nonferrous metals is lower than expected; 5) Non ferrous metal prices fell sharply.
