Report summary:
The 154 environmental protection and public utility stocks we tracked outperformed the Shanghai index by 1.97 percentage points this week. Year to date outperformed the Shanghai Composite Index by 16.38 percentage points. This week, Xinjiang East Universe (Group) Gas Co.Ltd(603706) , Fujian Mindong Electric Power Limited Company(000993) , Ningbo Energy Group Co.Ltd(600982) rose by 15.71%, 14.73% and 12.16% respectively, showing good performance Bohai Water Industry Co.Ltd(000605) , Sichuan New Energy Power Company Limited(000155) , Jiangsu Akcome Science And Technology Co.Ltd(002610) decreased by 13.25%, 11.80% and 11.31% respectively, showing poor performance.
The impact of the epidemic is still ongoing, and the price of lithium salt continues to fall.
This week, the price of lithium salt in China continued to fall. In this cycle, the downstream auto enterprises began to resume production one after another, but the impact of early shutdown still exists, and the overall demand is still weak. In terms of superimposed supply, it increased month on month compared with March, accelerating the decline of lithium salt price during the week. It is expected that the overall output of new energy vehicles downstream of Q2 will decline month on month compared with Q1 due to the shutdown of the epidemic. However, Tesla said in the recent performance exchange meeting that even if the output of Q2 declines, it will still maintain the annual target. We judge that this is not the problem and challenge faced by a Tesla auto company. The whole new energy industry chain will face this dilemma. It is expected that most auto companies will accelerate production in Q3 and Q4 in order to maintain the annual output target. At that time, the demand for lithium salt is expected to rise rapidly. At the same time, processors using spodumene as raw material are facing the cost pressure brought by the rise of concentrate price. We judge that the price of lithium salt is under pressure in the short term, but with the recovery of demand and the rise of raw material cost, the price may return to a high level.
MT Marion’s 6% concentrate output accounted for only 17% in the first quarter, and the average selling price of Q1 was 1952 US dollars / ton.
On April 22, Mineral Resources announced its production and operation in the first quarter. In 2022q1, it produced 104000 tons (a year-on-year decrease of 4.59% and a month on month increase of 6.12%) and shipped 94000 tons (a year-on-year decrease of 26.56% and a month on month decrease of 31.04%) of spodumene concentrate. Among the output, high-grade concentrate (SC6%) accounted for 17%, high-grade concentrate accounted for 58% in 2021q4, and the proportion of high-grade concentrate decreased significantly. Mtmarion is still expected to reach the production plan guidance of 457000475000 tons in fiscal year 2022. According to this calculation, the planned output of Q2 is 147000172000 tons. The average selling price of mtmarionq1 spodumene concentrate was US $1952 / dry metric ton, up 69% month on month. As for mtwodgina, 22000 tons of 45000 tons of lithium concentrate from the shutdown and overhaul inventory in 2019 were sold at the price of 2200 US dollars / ton in the first quarter. The first batch of new spodumene concentrate of the first production line is expected to be produced in May 2022, and the second production line is expected to produce the first batch of spodumene concentrate in July 2022. The overall expectation is consistent with the schedule announced earlier. Mtwodgina2 has been shut down for maintenance since its completion in 019. Previously, it mainly focused on raw ore production and sales. It is expected that the ramp up of production capacity will take a long period, and the incremental contribution is expected to be in 2023. 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 month on month based on Q2, and the cost of processing plants using spodumene to process lithium salt will continue to rise. Even after the short-term correction under the impact of the epidemic, the lithium salt price will still rise to a high level in the future.
The installed capacity of power generation increased steadily, and the growth rate of renewable energy power generation was rapid.
From January to March, 31.75 million kilowatts of new power generation capacity was added to the national infrastructure, 8.24 million kilowatts more than the same period last year. Among them, hydropower, nuclear power, wind power and Cecep Solar Energy Co.Ltd(000591) power generation were put into operation 2.34 million KW, 10000 kW, 2.65 million KW and 7.88 million KW more than the same period of last year respectively, and thermal power was put into operation 4.79 million KW less than the same period of last year. By the end of March, China’s installed power generation capacity was 2.4 billion kw, a year-on-year increase of 7.8%. Among them, the installed capacity of non fossil energy power generation was 1.14 billion kw, a year-on-year increase of 14.3%, accounting for 47.6% of the total installed capacity, with a year-on-year increase of 2.7 percentage points. In terms of power generation, thermal power generation decreased by 5.7% year-on-year in March and increased by 4.3% from January to February; Hydropower increased by 19.8%, 11.6 percentage points faster than that from January to February; Nuclear power increased by 2.2%, 7.4 percentage points slower than that from January to February; Wind power increased by 23.8% and decreased by 7.6% from January to February Cecep Solar Energy Co.Ltd(000591) power generation increased by 16.8%, 10.3 percentage points faster than that from January to February. In terms of the growth rate of power generation, renewable energy represented by hydropower, wind power and Cecep Solar Energy Co.Ltd(000591) power generation maintained a growth rate of more than 15% in March, maintaining a rapid growth trend, and the power generation of traditional thermal power decreased year-on-year.
China Shipbuilding Industry Group Power Co.Ltd(600482) coal market is generally weak, and short-term downstream demand has weak support for coal price. The China Shipbuilding Industry Group Power Co.Ltd(600482) coal market is weak as a whole this week. In terms of origin, most coal mines in the main production areas have been producing normally recently, China’s coal supply has remained at a high level, the demand of the long-term association of downstream power plants is stable, and there is little pressure on the inventory of coal mines focusing on fulfilling the long-term association. However, coal mines in some areas mainly selling coal in the market delivered more slowly in the first half of this week, and the pit mouth price was reduced to alleviate the inventory pressure; After the price reduction in the early stage, the sales situation of some coal mines in the second half of the period has improved, the inventory has been digested, and the pit mouth price has gradually stabilized as a whole. In terms of downstream demand, China’s downstream coal consumption demand is still weak this week. The temperature rises, the residential power load decreases, the growth rate of industrial power consumption also slows down, and the daily consumption of power plants is at a low level as a whole; There is still insufficient support for the downstream industry due to the lack of coal demand in the downstream industry as a whole.
The average price of LNG in China rose first and then fell, while the price of natural gas in the United States decreased slightly.
This week, China’s average LNG price rose first and then fell. In terms of supply, China’s LNG output decreased slightly month on month. Although the arrival volume of sea and gas has increased, subject to the high price, sea and gas is still dominated by gasification export, and the batch shipment at the terminal continues to decrease; In terms of demand, with the decline of prices in some parts of South and central China, the resistance of North gas to the South increases, and the flow of resources to East and North China increases. At present, the terminal demand is general, mainly purchasing on demand, and the demand of industrial users in some areas still needs to be restored. LNG supply may decrease next week, and demand may not improve. Therefore, Zhuo Chuang information expects the LNG price to decline slightly in the short term. The overall US natural gas market declined slightly in this cycle. In the early stage of the cycle, due to the continuous upgrading of European geographical factors, market practitioners expressed concern about the tight supply of natural gas in Europe. In addition, part of the supply gap of natural gas in Europe also needs to be filled by American natural gas, which is also an important reason for the strength of American natural gas futures market. In the later period of the cycle, the price showed a downward trend due to the gradual warming of the climate in the United States and the weakening of heating demand.
Investment advice
Recently, although the downstream demand is affected by the epidemic, the price of lithium salt has decreased significantly. However, considering that the long-term association price of 2022q2 lithium concentrate has reached $5000 / ton, the tax included cost of lithium carbonate is 320000 yuan / ton.
In the context of tight supply and demand, the price of Q3 lithium concentrate will continue to rise, and the future decline of lithium salt price is limited under the support of high cost. Tesla said at the quarterly report telephone exchange meeting on April 21 that the epidemic has led to the lack of production time for several weeks in the factory in Shanghai. The output of Q2 may be slightly lower than that of Q1, but q3-q4 will increase significantly, and the annual output is expected to reach 1.5 million (worldwide). We believe that this is not just the situation and plan faced by Tesla, a new energy vehicle enterprise, but the common plan and goal of all enterprises in the whole industry. They will rush to complete the annual sales volume in 2022 in q3-q4. Therefore, the weakening downstream demand of Q2 lithium carbonate will be reversed in the second half of the year, and the price of lithium carbonate will rise with a high probability at that time. I suggest you 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.
