Event: according to the Securities Daily, according to the data of the national development and Reform Commission, the national investment increased by 9.3% in the first quarter, an increase of 4.4 percentage points over the whole year of 2021, and positive results were achieved in stabilizing investment. Among them, infrastructure investment increased by 8.5% year-on-year, 0.4 percentage points higher than the previous two months, showing a monthly upward trend.
In the first quarter, the number of new projects started across the country increased by 12000 compared with the same period last year, and the planned total investment of new projects increased by 54.9%. China's new and old infrastructure investment continued to make efforts, and a number of major projects were started in many places.
Comments:
Since this year, China has moderately advanced infrastructure investment to provide strong support for steady growth and boost the demand for industrial metals. In the second quarter, the steady investment policy continued to work, and a number of major new and old infrastructure projects accelerated. According to the Securities Daily, from April 1 to April 26, 7911 major projects were started in Anhui, Hunan, Sichuan, Hebei, Jiangxi and Shandong, with a total investment of 3418.3 billion yuan.
Major projects under centralized construction include not only traditional basic investment, but also livelihood projects such as public services and ecological environmental protection, as well as industrial upgrading projects to promote high-quality industrial development. On April 26, Xi Jinping presided over the 11th meeting of the central financial and Economic Commission to study the issue of comprehensively strengthening infrastructure construction. The central government's statement will comprehensively strengthen infrastructure construction, rise to a higher strategic level, jointly promote new and old infrastructure projects, promote steady growth through steady investment, or boost the demand for industrial metals.
The development of new infrastructure has brought a pull to the industrial metal demand represented by aluminum. According to CISC, the dependence of new infrastructure projects on industrial metals is significantly higher than that of traditional infrastructure projects. For example, in terms of intercity high-speed railway and urban rail transit, due to the characteristics of low density and good mechanical efficiency of aluminum alloy, aluminum alloy materials are widely used in the construction of China's high-speed railway, subway train carriage and rail electric vehicle body. In terms of UHV power grid, the transmission cable mainly adopts steel cored aluminum strand (aluminum content is about 67%), copper will be used in the construction of substation and some electrical equipment, and the transmission tower and its supporting line fittings are mostly made of galvanized anti-corrosion coating. Aluminum, copper and other metals are also widely used in 5g infrastructure and the construction of charging piles for new energy vehicles. In addition, the rapid development of new infrastructure is expected to drive the reform and upgrading of other related industries. For example, the charging pile industry of new energy vehicles can drive the development of the whole new energy industry chain, in which the manufacturing process of new energy vehicle body and new energy battery will generate demand for electrolytic aluminum and aluminum products.
The strong demand in the downstream promotes the continuous decline of electrolytic aluminum, and is optimistic that the profit of electrolytic aluminum will remain high. According to SMM statistics, China's social inventory of electrolytic aluminum was 987000 tons on April 28, down 34000 tons from last Thursday. A year-on-year decrease of 128000 tons, a year-on-year decrease of 11%. The recovery of downstream industrial enterprises' production continued to boost aluminum demand. In addition, the national policy of steady growth and strong infrastructure has played a significant positive role in the development of electrolytic aluminum sector. The production and construction of a number of new infrastructure projects in 5g, new energy vehicles, UHV, photovoltaic, wind power and other fields will significantly drive the demand for aluminum. The import window continues to close, and the superimposed demand accelerates the recovery. It is expected that the electrolytic aluminum inventory will remain low, which will effectively support the aluminum price, and the electrolytic aluminum profit will remain high.
Event: the fourth auction of PLS lithium concentrate: the price continued to reach a new high.
According to the announcement of PLS, the fourth auction of PLS lithium concentrate was completed today. The final transaction price was US $5650 / ton (FOB, 5.5% lithium oxide grade). The auction quantity was 5000 tons, which was shipped in June 2022.
The auction price corresponds to the tax cost of a single ton of lithium salt of about 404000 yuan / ton.
Comments:
Resumption of four Auctions:
First time: price 1250 USD / ton (FOB), quantity 10000 tons, grade 5.5% (Pilbara inventory)
The second time: the price is US $2240 / ton (FOB), an increase of 79.2% compared with the previous auction. The quantity is 8000 tons and the grade is 5.5% (Pilbara inventory)
The third time: the price is US $2350 / ton (FOB), an increase of 5% compared with the previous auction, the quantity is 10000 tons and the grade is 5.5% (Altura)
The fourth time: the price is US $5650 / ton (FOB), an increase of 140.4% compared with the previous auction. The quantity is 5000 tons and the grade is 5.5% (Altura)
About the auction price:
The auction price was longer than Q1, and the single price jumped, mainly because the price of lithium salt increased significantly in the first quarter and the ore price lagged behind; In addition, as the auction products were shipped in June this year, there is strong expected support for the high forward lithium price. There are many participants in this auction. On the one hand, due to the shortage of ore resources, some enterprises participate in the auction to maintain production; On the other hand, the market is still optimistic about the long-term demand performance.
Prices have gradually bottomed out and marginal expectations have improved.
1. The lithium salt cost corresponding to the lithium concentrate auction is 404000 yuan / ton, which gives strong support to the price; 2. After the periodic correction of lithium price, it provides logical support for strong repair of subsequent demand.
We believe that China's lithium resource development or acceleration, and enterprises deeply involved in China's resource development or integrated layout may have long-term competitive advantages.
1. The price of lithium ore continues to rise, continues to increase the cost pressure of the industrial chain, and the profit distribution is transferred to the upstream; 2. At present, lithium resources are facing certain geopolitical risks. Countries actively promote the nationalization bill, and the supply uncertainty increases;
3. There is still room for development of China's resources. According to USGS, China's lithium resources account for about 6% of the world. From the perspective of lithium resource distribution, according to GGII, more than 80% of China's lithium resources are stored in salt lakes and distributed in Qinghai, Tibet and other provinces; Lithium ore resources are concentrated in Sichuan, Jiangxi, Hunan, Xinjiang and other provinces; Clay resources are enriched in Yunnan, Guizhou and other provinces.
Risk warning: downstream demand is less than expected; Lithium resource projects were put into operation beyond expectations.
