Investment summary:
The tight supply of raw materials continues to be included in the strong cobalt price in 2021. Supply shortage is the key word of cobalt Market in 2021. The tight supply of cobalt raw materials and low inventory caused by insufficient transportation capacity have become the main driving force of price rise, and the negative impact of the epidemic in South Africa on the timeliness of commodity transportation customs clearance also runs through the whole year. With the increasing concern of Chinese smelters about the supply of raw materials and the continued destocking of cobalt raw materials, the contradiction between supply and demand in the global cobalt market has enlarged, driving the continuous rise of the cobalt price center (the average price rose to 378000 yuan / ton in 2021, up 41.4% compared with 2020; the spot price rose to 491000 yuan / ton at the end of the year, + 76%).
Supply side: the pace of expansion of head mining enterprises is the core focus in 2022. From the perspective of supply growth, we expect the growth rate of global cobalt supply to increase from 2022 to 2023, but the expansion rhythm is orderly. If the supply of recovered cobalt is included, the supply of cobalt is expected to be about 1583 / 18.94 / 216200 tons from 2021 to 2023, with a year-on-year growth rate of + 8.02% / + 19.63% / + 14.14%. It is noteworthy that the situation of tight transportation capacity in South Africa and low raw material inventory may continue in the first quarter of 2022, which may further amplify the fluctuation of cobalt price. We have counted the core projects to be concerned at the mine end and listed them as follows:
(1) Glencore mutanda's resumption of production is the core variable affecting cobalt supply in 2022, and Katanga's output may still have room for improvement. The operation restart of mutanda is planned to be implemented by the end of 2021. When the mine is full, it may form a capacity of 20000 metal tons / year (accounting for about 20% of the global capacity); Katanga has been in the state of capacity climbing since the resumption of production in Q1, 2018and the output may increase to 8000 tons / quarter from Q4, 2021q. It is estimated that Glencore's cobalt metal output from 2021 to 2023 will be 331 / 4.74 / 49400 tons respectively, with a year-on-year increase of + 20.8% / + 43.2% / + 4.2%.
(2) China Molybdenum Co.Ltd(603993) 10K project enters the production period, and TFM mixed ore and kisanfu project contribute long-term increment. TFM's 10K project is expected to increase cobalt production by 45% (to 23000 tons) in recent 1-3 years. In combination with the TFM mixed ore project to be built in the future and the world's largest and highest grade undeveloped copper cobalt project kisanfu, after 2025 China Molybdenum Co.Ltd(603993) or have a cobalt production capacity of about 60000 tons / year.
(3) laterite nickel ore has gradually become a new supply source of cobalt metal that can not be ignored. Many Indonesian laterite nickel mines, such as Zhejiang Huayou Cobalt Co.Ltd(603799) Huayue project (7800 tons of associated cobalt), Gem Co.Ltd(002340) qingmeibang project (4000 tons), Liqin Obi nickel cobalt smelting project (5000 tons), will be gradually put into operation within 1-2 years and contribute to part of the increment of cobalt supply.
Demand side: the field of consumer electronics has increased steadily, and the consumption of power batteries can still maintain a high growth rate. With the gradual return of global economic activities to the right track, the epidemic related to notebook and tablet computers may lead to a slight decline in consumer demand, and the expansion of the market scale of mobile phones and new electronic products will boost the consumption of lithium cobaltate; Meanwhile, emerging 3C consumer electronics such as TWS, e-cigarette and UAV bring more application scenarios and marginal increment to lithium cobalt battery. We estimate that the cobalt demand in the consumer electronics field from 2021 to 2023 will be about 7.4/7.8/81000 tons, a year-on-year increase of + 14.7% / + 4.7% / + 3.9%. In terms of power batteries, although the high nickel trend limits the amount of cobalt used by single units, the installed capacity of ternary batteries continues to increase due to the expansion of the scale of new energy vehicles, and the total cobalt demand still maintains a deterministic expansion. From 2022 to 2023, the cobalt demand in the field of power batteries may reach 45 / 60000 tons, with a year-on-year change of + 56% / + 31%. Based on comprehensive observation, we believe that the total global demand for cobalt may increase to 17.7/201 thousand tons from 2022 to 2023, a year-on-year increase of + 12.1% / 13.5%.
Supply and demand pattern and price judgment: the structural tight balance continues, and the price may fluctuate strongly. After nearly two years of mine end contraction (mutanda shutdown), destocking and demand boost, cobalt metal has entered the current tight balance between supply and demand from the original oversupply. Considering the uncertainty of transportation and production caused by the global epidemic, the current tight balance may continue in 2022; This means that the cobalt price in the context of low inventory in the industrial chain may remain high and volatile (we expect the average price range of electric cobalt to be 350000-400000 yuan / ton). In addition, we should focus on the resumption of production of Glencore mutanda mine and the expansion rhythm of Katanga, as well as the recovery degree of transport capacity in South Africa under the epidemic or the formation of guidelines for price expectations.
Related companies: Zhejiang Huayou Cobalt Co.Ltd(603799) , China Molybdenum Co.Ltd(603993) .
Risk tip: the supply release at the mine end is higher than expected, the production and sales of new energy vehicles are lower than expected, the change of battery technology path leads to the decline of cobalt demand, and the risk of inventory dominance.
