The start of carbon neutralization cycle will become the core driving factor of future material investment
We believe that “carbon neutralization” and “carbon peak” will become one of the most important tasks for China’s development for a long time in the future. The investment opportunities for new chemical materials in the future mainly come from the continuous mismatch between the continuous growth demand brought by new energy and the limited supply brought by the upgrading of industrial structure. We focus on the links where new energy drives incremental demand and the supply side is limited, Phosphorus chemical industry, fluorine chemical industry, lithium salt, rare earth and other links are recommended.
Phosphorus chemical industry: agrochemical industry is upward and new energy is enabled
Lithium iron phosphate is in short supply because of its outstanding cost performance demand. Phosphorus chemical enterprises have obvious advantages in phosphorus source. The added value of phosphate rock processed into iron phosphate is much higher than that sold and processed into phosphate fertilizer. The massive market calls for a large chemical supply chain. Lithium giants take the initiative to embrace phosphorus chemical enterprises, mainly focusing on their advantages in resources and chemical technology, which can stably provide a large and stable supply of raw materials, and improve the strategic position of phosphorus chemical industry in the lithium industry chain. The new capacity of iron phosphate mainly comes from the capacity replacement of traditional phosphorus chemical industry. We are optimistic about the high added value brought by the new demand. At the same time, due to its resource attribute and the limitation of determining the production by slag, the supply of phosphorus ore is rigid. The incremental demand for new energy is expected to change the supply and demand pattern of phosphorus ore and lead to the revaluation of the value of enterprises with phosphorus ore resources.
Fluorine chemical industry: from big but not strong to high-end
The production quota of the second generation refrigerant continues to decline, and the industry will further switch from the second generation refrigerant to the third generation refrigerant. At present, the capacity expansion of the third generation refrigerant is nearing the end. With the further reduction of overseas third generation refrigerant and the increase of export demand, the long-term supply and demand pattern of the third generation refrigerant is expected to improve.
Fluoride with high added value has become a long-term focus. The expansion of PVDF production is limited by the procedures of environmental impact assessment, safety assessment and energy assessment, and its main raw material R142b continues to be in short supply. Due to its destruction of the ozone layer, the approval of R142b’s new production capacity is extremely strict. At present, the planned new supply capacity is likely to be lower than expected. Considering the continuous strong demand for PVDF and the restrained supply, we believe that PVDF will continue to be in short supply in 2022, It is also expected to maintain a good profitability in the medium and long term.
Lithium salt: in 2022, the supply will still exceed the demand, and the medium and long-term shortage will continue
Under the goal of carbon neutralization, electric vehicles and energy storage have driven the demand for lithium carbonate. In terms of supply, due to the long production cycle of lithium ore, the new supply will return to low growth after being released successively from 2022 to 2023. The compound growth rate of global lithium resource supply from 2021 to 2025 is only 29%. At the same time, due to the epidemic situation and technical bottleneck, the lithium mine may still be put into operation lower than expected. In the long run, the growth rate of global supply is lower than that of demand, and lithium resources will remain in short supply.
Rare earth: an opportunity to pay attention to the reconstruction of rare earth value
The era of low price competition caused by the rampant Black Rare Earth in the past has passed. China’s rare earth mining and separation has become more standardized and transparent under the guidance of policies and regulations, and the value of rare earth will be reconstructed. After the establishment of the six rare earth groups, China Re integrated rare earth enterprises and established China rare earth group, which further improved the supply concentration. There is no expansion plan for the only mines in the United States, Australia and the United States, and the output has reached the upper limit. Affected by the epidemic and political situation in Myanmar, the output of mines has declined in the past two years, and it is difficult to see signs of recovery in the short term. The supply of praseodymium and neodymium oxide is subject to the bottleneck of rare earth output, with a 5-year CAGR of 12.2%. On the demand side, the global demand for Nd-Fe-B for new energy vehicles and wind power installations has increased significantly. At the same time, China pays more attention to the energy efficiency of industrial motors, the penetration rate of permanent magnet motors is expected to increase rapidly and significantly, and the medium and long-term supply and demand pattern of rare earth and magnetic materials is expected to improve.
Industry rating and investment strategy
For the first time, give the “overweight” rating to new chemical materials.
Phosphorus chemical industry: recommend Hubei Xingfa Chemicals Group Co.Ltd(600141) , Yunnan Yuntianhua Co.Ltd(600096) , Guizhou Chanhen Chemical Corporation(002895) , Sichuan Development Lomon Co.Ltd(002312) , Hubei Yihua Chemical Industry Co.Ltd(000422) , pay attention to Shanghai Zhongyida Co.Ltd(600610) , Chengdu Wintrue Holding Co.Ltd(002539) , Xinyangfeng Agricultural Technology Co.Ltd(000902) , etc.
Fluorine chemical industry: it is recommended that Lecron Industrial Development Group Co.Ltd(300343) , Guangdonghectechnologyholdingco.Ltd(600673) , and fluorine chemical enterprises with integrated supply capacity, Zhejiang Juhua Co.Ltd(600160) , and Dongyue Group, which have a rapid progress in the new production capacity of PVDF.
Lithium: the lithium industry has ushered in a double dividend period of profit and market scale growth. It is recommended to pay attention to enterprises that master upstream resources and have sufficient capital and technology to expand production capacity. Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Chengxin Lithium Group Co.Ltd(002240) , Youngy Co.Ltd(002192) , Sichuan Yahua Industrial Group Co.Ltd(002497) , Yongxing Special Materials Technology Co.Ltd(002756) , Qinghai Salt Lake Industry Co.Ltd(000792) are recommended. It is recommended to pay attention to Jiangxi Special Electric Motor Co.Ltd(002176) , Zangger mining, Keda Industrial Group Co.Ltd(600499) , Tibet Mineral Development Co.Ltd(000762) , Tibet Urban Development And Investment Co.Ltd(600773) .
Rare earth: rare earth minerals usher in a bonus period. It is recommended that upstream mining enterprises China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , China Minmetals Rare Earth Co.Ltd(000831) , Shenghe Resources Holding Co.Ltd(600392) , Rising Nonferrous Metals Share Co.Ltd(600259) . The prosperity of the permanent magnet material industry has improved, and each processing link is expected to usher in the overall profit growth. Jl Mag Rare-Earth Co.Ltd(300748) , Yantai Zhenghai Magnetic Material Co.Ltd(300224) , Beijing Zhong Ke San Huan High-Tech Co.Ltd(000970) are recommended. It is recommended to pay attention to Ningbo Yunsheng Co.Ltd(600366) , Earth-Panda Advanced Magnetic Material Co.Ltd(688077) .
Risk tips
The overall progress of carbon neutralization is less than expected; Risk of large fluctuation of upstream raw material price; Downstream demand is lower than expected; The performance of relevant listed companies is lower than expected; Market systemic risk;
