Looking back to 2021: the overall performance of the industrial metal sector is bright, and the core factors are the dual control of energy consumption and the continuous higher than expected volume of new energy vehicles. In the first half of the year, driven by the recovery of demand, the shock of base metals was strong. In the second half of the year, with the promotion of the policies of double control of energy consumption and power and production restriction, the price of metal with greater impact on the supply side continued to reach a new high. SW nonferrous metals industry index rose as high as 73.24%, ranking first among 28 SW sectors.
Looking forward to 2022: the steady growth policy will boost demand, the supply curve is still steep, and the metal price is expected to run at a high level. In the context of low inventory, the core of cyclical fluctuation is the change of supply and demand. We believe that this round of commodity price rise has strong sustainability, mainly due to the limited ability of supply side adjustment, while the demand side is driven by emerging fields, superimposed with steady growth policies to boost demand in traditional fields, and pay attention to the change of demand side in 2022.
Supply side: under the background of carbon neutralization and carbon peaking, policy restrictions and rising energy prices have forced the industry to clear up, and the supply side of some varieties has become more and more steep. In addition, the long-term capital expenditure of copper and other industrial metals has declined in the past, and there are restrictions on new supply in the future, At the same time, the project delay caused by short-term epidemic and power and production restriction and other risk factors such as strikes make the supply repair uncertain, the supply curve is steep and the supply elasticity is greatly weakened.
Demand side: the meeting of the Political Bureau of the CPC Central Committee determined that the main tone of economic work in 2022 was stable growth. Under the guidance of the policy, the previous pessimistic expectation of the decline of the traditional demand side will be reversed. On the premise of the stable growth of the demand in the traditional fields of industrial metals, the rapid development of the corresponding new energy industry superimposed with carbon and boosted the demand in the emerging fields of downstream industrial metals. The supply-demand curve will be different from the previous cycle, and commodity prices are easy to rise but difficult to fall.
Investment suggestion: we suggest holding copper, aluminum and other industrial metals with weak elasticity on the supply side and expected recovery on the demand side. It is suggested to focus on: copper sector: Zijin Mining Group Company Limited(601899) , China Molybdenum Co.Ltd(603993) , Western Mining Co.Ltd(601168) , Tongling Nonferrous Metals Group Co.Ltd(000630) , Jiangxi Copper Company Limited(600362) , Zhejiang Hailiang Co.Ltd(002203) , Anhui Truchum Advanced Materials And Technology Co.Ltd(002171) ; Aluminum sector: Shandong Nanshan Aluminium Co.Ltd(600219) , Henan Mingtai Al.Industrial Co.Ltd(601677) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Tianshan Aluminum Group Co.Ltd(002532) , Aluminum Corporation Of China Limited(601600) , Sunstone Development Co.Ltd(603612) , Ye Chiu Metal Recycling (China) Ltd(601388) , Chongqing Shunbo Aluminum Co.Ltd(002996) .
Risk tip: metal prices fell sharply; The terminal demand is less than expected; Global deflation is expected to intensify; The company’s project is not progressing as expected.
