[Key words this week]: the epidemic in South America intensified and the expansion of Salt Lake continued to be postponed; Argentina, Bolivia and Chile plan to establish an organization of lithium producing countries, and the lithium ore “OPEC” is ready to come out; In the first quarter of cattlin, the long-term single price of lithium concentrate reached US $2500 / ton; The output of praseodymium and neodymium oxide in Lynas increased by 8% month on month in the fourth quarter.
Market review: 1) in terms of small metals, the sales volume of new energy vehicles in China reached a new high in October, and the penetration rate of new energy passenger vehicles was close to 20%. The prosperity of the industry continued to rise. The prosperity trend of cobalt, lithium and rare earth in the upstream of new energy vehicles was clear and continued to be optimistic: ① the inventory of lithium ore in the industry was low, the reluctance to sell in the upstream was obvious, the price accelerated, and the lithium concentrate rose by 10.0% month on month this week, Battery grade lithium carbonate increased by 10.1% month on month, and the price of electric carbon has exceeded 350000; ② With the outbreak of the epidemic in South Africa, cobalt prices accelerated upward, and metal cobalt rose by 0.6% this week; ③ In terms of rare earths, the shortage of raw materials continued, and downstream enterprises increased their demand for goods at the end of the year. The quotation of praseodymium and neodymium oxide rose by 2.5% this week. 2) Supported by the expectation of China’s further easing policy, the price of base metals increased; The sharp rise in global stock market volatility, the spread of panic in financial markets and the rise in oil prices have increased the attractiveness of safe haven assets: ① base metals, LME, aluminum and copper increased by 1.2% and 2.1% respectively; ② The real yield of 10-year US bonds rose from – 0.66% → – 0.59%, and Comex gold closed at US $1831.8/oz, up 0.84% month on month. 3) A shares fell overall this week. Shenwan nonferrous metals index closed at 5377.22 points, down 2.82% month on month, outperforming the Shanghai Composite Index by 2.86 percentage points. Gold, industrial metals, rare metals and new metal and non-metallic materials rose or fell by 0.83%, 0.18%, – 4.94% and – 7.50% respectively.
Macro “three factors” summary: the policy direction of China’s steady growth is clear, and the central bank has cut the policy interest rate for the first time in recent two years; In the United States, the number of years of quarterly adjustment for the commencement of new housing and private housing in December has picked up, and the epidemic has cooled down; CPI in the euro area rebounded year-on-year in December, with the epidemic warming up; Specifically: 1) China’s GDP in the fourth quarter fell year-on-year, and the industrial added value rebounded year-on-year in the same month. China’s GDP in the fourth quarter was 4.0% year-on-year (the previous value was 4.9%, expected to be 3.74%), and the annual GDP in 2021 increased by 8.1% over the previous year, with an average growth of 5.1% in two years; In December, China’s industrial added value was 4.3% year-on-year (the previous value was 3.8%, and the expected value was 3.68%); In December, the total investment in fixed assets was 4.9% year-on-year (the previous value was 5.2% and the expected value was 5.0%), of which the manufacturing industry was 13.5% year-on-year (the previous value was 13.7%); The total retail sales of social consumer goods in December was 1.7% year-on-year (the previous value was 3.9%, expected to be 3.79%). 2) In the United States, the number of new private houses started in December has picked up. In the United States, 120300 new private houses were started in December (the previous value was 128900), and the number of new private houses started in December was adjusted by 1702000 (the previous value was 1678000, and it is expected to be 1.66 million); The total number of construction permits in the United States in December was 1.873 million (the former value was 1.717 million, and the expected number was 1.701 million), with a month on month ratio of 9.4% (the former value was 3.9%); The number of initial claims for unemployment benefits disclosed this week was 286000, up 55000 month on month. 3) CPI in the euro area rebounded year-on-year in December, and the epidemic warmed up. In January, the ZEW Economic Prosperity Index in the euro area was 49.4 (the previous value was 26.8, expected to be 29.2); In December, the EU CPI was 5.3% year-on-year (the previous value was 5.2%); In December, the CPI of the euro area was 0.4% (the previous value was 0.4%, the expected value was 0.4%), 5.0% (the previous value was 4.9%, the expected value was 5.0%), the core CPI was 0.4% (the previous value was 0.0%), and the core CPI was 2.6% (the previous value was 2.6%) year-on-year; This week, the United Kingdom, Germany and France added 569532.0 cases of covid-19 on a daily basis, an increase of 88196.8 cases on a month on week basis, and the epidemic is heating up. 4) The rhythms of various economies are different, but the decline direction of the global overall prosperity remains unchanged. In December, the global PMI was 54.3, up 0.50.
Base metals: China’s further easing policy is expected to heat up, the price of base metals has increased, the international oil price has reached a seven-year high under the fear of oil and gas supply interruption in Europe, the prices of tin and aluminum have also risen strongly stimulated by demand and production restriction, and the prices of other base metals have followed suit; The Central Bank of China lowered the policy interest rate for the first time in nearly two years. Supported by the expectation of further easing policy in China, the price of base metals rose. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose or fell by 2.1%, 1.2%, – 0.8%, 3.2%, 7.2% and 8.7% respectively this week, and the price rose as a whole.
1. For electrolytic copper, without too many opportunities for import price comparison within a week, some sources of goods are piled up in the bonded warehouse, and China’s bonded zone has accumulated the warehouse continuously; Before the Spring Festival, the overall market consumption is not optimistic, the demand is low, and the transaction in the foreign trade market is light. On Wednesday, the social inventory of electrolytic copper was 84000 tons, and the weekly cumulative inventory was 0600 tons.
2. For the electrolytic aluminum supply side, this week, some electrolytic aluminum in Yunnan, Qinghai and other places resumed production slightly, and the overall supply in China increased slowly; On the demand side, downstream processing enterprises have holidays one after another, and the demand is low. Affected by the rising price of power coal this week, the immediate cost of electrolytic aluminum was 17836 yuan / ton, up 4.27% month on month, and the profit per ton of aluminum was 2326 yuan, down 13.59% month on month. This week, China’s eight aluminum ingot inventories totaled 726000 tons, and the weekly cumulative inventory was 2000 tons.
3. For zinc ingots, overseas geopolitical issues have not been solved, and there is no further news whether Beixi No. 2 is approved or not. This week, the European electricity price also continues to fluctuate, and the short-term electricity price logic will not end; In terms of Shanghai zinc, the downstream has successively entered the holiday shutdown period before the festival. At the same time, due to the upward breakthrough of zinc price of 25000 yuan / ton this week, the willingness of downstream enterprises to purchase has been significantly weakened, the pre Festival reserve warehouse has officially entered the end, and the inventory has increased month on month this week. This week, the total inventory of zinc ingots in seven places was 133600 tons, and the weekly cumulative inventory was 10500 tons.
Upstream lithium battery raw materials: the prosperity of the global new energy industry continues to rise, the electric vehicle market in China, the United States and Europe resonates, and the upward trend of upstream raw material prices continues to strengthen:
1. The prosperity of demand continues to rise, and the price transmission is smooth: the production and sales of new energy vehicles in China have exceeded 3.5 million in 21 years, with a year-on-year increase of 1.6 times, and the market penetration rate is 13.4%, including 500000 in a single month in December. The passenger Association predicts that the sales of new energy vehicles in 2021 is expected to exceed 6 million, with a penetration rate of about 22%.
2. Lithium carbonate prices accelerated upward again.
1) On the price side, the price of battery grade lithium carbonate increased by 10.1% over last week, the price of battery grade lithium hydroxide increased by 10.6% over last week, and the price of spodumene increased by 10% over last week. MT cattlin mine expects the long-term single price of 22q1 lithium concentrate to reach 2500 us dollars / ton. 2) On the supply side, Chinese smelters have entered the period of centralized maintenance at the end of the year. The epidemic broke out in Chile and Argentina. The supply at home and abroad may be reduced in stock, and the bullish sentiment in the upstream is obvious; 3) Lithium salt inventory: lithium carbonate inventory decreased by 1.67% month on month from 5081 to 4996 tons; Lithium hydroxide inventory decreased by 1.35% month on month from 371 to 366 tons. 4) In terms of overseas lithium resources, the epidemic broke out in Chile and Argentina, the expansion of overseas resources continued to be delayed, the production time of SAL de Vida salt lake was postponed from the second half of 22 years to 23 years, and the delayed production of projects under construction or became a common phenomenon in the industry; In addition, according to the Latin American media Rio times, Argentina, Bolivia and Chile are discussing the establishment of an organization of lithium producing countries, and the lithium mine “OPEC” is ready to come out.
3. With the tightening of raw materials, the price of cobalt may rise further. 1) On the price side, the quotations of MB cobalt (standard grade) and MB cobalt (alloy grade) increased by 0.4% and 0.4% month on month respectively, while China’s metal cobalt and cobalt sulfate increased by 0.6% and 0.5% respectively. 2) On the supply side, in December 2021, China’s total import of cobalt raw materials was 8735 metal tons, with a month on month increase of 3.96% and a year-on-year decrease of 10%; In 2021, China’s total import of cobalt raw materials was 91100 tons of metal tons, with a year-on-year increase of 2.79%. According to the feedback of the industrial chain, the uncertainty of shipping schedule will continue until at least the first quarter of 2022.
4. Rare earth: the shortage of raw materials continued, and the demand of downstream enterprises for goods preparation at the end of the year increased. The quotation of praseodymium and neodymium oxide increased slightly by 2.5% this week. 1) In the spot market, the quotation of praseodymium and neodymium oxide in China increased by 2.5% to 928000 yuan / ton compared with last week; In terms of medium and heavy rare earths, the prices of dysprosium oxide and terbium oxide increased by 0.3% and 1.6% compared with last week. 2) Myanmar mines imported a total of 5093 tons of REO in December, with a significant increase month on month, which is mainly due to the resumption of import of Myanmar mines in mid and late November and the centralized Customs clearance of the backlog of rare earth ore stocks in the early stage. Due to the epidemic situation, the import of Myanmar mines has been closed again; 3) Us mines imported 4173 tons (about 2504 tons of REO) in December, down 69% month on month, mainly due to the impact of customs clearance cycle; 4) In terms of inventory, the inventory of praseodymium and neodymium oxide decreased from 2490 to 2458 tons, down 1.29% month on month.
5. Nickel: the price has reached a new high in recent 10 years. 1) Nickel prices continued to set a new high in recent 10 years, and SHFE nickel closed at 176700 yuan / ton, up 7.73% month on month. 2) On the supply side, Indonesia plans to levy a tax on ferronickel. The government may begin to levy a tax on the export of ferronickel and nickel pig iron in 2022. If the nickel price is more than 15000 US dollars / ton, a tax of 2% may be levied, and the tax will increase with the increase of nickel price. Previously, the Indonesian government has repeatedly expressed the idea of levying a tax. Myanmar dagongshan nickel smelting project power plant was bombed and suspended production, with an annual production capacity of 85000 tons of FeNi.
Investment suggestion: maintain the “overweight” rating of the industry
1. Base metals: China’s economic work in 2022 will be “stable”, which will support the price of base metals to some extent. However, from the global dimension, 1) changes in the structure of overseas economic demand before, during and after the epidemic, and 2) the global liquidity taper trend remains unchanged, and the downward trend of base metals may not have been fundamentally changed.
2. The upstream raw materials of new energy, such as lithium cobalt rare earth copper foil, aluminum foil and magnetic materials, are still strong in the short cycle, and the general direction of the medium and long-term three-year boom upward cycle will not change. The industrial boom is the most clear and firmly optimistic.
Core target: 1) new energy vehicle industry chain: Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Sinomine Resource Group Co.Ltd(002738) , Yongxing Special Materials Technology Co.Ltd(002756) , Sichuan Yahua Industrial Group Co.Ltd(002497) , Zhejiang Huayou Cobalt Co.Ltd(603799) , China Molybdenum Co.Ltd(603993) , China Northern Rare Earth (Group) High-Tech Co.Ltd(600111) , Shenghe Resources Holding Co.Ltd(600392) , Yantai Zhenghai Magnetic Material Co.Ltd(300224) , Jl Mag Rare-Earth Co.Ltd(300748) , Earth-Panda Advanced Magnetic Material Co.Ltd(688077) , Jiangsu Dingsheng New Material Joint-Stock Co.Ltd(603876) , Nuode Investment Co.Ltd(600110) , Guangdong Jiayuan Technology Co.Ltd(688388) etc. 2) Base metal: Yunnan Aluminium Co.Ltd(000807) , Henan Shenhuo Coal&Power Co.Ltd(000933) , Tianshan Aluminum Group Co.Ltd(002532) , Sunstone Development Co.Ltd(603612) , Zijin Mining Group Company Limited(601899) , Tongling Nonferrous Metals Group Co.Ltd(000630) etc. 3) Precious metals: Shandong Gold Mining Co.Ltd(600547) , Shengda Resources Co.Ltd(000603) etc.
Risk tips: macroeconomic fluctuation, import and environmental protection policy risk, gold price fluctuation risk, lower than expected risk of new energy vehicle sales, lower than expected risk of premise assumption of supply and demand calculation, etc.
