Domestic policies continue to depress commodity prices, and market attention shifts to the demand side. Coal prices continue to soar, resulting in a new round of strong policy crackdown, weakening supply-side and cost-side support logic of metal commodities, and the market gives more weight to demand-side logic, so the category with strong demand is less adjusted this round. The commodity price adjustment caused by this round of policy crackdown will accelerate the peak of PPI, and some of the demand suppressed by high prices is expected to be gradually released. In addition, there has been a shift in policy in the real estate industry since October, which is expected to lead to a rebound in demand for metal commodities, so we believe that the current demand for major industrial metals is rigid and the supply side will still be affected by power shortages in the fourth quarter. its prices will remain relatively strong after the correction. Overseas, as US economic data continue to improve and inflation remains high, the dovish attitude of the Federal Reserve has weakened, with shrinking tables approaching and interest rate increases on the agenda, but they are not the main influencing factors for metal commodities. The maximum impact of the expected US interest rate hike on precious metals may have passed, and the subsequent impact will be marginal.
The cost end support of aluminum and copper is weakened, and the demand side may become the main consideration. This week, SHFE aluminum prices fell 12% to 21460 yuan / ton, while Baichuan alumina spot price rose 1.5% to 4095 yuan / ton. The NDRC once again stressed the issue of ensuring coal supply and stabilizing prices, and studied the implementation of intervention measures on coal prices in accordance with the law. The sharp fall in coal prices led to the weakening of the cost support of electrolytic aluminum prices, and aluminum prices fell within the week. At present, electrolytic aluminum is still affected by power cuts, the expected increase of coal consumption in heating season, superimposed energy consumption and double control still have no signs of relaxation, and it is expected that the capacity of electrolytic aluminum still has room to decline. The demand for electrolytic aluminum is still affected by high prices and power cuts, and the situation of power cuts in some areas will be alleviated, and the decline in aluminum prices will also stimulate the replenishment demand of some manufacturers. The elasticity of electrolytic aluminum supply is less than demand, and the fundamentals of aluminum prices are still supported. In terms of alumina, caustic soda prices have declined this week, driven by coal prices, and alumina profit margins have risen to more than 1000 yuan / ton. Considering the structural shortage of alumina and the expected production reduction in the Winter Olympic Games, alumina prices are still expected to continue to rise. SHFE copper, the main force, fell 1.66 per cent to 72390 yuan a tonne after last week's energy crunch led to a contraction in supply and expectations of a sharp rise in copper prices, with policy crackdowns driving the transition to demand-side logic. As a variety with a small increase in the current commodity cycle, the demand for copper is relatively strong, and the downstream processors have a strong ability to receive goods when the price is below 70000 yuan / ton, so the copper price pullback is less in this round. In addition, as a variety with weak logic on the supply side, the release of global supply in 2021 is an important factor in suppressing the height of copper prices; at present, the impact of monetary policy and liquidity environment on prices is passivated, and demand is relatively strong. Copper prices continue to adjust to a relatively limited extent.
The upward trend of lithium prices remains unchanged. This week, Wuxi electronic disk lithium carbonate prices rose 11.22% to 223,000 yuan / ton, Baichuan carbon, electric carbon and lithium hydroxide prices maintained 18.55,19.33,1899,000 yuan / ton, spodumene prices rose 4.29% to $1215 / ton. The rising pace of lithium salt prices slows down, but the trend remains the same, and spodumene prices continue to rise. Pilbara will hold the third round of spodumene auction next week, and the auction price is expected to continue to rise sharply, which is expected to push up the price of lithium salt.
This week, the operating rates of lithium carbonate and lithium hydroxide increased by 0.93%, 2.72% to 55% and 91% respectively, production increased by 0.93%, 2.73% to 4675 and 4154 tons respectively, and inventories continued to be eliminated, falling by 1.94% and 17.19% to 7024 and 159 tons, respectively. On the demand side, sales of new energy vehicles continued to exceed expectations, with global electric vehicle sales hitting a record high of 674500 units in EV-volumes,9 month, up 88 per cent year-on-year and 25 per cent month-on-month. Tesla produced a total of 237800 vehicles in the third quarter, delivered 241300 vehicles, the main models are Model 3 and Model Y, and announced that all standard continued electric models worldwide will use lithium iron phosphate batteries in the future. The situation of lithium iron phosphate is gradually opening up. According to the Battery Alliance, in September 2021, the production of power batteries in China was 23.2 GWH, an increase of 169% over the same period last year. Among them, the output of ternary batteries and lithium iron phosphate batteries were 9.6 and 13.5 GWH respectively, up 103% and 252% respectively over the same period last year. It is expected that the fundamental support of lithium prices in the fourth quarter of this year and 2022 is still strong, with considerable room to rise. It is suggested to focus on undervalued enterprises or enterprises with marginal growth of lithium resources that are rich in lithium reserves and benefit from rising lithium prices.
The rise of rare earths and magnetic materials has accelerated. This week, the price of metal praseodymium and neodymium rose rapidly from 750000 / ton to nearly 800000 / ton, and the price of NdFeB blank rose by an average of 20,000 yuan / ton. The peak consumption season brings, high-end NdFeB price transmission capacity is strong, the sensitivity to the cost side is also relatively low. The price of metal praseodymium and neodymium was at a high of 70-750000 / ton in August-September, restraining the consumption of some middle and low-end NdFeB, and its output declined compared with that of the previous month. However, among the high-end products, the penetration of new energy vehicles is accelerated, and industrial motors are rapidly transformed to NdFeB motors driven by power shortage and energy efficiency, although the overall output of low-and middle-end NdFeB has declined, but the proportion of high-end NdFeB promotes the growth of total demand for rare earths. On the other hand, the supply side of rare earths is moderately improved, and the environmental protection and import constraints that restrict production in the early stage have not been substantially eliminated, so both sides of supply and demand support the upward price of rare earths, and NdFeB follows the rise driven by cost and demand.
Risk factors: lower-than-expected decline in downstream demand, supply-side constraint policy shift, domestic liquidity easing less than expected, metal prices fell sharply, and so on.
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