Lithium: the contradiction between supply and demand still exists in the off-season, and we are optimistic about the continuity of the high price of lithium. 1) the sales of Xineng cars exceeded expectations in January, and the demand side was not weak in the off-season: in January, the sales of domestic mainstream electric car companies generally exceeded expectations. BYD / GAC Ean / Xiaopeng achieved sales of 9.3 paces per annum in January, with a year-on-year increase of 362 per cent, 118 per cent and 115 per cent, respectively. The demand side is not light in the off-season, driving battery-grade lithium carbonate up 7.7% to 392,000 yuan / ton in the first week after the Spring Festival, and lithium hydroxide up 9.4% to 3.265 million yuan / ton. 2) in the short term, the contradiction between supply and demand is difficult to solve. On the demand side, the new capacity downstream continues to climb, the procurement demand is strong, and the smooth transmission of lithium prices is expected to continue to rise or continue to be high; on the supply side, the maintenance range of large factories is obvious, and some smelters reduce and stop production due to the influence of the Winter Olympic Games, and the shortage of lithium resources continues. Some smelters have stopped production due to lack of ore, and the price of lithium resources is high and difficult to find, and the shortage of supply is difficult to alleviate. 3) in the medium and long term, the lithium price may be high for a long time, and the lithium industry may be high and continuous or exceed expectations. On the demand side, the new energy vehicle industry chain has entered the era of endogenous growth, and the demand pull has a strong explosive power. On the supply side, high-quality new mines are scarce, and overseas existing mines have also revised production guidelines. Superimposed on the fact that the governments and people of Chile, Mexico, Serbia and other countries are tightening their attitudes towards the development of local lithium resources, in the medium to long term, the increments available for new projects in the next few years may be very limited, and it will be difficult for new lithium supplies to match the demand growth of 100,000 to 250,000 tons of LCE+ per year, and the contradiction between supply and demand in the industry may exist for a long time. Optimistic about the long-term high prosperity of "white oil" lithium resources, the target allocation value of lithium resources with high certainty of performance release and significant marginal improvement is more prominent. Related targets: Rongjie shares, Koda Manufacturing, Shengxin Lithium Energy, Tianqi Lithium Industry, Ya Hua Group, Jiangte Motor, Ganfeng Lithium Industry, Yongxing Materials, Zang GE Holdings, Tianhua Super Clean, China Mineral Resources, Tibet Mining, Tibet City Investment, etc.
Rare earths: rigid demand for post-holiday procurement drives up prices, and tight supply and demand is expected to exist for a long time. 1) in the short term, the rigid demand of post-holiday procurement promotes the tightening of supply and demand. On the demand side, due to the lack of stock in the downstream NdFeB enterprises before the festival, due to the strong demand in areas such as wind power and new energy cars after the festival, the downstream order situation has improved and there is a rigid demand for procurement. On the supply side, the supply tension continues, although the indicators have increased, most of the separated enterprises have normal production during the Spring Festival, but its output is difficult to increase significantly in a short period of time, coupled with the impact of the Winter Olympic Games, some enterprises are underemployed or even stop production. Considering the release of restraint from domestic indicators, overseas production capacity is close to full capacity, and supply is expected to remain tight for the whole of 2022, supporting the high price of rare earths. 2) in the long run, rare earths are at the starting point of a new era of reshaping supply and demand, and the valuation system is reconstructed. At present, the properties of materials in the upstream of rare earth new energy are gradually strengthening, and the logic of high demand for lithium and cobalt in history is expected to be repeated in the future. at the same time, due to the characteristics of strict policy control and high concentration in the industry, the supply end of rare earths is even better than lithium cobalt, and the ability to cross the cycle in the future may be stronger, rare earths have changed from the worst pattern of resource products to the best pattern of resource products, and the valuation system of the rare earth plate is being reconstructed. With the upward movement of the price center of rare earths, relevant companies may continue to cash in high profits and seize the opportunity of revaluation of core asset prices with global pricing power. Related targets: northern rare earths, Minmetals rare earths, Baotou Steel shares, Shenghe Resources, Xiamen Tungsten Industry, etc.
Risk hints: the risk of supply exceeding expectations, the risk of demand falling short of expectations, and the risk of policy change.
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