Zhongtai Securities: the Federal Reserve sends hawkish signals such as lithium and rare earths rising rapidly

[key words last week]: the sales of electric cars in Europe hit a record high in December; the pricing of the concentrate of Northern rare Earth and Baotou Steel was determined; the spot price of lithium carbonate exceeded 300,000 yuan / ton; the price of praseodymium and neodymium oxide exceeded 900,000 yuan / ton; lithium and rare earth prices deviated further from stock prices.

Market review: 1) in terms of small metals, domestic sales of new energy vehicles reached a new high in October, the penetration rate of new energy passenger vehicles was close to 20%, the industry boom continued to rise, and the upstream cobalt, lithium and rare earth prosperity trends were clear and optimistic: 1 Lithium ore inventory in the industry was low, upstream sales sentiment was obvious, and prices accelerated. Last week, lithium concentrate rose 7.1% month-on-month, and battery-grade lithium carbonate rose 10.3% month-on-month. The price of electric carbon is approaching 300000; 2 the outbreak of the epidemic in South Africa, cobalt prices accelerated upward, last week metal cobalt rose 2.8% Bing 3 rare earths, raw material supply is tight, the Ministry of Industry and Information Technology revealed motor energy efficiency improvement plan, raise rare earth demand expectations, last week praseodymium neodymium oxide quotation rose 6.4%. 2) the new non-farm data in the United States in December were lower than expected, and the ban on Indonesian coal exports intensified market concerns about energy supply shortages. The global epidemic has risen sharply: 1 basic metals, LME aluminum and copper rose 3.9% and-0.8% respectively. The real yield on 2-year US Treasuries closed at 1797.4 US dollars / ounce from-1.06% to 0.72% gold, down 1.71% from the previous month.

The macro "three factors" summarize: the policy direction of domestic steady growth is clear; the PMI of ISM manufacturing industry in the United States fell somewhat in December, and the new non-farm data in December were lower than expected; and the overseas epidemic accelerated.

Basic metals: Indonesia's coal export ban heightens market concerns about energy supply shortages after Fed minutes released hawkish signals, the dollar index rose slightly and the center of gravity of copper prices shifted slightly; in addition, news of Indonesia's coal export ban fermented during the New Year's Day holiday, once again exacerbating market concerns about energy supply shortages and supporting the upward price of base metals. Specifically, LME copper, aluminum, lead, zinc, tin and nickel rose and decreased by-0.8%, 3.9%, 0.2%, 0.1%, 2.6% and 0.3% respectively last week.

1. As for electrolytic copper, as the overhaul of copper smelters at the end of the year is basically coming to an end, and some smelters quickly recover the superimposed catch-up effect from the accident, domestic electrolytic copper output rose 6.6% month-on-month in December, far exceeding market expectations; on the raw material side, it is expected that the tense pattern of crude copper will ease Synchronize as the global supply chain alleviates; at present, the impact of the Winter Olympic Games on northern smelters is limited. Last Wednesday, the stock of electrolytic copper was 78400 tons, and 3300 tons were sent to the warehouse every week.

2. For electrolytic aluminum, on the supply side, domestic electrolytic aluminum production continues to operate at a low level; on the demand side, the Spring Festival is approaching, and downstream consumption is gradually weakening. At the same time, the aggravation of the epidemic situation in Henan and the possible production restriction requirements of the Winter Olympic Games make it possible to further weaken downstream consumption before the Spring Festival.

However, the price of alumina fell, and the profit of electrolytic aluminum rebounded rapidly. the immediate cost of electrolytic aluminum was 16402 yuan / ton, down 0.73% from the previous month, and the profit was 3088 yuan / ton, up 21.24% from the previous month. Last week, the total inventory of aluminum ingots in Badi in China totaled 776000 tons, and 23000 tons went to the warehouse every week.

3. For zinc ingots, overseas, the price of natural gas in Europe has soared again, the shortage of energy has returned to market vision, and the immediate cost of zinc smelters in Europe has gone up, boosting the price of zinc. In terms of zinc in Shanghai, after entering New Year's Day, the inventory did not see a large accumulation, reflecting that the current consumption is better than the market expectation.At the same time, the current Hu Lun ratio continues to decline, the loss on the purchase of imported zinc concentrate by domestic smelters is expanding, and domestic processing fees continue to decline. Last week, zinc ingot stocks totaled 125500 tons, up 5400 tons from the previous week.

Upstream lithium electricity 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 demand boom continues to rise, and the price transmission is smooth: 1) sales in six European countries (Britain, France, Germany, Norway, Sweden and Italy) totaled 203100 vehicles in December, an increase of 12% over the same period last year and 32% month-on-month growth, a record high. 2) the output of cathode materials continued to increase in December. The domestic output of ternary materials was 40200 tons, an increase of 7.39% compared with the previous month, and the output of lithium iron phosphate was 56000 tons, an increase of 11.8% over the previous month. The production schedule of the new energy vehicle industry chain continues to increase.

2. The stock will be ready at the end of the year, and the price of lithium carbonate will accelerate again. 1) on the price side, battery-grade lithium carbonate rose 10.3% compared with last week, battery-grade lithium hydroxide rose 10.1% over last week, and Wuxi electronic disk lithium carbonate futures price reached 39,000 yuan / ton. 2) on the supply side, domestic smelters have entered the period of centralized maintenance at the end of the year, the outbreak of the epidemic in Argentina, supply at home and abroad may be reduced spot, the upstream bullish sentiment is obvious; 3) on the demand side, the current downstream stock situation is not optimistic, it is expected that inquiry orders and procurement demand will continue, lithium carbonate-lithium hydroxide price difference will increase, causticizing demand will increase, lithium hydroxide will continue to rise; 4) Lithium salt inventory, lithium carbonate inventory from 5533 to 5200 tons, a decrease of 6.02% compared with the previous month; lithium hydroxide inventory from 397,391 tons, a decrease of 1.5% from the previous month. 5) domestic lithium resources, Guoxuan plans to produce 50,000 tons of lithium battery-grade lithium carbonate project and 7.5 million tons of lithium ore mining and separation project in Fengxin, Yichun, of which the first phase is to build 20,000 tons of lithium carbonate and 3 million tons of lithium ore mining and separation projects, with an estimated construction period of one year, which does not affect the 22-year supply and demand structure.

3. With the tightening of raw materials, the price of cobalt may go up further. 1) on the price side, the quotations of MB cobalt (standard grade) and MB cobalt (alloy grade) rose 0.7% and 0.7% respectively compared with the previous month, and the domestic tax price of metal cobalt has reached 540,000 yuan / ton. Domestic metal cobalt, cobalt sulfate and cobalt tetroxide rose 2.8%, 1.0% and 2.9% respectively. 2) on the supply side, China's total cobalt raw material imports in November 2021 totaled 8100 metal tons, an increase of 50% from the previous month and a decrease of 10% from the same period last year. The outbreak of the epidemic in South Africa, according to industry chain feedback, the uncertainty of the shipping schedule will continue at least until the first quarter of 2022; 3) there is a shortage of raw materials in smelting enterprises. at present, the prices of domestic and overseas electric cobalt manufacturers are seriously upside down, the discharge production of electric cobalt enterprises is reduced or stopped, traders' inventory remains low, cemented carbide and other manufacturers begin to replenish inventory, and prices continue to rise.

4. Reshape the pattern of rare earth permanent magnet industry. 1) in the spot market, domestic praseodymium and neodymium oxide prices rose 6.4% to 900,000 yuan / ton compared with last week; for medium and heavy rare earths, dysprosium oxide and terbium oxide prices rose 0.3% and 0.9% compared with last week, and the spot circulation in the market is limited, and large manufacturers are more willing to raise prices.

2) inventory, praseodymium and neodymium oxide inventory is flat compared with last week. 3) imports of overseas mines, Myanmar mines resumed at the end of November, with a total import of 1220 tons of REO, in November, of which there was no import of mixed rare earth carbonate ore, which was closed again recently due to the epidemic. 4) the pricing of northern rare earth and Baotou steel concentrate has been determined, and it is proposed that from January 1, 2022, the sales price of rare earth concentrate of both sides will be adjusted to 26887.20 yuan per ton (dry quantity, REO=51%), which is 65% higher than the previous value (16300 yuan). Corresponding to the north rare earth, the cost per ton of praseodymium-neodymium oxide is increased by about 100000 yuan.

In the same period, the price of praseodymium and neodymium oxide has risen from 500,000 yuan / ton to 800,000 yuan / ton, up 60%; the quarterly average price of praseodymium and neodymium oxide has also risen from 500000 / ton of 2021Q2 to 760000 / ton of 2021Q4, an increase of 52%, which is in line with expectations.

Nickel: the supply of raw materials is tight and the price remains strong. 1) SHFE nickel closed at 1511,000 yuan / ton, down 0.34% from the previous month. 2) on the supply side, China-Indonesia Ferro Nickel output in December 2021 was 1080,000 tons, an increase of 0.15% month-on-month. 3) on the demand side, stainless steel factories have recently issued plans to reduce production during the Spring Festival in 2022. In January and February 2022, the production of 300 series stainless steel decreased by 180000 tons and 100000 tons compared with normal production.

Investment advice: maintain the "overweight" rating of the industry

1. Basic metals, China's economic work in 2022 will set the tone of "stable word first", which will provide a certain support for the prices of basic metals, but from the global dimension, 1) the structural changes before, during and after the epidemic of overseas economic demand, and 2) the trend of global liquidity taper remains unchanged, and the downward trend of basic 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, etc., the short-cycle demeanor is still strong, and the general direction of the medium-and long-term three-year upstream cycle will not change, and the industrial boom is the most clear! Keep an eye on it!

Core targets: 1) New Energy vehicle Industry chain: Ganfeng Lithium Industry, Tianqi Lithium Industry, China Mineral Resources, Yongxing Materials, Yahua Group, Huayou Cobalt Industry, Luoyang Molybdenum Industry, Northern rare Earth, Shenghe Resources, Zhenghai Magnetic Materials, Jinli permanent Magnet, Dadixiong, Dingsheng New Materials, Norde shares, Jiayuan Technology and so on.

2) basic metals: Yunnan Aluminum Co., Ltd., Shenhuo Co., Ltd., Tianshan Aluminum Industry, Suotong Development, Zijin Mining, Tongling Nonferrous, etc. 3) Precious metals: Shandong gold, Shengda resources, etc.

Risk hints: macroeconomic fluctuations, import and environmental protection policy risks, gold price fluctuation risks, new energy vehicle sales less than expected risks, supply and demand assumptions less than expected risks, and so on.