21Q4 Nonferrous position reduction is still optimistic about Copper, Aluminum, Cobalt and Lithium opportunities [Agency Review]

2021Q4 non-ferrous stocks as a whole continued to rise, SW non-ferrous quarterly increase of 7.12%, led by the magnetic materials industry. The quarterly average price of 2021Q4 metal remained high as a whole, with Q4SHEF copper and aluminum averaging 70500 yuan / ton and 20200 yuan / ton respectively, with year-on-year changes of + 1.5% and-2.0% respectively. Copper, Taper landed, inventory low, copper prices maintain high; aluminum, cost-side changes, Q4 prices rose after the shock; rare earth magnetic materials by policy incentives to lead the plate; new energy and other industrial chain-related metal plates strengthened. 2021Q4 single-quarter SW non-ferrous growth ranked 17th in Shenwan industry.

The proportion of 2021Q4 funds held in non-ferrous industries fell 0.48pct to 3.65 per cent from the previous month. The rise in energy prices in the fourth quarter of 2021 pushed the metal cost side up, and then the state intervention and regulation, the cost end plummeted, the support was no longer supported, driving industrial metal prices to rise and fall, the related target fell sharply, and the positions of public funds declined. In terms of energy metals, the prices of lithium carbonate and rare earths continued to rise, but stocks did not rise much, mainly because of divergent market views, weaker consensus expectations and more positions reduction. Fund position Q4 decreased slightly compared with the previous month.

Investment advice: be optimistic about the opportunities of copper, aluminum, cobalt and lithium.

1) Industrial metals: steady growth boosts traditional demand, and double carbon changes the supply curve. Supply side: in the context of carbon-neutral carbon peak, policy restrictions and energy prices raise the production cost of energy-consuming metals, forcing the industry to clear out, and the supply end of some varieties is getting steeper and steeper. Demand side: the meeting of the political Bureau of the CPC Central Committee set the main tone of economic work in 2022 as steady growth. Under the guidance of policies, the pessimistic expectation of the decline in the traditional demand side will be reversed. Under the premise of steady growth in demand in traditional areas of industrial metals, the new energy industry corresponding to superimposed carbon neutralization develops rapidly, boosting demand in new areas of industrial metals downstream. The supply and demand curve will be different from the previous cycle, and commodity prices are easy to rise and difficult to fall. It is suggested that we should focus on Zijin Mining, Luoyang Molybdenum, Shenhuo, Nanshan Aluminum, Tianshan Aluminum and Aluminum of China.

2) New energy metals: the global electrification process is accelerated, the resource premium capacity is enhanced, and the supply and demand structure is tight for a long time. Lithium: profits of the industrial chain are quickly transferred to the upper reaches, and prices are expected to remain high. From the point of view of the mine end, the concentration of ore and salt lake production capacity is high and the spot supply to the market is limited, and the supply of lithium concentrate is tight. The auction price of lithium concentrate has reached record highs one after another, and the profits of the industrial chain have been quickly transferred to the upper reaches. Cobalt: facing the pressure of increasing supply in the short term, the price fluctuates in a steady state for a long time. In the future, with the expansion of the power demand base in the supply and demand structure of cobalt products, the demand for new energy of consumer electronics will improve for a long time, which will support the price of cobalt products to a certain extent. It is suggested to focus on Huayou Cobalt Industry, Salt Lake shares, Tianqi Lithium Industry and Yongxing Materials.

Risk tip: metal prices fell sharply, terminal demand was lower than expected, and global deflation expectations intensified.