With the slow recovery of domestic metal demand, novel coronavirus's new variation may disturb the tightening pace of the Federal Reserve. Since late November, real estate sales and financing have improved, the pace of work has also accelerated at the end of the year, and metal demand continues to recover, becoming the most important support for current metal prices. However, the overall pessimism of the industrial chain is still there, the peak season is coming to an end, the pace of replenishment of processing and downstream demand links is still relatively slow, and the overall price upward space is limited. Cinda Securities believes that with the gradual landing of the policy of marginal improvement in real estate at the end of the year, the previously suppressed demand is expected to continue to be released.
Demand rebounded, aluminum prices are still supported by fundamentals, copper supply and demand remains relatively weak. At present, the fundamentals of aluminum prices are strong, but SHFE aluminum prices fell 2.9 per cent to 18650 yuan / ton over the weekend due to concerns in the capital markets caused by the new strain. According to wind data, the national aluminum bar inventory continued to decline, falling 18% to 88000 tons, electrolytic aluminum social inventory decreased by 21000 tons. In terms of fundamentals, the current electrolytic aluminum supply side is subject to policy and cost-side pressure to resume production and the progress of production is slow, and the demand level will continue to support aluminum prices along with the relaxation of the downstream power restriction policy and the increase in replenishment willingness brought about by the fall in aluminum prices. SHFE copper rose 0.56 per cent to 70560 yuan per ton this week, but Friday night trading fell 2.4 per cent to 69360 yuan per ton under the influence of a new variety of novel coronavirus. At present, copper maintains a pattern of weak supply and demand, with overseas demand stronger than domestic demand; the bottom margin of domestic real estate and electricity demand is improving, and there is still a valuable rush window at the end of the year. The supply side is relatively stable, and there are no other strong interference factors except that Indonesia may ban the export of copper concentrate in 2023. Short-term domestic demand to observe the impact of novel coronavirus's new variants on the global economy, the copper price center may remain around 70000 yuan / ton.
The price of lithium will rise across the board during the peak season of lithium demand. This week, the price of lithium carbonate in Wuxi plate rose 0.45% to 2255,000 yuan / ton, Baichuan industrial carbon and electric carbon prices rose 0.80%, 1.00% to 19,024 million yuan / ton, lithium hydroxide maintained 1.989,000 yuan / ton, and spodumene price rose 11.59% to US $2215 / ton. The price of lithium ore is rising rapidly, and the rapid rise of the cost side continues to form a strong support for the price of lithium salt. Affected by the weather, the operating rate and production of lithium carbonate continued to decline by 0.49%, 0.49% to 52.9% and 4486 tons this week, and inventories fell by 1.63% to 6595 tons. The fourth quarter coincides with the peak season for the consumption of new energy vehicles, and demand continues to maintain high growth. Lithium carbonate stocks continue to be eliminated, and prices show signs of accelerating. The start-up power and output of lithium hydroxide this week increased by 0.56%, 0.57% to 63.3% and 4398 tons respectively, and production by various manufacturers gradually resumed, but the market demand for high-nickel ternary materials downstream has weakened, resulting in high lithium hydroxide prices consolidation. Lithium hydroxide inventory rose 1.72% to 4398 tons. But the price of spodumene at the cost end continues to rise at a rate of more than 10% a week, supporting the cost of lithium hydroxide. Towards the end of the year, downstream enterprises began to prepare stocks, and the inventory of ternary materials increased by 2.33% to 176 tons. Cinda Securities expects the stock boom to drive the price of lithium hydroxide to continue to rise by the end of the year. 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.
Rare earths continue to rise sharply, and policies support the development of efficient motors. The metal praseodymium and neodymium rose 75000 / ton to 1.045 million / ton this week; the price of NdFeB blank was 7000 / ton, much lower than the increase in the cost of rare earths. On November 23, the Ministry of Industry and Information Technology and the General Administration of Market Supervision recently jointly issued the Motor Energy efficiency improvement Plan (2021-2023), which aims to achieve an annual output of 170 million kilowatts of high-efficiency and energy-saving motors by 2023, accounting for more than 20% of in-service high-efficiency and energy-saving motors. At present, the permeability of NdFeB motor in industrial motor is less than 5%. As the most widely used industrial motor, the improvement of energy consumption standard will greatly drive the demand of NdFeB. The total output of industrial motors in China is 230 million kw in 2020. If the permeability of NdFeB motors is increased to 10%, it will drive the demand for NdFeB 4600-11500 tons per year. If the NdFeB motor permeability increases by 10 PCT, it will drive the demand for 40000-100000 tons of NdFeB.
Precious metals still have central upward power. SHFE gold prices fell 3 per cent to 370 yuan / kg, SHFE silver fell 5.6 per cent to 4775 yuan / the real yield on kg, 10-year Treasury bonds rose 0.04 per cent to-1.07 per cent SPDR gold positions, up nearly 6 tons from the beginning of the week, while SLV silver positions were 17000 tons, up 34 tons from the beginning of the week. The VIX index rose 54 per cent to 28.6 on the day, with precious metals affected to some extent, but as safe havens, the overall volatility was small. Cinda Securities believes that the Fed is less likely to raise interest rates ahead of time, and the precious metals center still has upward momentum.
Investment suggestion: in the context of the "double carbon" goal, pay attention to the historic investment opportunities of new energy and new materials, focus on new energy metals (lithium, cobalt, nickel, rare earth) with strong demand and weak supply pattern, and new metal materials that benefit from industrial upgrading and domestic substitution. Lithium suggests to pay attention to Tianqi Lithium Industry, Ganfeng Lithium Industry, Yongxing material, Shengxin Lithium Energy, Jiang Special Motor, etc., new materials suggest to pay attention to Power Diamond, Hesheng shares, Quartz shares, Homei New Materials, Bowei Alloy, etc. Titanium suggests to pay attention to Bao Ti shares, Anning shares, etc. Precious metals suggest to pay attention to Chifeng Gold, Yintai Gold, etc. Industrial metals suggest to pay attention to cloud aluminum shares, Shenhuo shares, Western Mining, Zijin Mining, Lizhong Group, Suotong development and so on.
Risk factors: lower-than-expected decline in downstream demand, a shift in supply-side constraint policies, less-than-expected domestic liquidity easing, higher-than-expected liquidity tightening in the United States, a sharp fall in metal prices, and so on.
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