Non-ferrous metals: copper and aluminum strengthen counter-seasonally, supply worries continue to push up lithium and cobalt prices [agency review]

SMM survey: what kind of metal do you like most in 2022?

Basic metals: seasonal accumulation of copper inventory is opened; aluminum electrolysis profits are significantly stronger.

(1) Copper: 1 in terms of prices, the global destocking trend continues to slow, domestic consumption weakens at the end of the year, stocks in bonded areas rise for the first time, and fundamental support weakens. The Federal Reserve tightening policy is superimposed on the European zinc plant due to rising electricity prices, which has led to the re-fermentation of the energy crisis in Europe, which is expected to jointly push copper prices up. 2 on the supply side, the long-term Benchmark price of TC in 2022 is 65 US dollars / ton, which is 5.50 US dollars / ton higher than that of 59.5 in 2021 and higher than the current spot price of 60.75 US dollars / ton, indicating that the forward copper concentrate is becoming more relaxed. After the impact of power cuts has been weakened, SMM expects China's electrolytic copper production to continue to increase by 25000 tons to 850700 tons in December compared with the previous month. On the demand side, copper prices rose and downstream consumption cooled at the end of the year, and copper terminal demand weakened. This week, year-end stock accumulation appeared for the first time in the bonded area, and the import copper premium fell in a stalemate. The slowdown of global destocking and the overall weakening of spot rising water suggest that the logic of copper fundamental support is weakened, which constitutes the core upward pressure of copper price.

(2) Aluminum: inventory: LME inventory orders rise by 66400 tons to 979600 tons per week, or potential stocks are gradually transferred to explicit stocks under the influence of liquidity tightening policy, and overseas inventories are expected to maintain accumulated stocks in stages. Cost: alumina fell 6.2% from 3080 yuan / ton to 2889 yuan / ton during the week, corresponding to the tax production cost of self-provided power plant about 16500 yuan / ton, and the weekly profit of single ton electrolytic aluminum (self-provided power plant) increased by 594 yuan / ton to 2542 yuan / ton. The logic of electrolytic aluminum cost support continues to weaken during the week, and the demand for downstream annual replenishment is strong in December, aluminum electrolysis will become the long-term bottleneck of the industrial chain, and the price trend of electrolytic aluminum will be stronger than that of upstream raw materials. corresponding to the profit of aluminum electrolysis continues to improve; Demand: with the Winter Olympic Games approaching, due to the market expectations of production reduction and shutdown of heavy industry in many provinces in January next year, existing aluminum sheet, strip and foil orders are actively purchased, and the costs of processing enterprises are on the rise. the production situation hit a recent high and the orders of large enterprises are more than 3 months, and downstream procurement may remain high before the end of the year. Suggested attention: Zijin Mining, China Nonferrous Mining, Mingtai Aluminum, Jinxin, Nanshan Aluminum, Suotong Development, Shenhuo, Tianshan Aluminum, Chinalco, Yunnan Aluminum.

Energy metals: lithium supply and demand in winter is improving again; mutant strains continue to disturb cobalt supply.

(1) Lithium: since December, seven listed companies have issued announcements to speed up the construction and expansion of lithium iron phosphate related projects, and under the general trend that resource-side enterprises gradually extend downstream, the spot market of lithium salt will be more tight. During the week, battery-grade lithium carbonate rose 21000 yuan / ton to 238900 yuan / ton. Lithium carbonate prices warmed up the profit space of battery-grade lithium carbonate rose 16600 yuan / ton to 71500 yuan / ton in the week. Under the trend of advanced investment in new energy and new infrastructure, the gap between supply and demand may continue to enlarge, and resource-side enterprises are expected to continue to benefit.

(2) Nickel: shipments of nickel mines in the Philippines are limited during the rainy season, and some domestic nickel sulfate enterprises suffer losses and maintenance in December, affecting the output of nickel sulfate by about 2%. The reduction in stainless steel production led to a rapid decline in nickel-iron prices, and the nickel-iron sulfate price difference rebounded to a high of 45283 yuan / ton, and profits drove nickel iron to turn to high nickel matte. With the commissioning of MHP and high nickel matte, the supply of raw materials for upstream intermediate products of nickel sulfate tends to be relaxed in 2022.

(3) Cobalt: the time of the South African mutant strain continues to affect the cobalt supply route, and the domestic arrival in Hong Kong may decline again. At present, overseas cobalt prices still show an upward trend, domestic quotations generally follow the rise, domestic low-cost inventory has been cleared, cobalt prices are expected to maintain an upward trend. Suggested attention: Huayou Cobalt Industry, Ganfeng Lithium Industry, Zhejiang Fu Holdings, Tianqi Lithium Industry, Rongjie shares, Yahua Group, Salt Lake shares, Tibet Mining, Hanrui Cobalt Industry, Xiamen Tungsten Industry, Xiamen Tungsten Xinneng, Shengtun Mining, Jinli permanent Magnet.

Precious metals: policy uncertainty landed and inflation expectations pushed gold prices higher again.

Gold: 1 nominal interest rate: the interest rate on 10-year Treasuries fell to 1.41% from 1.48% during the week. The monthly rate of retail sales in the United States in November is 0.3%, which is expected to be 0.8%, lower than the previous value of 1.7%. The outbreak has slowed US sales data in November, and its potential economic risks have led to a recent decline in long-term US Treasury interest rates, which could be a constraint on the pace of US interest rate increases. Overall, the current US unemployment rate has basically returned to its pre-epidemic level, providing the basis for policy-side liquidity tightening and laying medium-term gold price pressure; 2 inflation expectations: implied inflation in the US bond market fell from 2.44% to 2.38%. The real interest rate fell from-0.96% to-0.97% during the week. The US PPI data surged 9.6% in November from a year earlier, and the Fed is expected to accelerate the pace of tightening before the meeting to raise interest rates. At this week's interest rate meeting, as expected, the Federal Reserve ended its debt reduction ahead of schedule in March 2022, speaking hawkishly but not exceeding market expectations. In the statement, the Fed for the first time deleted the statement that "inflation expectations are temporary" and said the epidemic and the imbalance between supply and demand would continue to lead to a rise in the rate of inflation. The market got rid of the fear of raising interest rates in the short term and continued inflation, and gold staged a strong rebound after the meeting. Before the Fed's more hawkish comments, gold may have rebounded in a small band under the correction of expectations.

Risk hints: the global economic recovery is not as expected, the global epidemic development is higher than expected risk, political risk and so on.