Lithium: Chile elected Boric in the general election, increasing uncertainty about the supply of global lithium resources. On December 20, the results of Chile's presidential election were announced, and Boric was elected president of Chile. Boric advocates increasing the equity ratio of the mining industry and the establishment of a state-owned lithium industry company. We believe that, given the cycle required for constitutional amendments, political changes in Chile have a limited impact on global lithium supply and demand in the short term, but bring greater uncertainty to the release of new supply in the long term. In this context, we believe that the diversification of the supply pattern of lithium resources may be further accelerated, and the acceleration of the development of potential resources in China, Argentina, Africa and other places will be the general trend.
Cobalt: the recent rise in cobalt prices has slowed slightly, but the momentum of the medium-term rise remains. The recent rise in cobalt prices has slowed slightly, while Wuxi futures prices have appeared sideways. We believe that the main reason is that the epidemic situation in Zhejiang has been basically controlled, and the disturbance of cobalt salt production is expected to be gradually relieved. Second, the total import of cobalt ore + cobalt intermediate products in China increased by 50% month-on-month in November, the shortage of cobalt raw material supply has been slightly alleviated, and third, the transmission resistance from upstream price increase pressure to downstream still exists. However, the rising momentum of cobalt salt in the medium term still exists. First, as of December 24, Wuxi cobalt inventory is 166 tons, which is basically the same as last week and is still at an all-time low. Second, as of the 24th, the number of vessels / laden tons in Durban Port is only 59% of November's 57%. Considering the impact of the epidemic in South Africa and the reduction of ships around Christmas, we expect the transport capacity of Durban Port to decline in December. Third, the downstream cobalt salt smelting end, the profit space is squeezed by the rise of MB. We estimate that the current smelting profit of cobalt and cobalt sulfate is about 20,000 to 30,000 yuan per slight loss, and the cost side also plays a strong role in supporting the price.
Nickel: the price of nickel is expected to remain high in the short term, and the Indonesian carbon tax has little impact on the cost of nickel. The strong nickel price this week is mainly due to the disturbance of nickel ore supply in the Philippines during the rainy season. China's nickel ore imports in November were-10.5% month-on-month, of which imports from the Philippines were-17% month-on-month, accounting for 83% of the total imports. The issue of carbon tax in Indonesia has attracted market attention this week. Starting from April 1, 2022, Indonesia will levy a tax of 30 rupiah per kilogram of carbon equivalent, equivalent to about US $2.10 per tonne of CO2 equivalent. in this case, we estimate that Indonesia's wet (RKEF) project will increase the carbon tax cost by about 12-14 US dollars per tonne and 50-60 US dollars per tonne of nickel, accounting for less than 1 per cent of nickel costs. We believe that under this tax assumption, carbon tax is more difficult to become a bottleneck affecting the growth of nickel smelting projects in Indonesia in the future. considering the future restrictions on investment in coal-fired power plants in Indonesia and China, the main bottleneck may focus on the availability of power resources.
Valuation and suggestion
1) Lithium: it is recommended to pay attention to Ganfeng Lithium Industry, Zang GE Holdings (uncovered), Shengxin Lithium Energy (uncovered), etc.; 2) Cobalt and Nickel: it is recommended to pay attention to Huayou Cobalt Industry, Shengtun Mining (uncovered), Dow Technology (uncovered), etc.
Risk
1) the production and sales of new energy vehicles are lower than expected; 2) the new supply is higher than expected; 3) the epidemic repeatedly affects supply and demand.
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