[agency Review] Energy Metal prices in Nonferrous Metals Industry continue to strengthen

Investment strategy and key recommendations:

Precious metals:

Recently, inflation expectations in the context of stagflation have been the main support for the rise in precious metal prices, while concerns about commodity supply chains triggered by the global energy crisis have triggered the rise in inflation. Silver has both industrial properties and outperforms gold. At present, Taper has been fully priced, and the probability of raising interest rates next year will increase. At the same time, there are upside risks in US Treasuries, which could hit precious metals prices. Precious metal prices may repair upward in the short term, but overall weak in the long run.

Base metal:

Copper: copper prices rose and fell this week, the overall level of macro news is short, on the one hand, the market is expected to increase interest rates by the Federal Reserve, on the other hand, domestic economic growth is slowing, and price regulation is tightening. At present, the situation of power cuts has eased, but the pressure on the copper smelting side is still in place; downstream companies, based on concerns about rising prices, have improved downstream orders after prices have risen, but overall consumption is weak. Global inventories continue to decline, supporting prices, and market prices should fluctuate at 70,000 / ton in the short term.

Aluminum: at present, power restriction is still the main risk in the industry, the core contradiction is the game between supply and demand, and the policy of power restriction and production restriction leads to the weakness of both supply and demand in the market. Aluminum prices fluctuated downward this week, on the one hand, the market game sentiment is serious, on the other hand, the main energy coal prices are strongly regulated by policies, and the logic of cost support is weakening. The trend of inventory differentiation at home and abroad this week, due to weak consumption downstream of aluminum ingots continue to accumulate, overseas is showing a trend of destocking.

Zinc: zinc prices surged higher and fell back this week after rising to an annual high due to concerns about supply disturbances in the zinc market triggered by the global energy crisis, but then passed domestic coal supply policies and countries may adjust carbon emissions targets during the G20 climate summit, triggering a shift in market sentiment and a sharp drop in zinc prices. After the cooling of the energy topic hype, zinc ingots return to fundamental pricing, under the influence of high inventory, superimposing the current weak supply and demand, zinc prices are expected to fluctuate downwards.

Nickel: strong demand is still the main support of nickel price. At present, although the new supply-side production capacity in Indonesia has been put into operation one after another, the Philippine mine-side supply has weakened due to the influence of the rainy season, which is superimposed by the current strong overseas demand and the decline in nickel-iron production capacity caused by domestic power constraints, which makes the overall domestic nickel metal supply tight.

New Energy Metals:

Cobalt: the prices of cobalt and its products continue to rise this week, showing an overall overseas-led domestic trend. On the demand side, with the arrival of the end of the year, the impulse of the major new energy vehicle companies at the end of the year, the demand increased. The overall orders of downstream battery enterprises gradually increased, and the procurement of some precursor enterprises continued, resulting in the overall tightening of the raw material end.

Lithium: the prices of lithium and its products continue to rise this week. Demand-side support lithium prices, the current domestic lithium resources supply is tight, downstream hoarding sentiment is high. Follow-up need to pay attention to the third auction of Pibala on October 26, the first two rounds of auction prices are significantly higher than market expectations, resulting in lithium prices to follow, the results of the third auction will continue to guide market sentiment.

Market Review:

By the close of trading on October 22, the non-ferrous metals sector was down 0.2%, outperforming 0.8pct and 0.5pct, respectively, compared with the CSI 300 index and the Shanghai Composite Index. The growth rate of non-ferrous metal plate ranked 17th among 28 plates in Shenyin Wanguo. The three best performing subplates of non-ferrous metals this week are: rare earths up 6.4%, magnetic materials up 3.8%, and new metal materials up 5.5%.

The top five stocks rose: Fuda alloy, Huafeng aluminum, Dongmu shares, Yunhai metal, quartz shares.

Individual stocks fell in the top five: Jinbo shares, Tounan shares, Suotong Development, Shenhuo shares, Yitong new materials.

Portfolio: Jiangxi copper industry, Zijin mining industry, Tianqi lithium industry, Huayou cobalt industry, Ganfeng lithium industry, 20% each.

Risk tips: basic metal-energy crisis leads to weak supply and demand; new energy metal-battery technology route switching.