Non-ferrous Metals Industry Weekly report: copper and aluminum demand for copper and aluminum continue to be in short supply to boost the price of lithium and cobalt [agency review]

Precious metals: rising inflation pushes up the price of gold, and the expansion of the US economy creates long-term pressure on gold.

Gold:

Nominal interest rate: the interest rate on 10-year Treasuries rose to 1.50% from 1.41% during the week. Us durable goods orders rose 2.5 per cent in November from the initial value, much higher than the expected 1.6 per cent, indicating that US demand is stable and economic activity continues to expand; the labor market continues to recover, and the number of people applying for unemployment benefits this week was 205000, in line with expectations. The improvement of the US economy has boosted the rebound of the dollar index and expectations of higher US interest rates, which constitute medium-and long-term pressure on gold prices.

2 inflation expectations: the contradiction of energy shortage in Europe has been highlighted, energy prices have risen further, implied inflation in the US bond market has risen from 2.38% to 2.47%, and real interest rates have remained stable at-0.97% during the week. The US core PCE price index rose at an annualised rate of 4.7 per cent in November from a year earlier, higher than the previous figure of 4.1 per cent and 4.5 per cent higher than expected, the highest level in nearly 40 years, with the core affected by rising global raw materials and energy costs. The restraining effect of accelerated US debt contraction on inflation remains to be tested, and high US inflation may continue in the short term, which is expected to support gold prices to continue to rise.

Basic metals: consumption warps up the tail and goes to the warehouse more than expected, and metal prices continue to be booming.

(1) Copper:

In terms of price, the one-year LPR of the people's Bank of China was lowered to 3.8% in December, and the deputy director of the China National Development and Reform Commission said that it would implement the upcoming strategic outline of expanding domestic demand to boost the prospect of domestic demand for metals. The guidelines for raising interest rates in the United States are becoming clearer, and the market is re-trading fundamentals to the Treasury.

2 on the supply side, long order TC processing fee negotiations landed, and higher than the current spot transaction price, so that the recent seller offer increased, domestic smelter inventory is sufficient, spot TC rose significantly for the first time in two months. In the long term, the new Chilean President Borizi raised the issue of environmental protection and raising related mining taxes, which suppressed medium-and long-term mine output.

On the demand side, the year-end holiday reduced the activity of foreign trade spot transactions, and the Yangshan copper premium quickly fell back from $102 / ton to $88 / ton. Under the rush effect at the end of the year, the overall performance of domestic inventories continued to decline, with SHFE inventories as low as less than 30, 000 tons. Domestic interest rate cuts released loose liquidity signals to boost metal demand expectations, which basically showed support in the face of copper prices.

(2) Aluminum:

1 inventory: LME inventory fell 15400 tons to 964200 tons a week. LME is the main factor in the decline in inventories on global exchanges this week. The domestic social treasury decreased by 45000 tons to 877700 tons, only an increase of 199000 tons over the same period last year.

2 cost: alumina fell 1.25% from 2889 yuan / ton to 2853 yuan / ton during the week, corresponding to the tax production cost of self-provided power plant about 16200 yuan / ton, the spot aluminum price of the Yangtze River rose 680 yuan / ton to 20080 yuan / ton. the profit level of single ton electrolytic aluminum (self-provided power plant) rose sharply by 857.93 yuan / ton to 3400 yuan / ton during the week.

(3) on the demand side: China imported 229400 tons of aluminum ingots in November, an increase of 89500 tons, an increase of 173300 tons, and a total import of 1.5 million tons from January to November, with a cumulative increase of about 560000 tons. in exports, the export volume of unwrought aluminum and aluminum materials in November was 509300 tons, an increase of 29700 tons, an increase of 66000 tons, reaching the highest level of total exports since March 2020. Although the current import loss is still at 900 yuan / ton level, the time difference between the reduction of electrolytic aluminum production in the upstream and the recovery of downstream construction has led to a big increase in imports of aluminum ingots. At the same time, the obvious increase in overseas demand has become one of the main supporting factors of the current aluminum demand. At the current time, the market is worried that the cancellation of aluminum export tax rebate will be implemented on the ground, on the other hand, near the end of the year, the downstream is worried about the impact of the East Olympic Games on the start of construction and aluminum processing enterprises "scrambling for exports" to boost aluminum consumption. We expect aluminum exports to continue to grow in December, and the corresponding strong aluminum prices are expected to continue until the first ten days of the first quarter. Suggested attention: Zijin Mining, China Nonferrous Mining, Mingtai Aluminum, Jinxin, Nanshan Aluminum, Suotong Development, Shenhuo, Tianshan Aluminum, Chinalco, Yunnan Aluminum.

Energy metals: the price of lithium carbonate exceeded 250000 yuan; the price of nickel sulfate fell.

(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. Under the warming of lithium carbonate prices, the profit space of battery-grade lithium carbonate rose 16600 yuan / ton to 71500 yuan / ton in the week, while the profit space of battery-grade lithium hydroxide dropped slightly to 40700 yuan / ton in the week.

(2) Nickel: the buying of nickel sulfate is poor and the rise is weak, and the spot price of nickel appears split; the decline in the demand for stainless steel continues to weaken the price of ferronickel, increasing the long-term demand for high-nickel iron to produce nickel sulfate, and the supply of nickel sulfate raw materials will be further alleviated.

(3) Cobalt: the South African authorities announced the closure of all ports due to the epidemic, and the Democratic Republic of Congo-Port Durban, South Africa-China carried 70% of domestic cobalt raw material supplies. The rebound in the Omicron epidemic once again brought uncertainty to the global supply chain, stimulating cobalt prices to continue to rise. 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.

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