Focus on low-valued leading enterprises of metal resources. The central bank disclosed that social finance increased by 4.65 trillion yuan in March, an increase of 1.2738 trillion yuan over the same period last year, exceeding market expectations, reflecting the gradual landing of stable growth projects that have boosted financing demand in the infrastructure sector. However, exports rose 14.7% in March from a year earlier, slightly lower than the 16.3% in January-February. The decline in exports increased the pressure on economic growth, superimposed the epidemic to curb the recovery of consumption, and the market placed high hopes on stable growth policies. In addition, the central bank announced that it would cut the required reserve ratio for financial institutions by 0.25 points on April 25, and the loose policy would continue to support the bottom. We believe that in the context of stable growth policies and high inflation expectations, the metal resources sector will continue to benefit, and the high operation of metal prices and substantial growth in corporate performance will continue to promote the valuation repair of resource leading companies.

Demand is expected to recover, electrolytic aluminum enterprises will continue to benefit. SHFE aluminum price fell 0.3% to 21755 yuan / ton, the industry average gross margin of 4120 yuan / ton, basically the same as last week. Stocks of aluminum ingots rose 16000 tons to 1.039 million tons, according to wind. This week, aluminum prices are still mainly disturbed by the epidemic, which has led to poor logistics and transportation, the decline in the output of aluminum ingots in enterprises has led to the continuation of accumulation, strict epidemic prevention in East China, the production rhythm of some car companies has been disrupted, and the arrival of raw materials and products are not as expected. Market expectations are pessimistic and aluminum prices fluctuate downward at the beginning of the week. At the weekend, with Jilin's announcement of social zero for epidemic prevention and the beginning of the inflection point of the epidemic in Shanghai, market sentiment eased and aluminum prices rebounded rapidly. In the short term, the automobile industry in Jilin took the lead in resuming production after zero clearance; in view of the epidemic in Shanghai, the Ministry of Industry and Information Technology proposed a number of measures to ensure the supply chain and stable production of key enterprises in Shanghai, and the Shanghai Economic and Information Commission promptly issued epidemic prevention guidelines for industrial enterprises to resume work and production. It is expected that the downstream demand for electrolytic aluminum will speed up the recovery and form a strong support for aluminum prices. In terms of industry profits, in the middle of the week, some electrolytic aluminum enterprises issued first-quarter performance forecasts, showing a sharp increase in corporate profits compared with the same period last year, indicating that the profitability of the industry has increased significantly. It is expected that the rebound in aluminum prices under the recovery of downstream demand will continue to lead to wider profits in the industry, and electrolytic aluminum enterprises will continue to benefit. At the same time, aluminum price differences at home and abroad will continue to continue, and aluminum alloy processing enterprises with relatively large export products will continue to benefit. SHFE copper price rose 1.5% to 74880 yuan / ton, LME+SHFE inventory accumulated 14000 tons to 231000 tons, the current copper price is still disturbed by fundamentals and macro aspects, the strict control policy of the processing area epidemic continues, the slow arrival of raw materials and insufficient orders downstream lead to a slowdown in demand, macro-economic stagflation and even recession is expected to strengthen financial attributes to support copper prices, superimposed domestic reserve reduction 25bp, financial attributes will continue to support the strong operation of copper prices.

The spot price of lithium carbonate fell by 7%. This week, the price of lithium carbonate in Wuxi plate fell 1.03% to 434500 yuan / ton, Baichuan electric carbon and industrial carbon fell 7.2% and 6.5% to 48.04,465 million yuan / ton respectively, the price of spodumene rose 1.8% to 2825 US dollars / ton, and the price of lithium hydroxide rose 3.0% to 5089 million yuan / ton. Under the influence of the epidemic, the price of lithium carbonate is under pressure pullback. The supply of lithium carbonate and lithium hydroxide increased this week, with operating rates up 1.03% and 1.58% to 46.26% and 49.57%, respectively, and production up 1.04% and 2.03% to 4280 and 4365 tons, respectively, and their inventories rose 0.45% and 26.40% to 4942 and 1489 tons, respectively, while downstream ternary materials and lithium iron phosphate stocks declined, reflecting faster downstream inventory consumption but weaker raw material procurement. On the demand side, sales of new energy vehicles remained strong in the first quarter, supported by deferred orders. According to the China Automobile Association, China's production and sales of new energy vehicles in March were 46.5 and 484000 respectively, up 26 per cent and 45 per cent month-on-month; production and sales in the first quarter were 128.53 and 1.0749 million respectively, up 141 per cent and 143 per cent respectively from a year earlier. The first and second quarter is the off-season of traditional consumption, and the recent widespread spread of the epidemic has caused an impact on the new energy industry chain. the whole car factory is facing the difficulty of shortage of spare parts. FAW Changchun base car factory took the lead to stop production on March 13. Tesla Shanghai factory announced two consecutive stops of production in March 2022, and the time of resuming production is not estimated. Since March, the company's supply chain partners in Jilin, Shanghai, Jiangsu and other places have stopped production one after another because of the epidemic, and have not yet recovered, Weilai said. Under the influence of the epidemic, the demand for lithium downstream has been suppressed in the short term, which is the main factor for the rapid reduction of lithium prices. At the same time, the reduction of procurement by downstream industries mainly to digest inventory also affects the demand for lithium. According to the Power Battery Industry Innovation Alliance, China produced 100.6Gwh power batteries in the first quarter and installed 51.3Gwh, of which ternary batteries and lithium iron phosphate batteries accounted for 41.6% and 58.2%, respectively. The large difference between output and installed capacity reflects that the downstream inventory is more adequate in the short term. We believe that the demand side weakens in the second quarter and the supply side marginal increment increases gradually, and the lithium salt price ushered in a rare callback window period, but the lithium concentrate price is still in an upward trend, and the cost forms a strong support to the lithium salt price. at the same time, the third quarter has entered the peak consumption season of new energy vehicles, the time and space for lithium price correction is limited, and the overall operation will remain high. The correction of lithium price is more conducive to the valuation repair of companies related to the lithium plate.

The spread of the epidemic has led to a drop in demand and the price of rare earths continues to fall. On April 9, the northern rare earth official website released the listing price of rare earth products in April 2022, which is the same as that in March, and the listing price of praseodymium-neodymium products is lower than the market price. Affected by the epidemic in the Yangtze River Delta and the Pearl River Delta, the demand for orders for new energy vehicles and electric bicycles in the lower reaches of the river shrank in April. Factories such as Tesla, Lulai, and FAW all stopped production, which may affect orders for motors and magnets in the second quarter, and demand weakens. Rare earth prices may continue to explore.

Precious metals prices are still supported by risk aversion and stagflation expectations. SHFE gold rose 2.6% to 406.4 yuan / g, SHFE silver rose 5.2% to 5292 yuan / kg; 10-year Treasury bond real yield rose 9pct to-0.06%; SPDR gold position rose 9 tons to 1099 tons, SLV silver position rose 17700 tons, basically the same as last week. Precious metals prices are still supported this week by risk aversion, stagnant inflation and even a recession in the United States. The United States Congress agreed to cancel normal trade relations with Russia, superimposed Ukrainian helicopter gunships attacked Russian homes, leading to a renewed sense of risk aversion, the United States in March CPI and PPI are record increases, the pace of interest rate increases are expected to be stronger, but short-term Treasury interest rates are partially withdrawn and residents' real disposable income continued to decline in February, suggesting that US economic growth may slow, supporting market stagflation expectations. Precious metal prices continue the upward trend, and short-term precious metal prices are expected to remain supported by risk aversion and stagflation expectations.

Investment suggestion: in the context of the "double carbon" goal, attach importance to the historic investment opportunities of new energy and new materials, focusing on new energy metals with strong demand and weak supply pattern and new metal materials benefiting from industrial upgrading and domestic substitution. The strong supply constraints of metal resources caused by long-term low capital expenditure will support the high price of non-ferrous metals in the next few years, while inflation expectations will be superimposed by domestic monetary policy to remain loose. Non-ferrous metal resources enterprises will usher in investment opportunities for revaluation. Lithium suggests to pay attention to Tianqi Lithium Industry, Ganfeng Lithium Industry, Shengxin Lithium Energy, China Mineral Resources, Yongxing Materials, etc.; New Materials suggest to pay attention to Platinum New Materials, Lizhong Group, Homei New Materials, Hesheng shares, Quartz shares, Bowei Alloy, etc. Titanium suggests to pay attention to precious titanium shares, Anning shares, western materials, etc.; Precious metals suggest to pay attention to precious research platinum industry, Chifeng gold, Yintai gold, etc. Industrial metals suggest to pay attention to cloud aluminum shares, Shenhuo shares, Western Mining, Zijin Mining, Suotong development and so on.

Risk factors: higher-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, etc.