Non-ferrous Metals Industry Weekly report: pay attention to the persistence of the high lithium price and the opportunity for rare earth valuation reconstruction [institutional review]

Lithium: February led to excellent sales performance of the new power; Chile's left came to power, adding to the uncertainty of lithium supply.

1) sales of new forces in car building continued to increase in December. Xiaopeng, ideal, Lulai and Nezha delivered 1.6,1.4,1.0 and 10000 vehicles in December, respectively, compared with + 2.6%, + 3.7%, + 0% and + 0%, respectively. Year-on-year sales of + 181%, + 130%, + 109% and + 236% in 2021 reached 9.8,9.0,9.1 and 70000 respectively, a year-on-year increase of 263%, 177%, 109% and 362%.

2) the left-wing candidate of Chile has been elected president, and the stability of lithium supply has been reduced. On December 20, Chile's left-wing candidate Boric was elected as the new president. Boric supported high taxes and nationalization of resources, and recently postponed the public tender for lithium resources launched by the Chilean Ministry of Mines in October 21 (the quota plan of 2.13 million tons of LCE was distributed to five companies under a contract that will last for seven years). We believe that the election of the left wing has little impact on the current planned capacity, but in the medium to long term, it may lead to more cautious investment, increased uncertainty in the release of long-term capacity, and prolonged or higher-than-expected supply shortages in the industry.

3) be optimistic about the sustainability of the high-profile demeanor of the lithium industry. On the demand side, the industry chain of new energy vehicles has entered an era of endogenous growth, and demand rigidity has increased; on the supply side, high-quality new mines are scarce, the future increment of resources is limited, and the supply order of the industry is better than that of the previous cycle. Is sitting on the leading edge of the price dividend or cautious volume.

The contradiction between supply and demand in the industry will be prominent in the next three years, supporting the long-term high lithium price, high certainty in performance release and significant marginal improvement in the allocation value of lithium resources. Related targets: Koda Manufacturing, Shengxin Lithium Energy, Rongjie shares, Tianqi Lithium Industry, Ya Hua Group, Jiangte Motor, Ganfeng Lithium Industry, Yongxing Materials, Zang GE Holdings, Tianhua Super Clean, China Mineral Resources, Tibet Mining, Tibet City Investment, etc.

Rare earths: downstream demand continues to be booming, with imports of rare earth minerals rising month-on-month in November. 1) the unit price of rare earth mine imports from Myanmar increased by 135% in November, while mine imports from the United States rebounded from the previous month.

1 Myanmar: in November, China imported about 1423.8 tons of rare earth minerals from Myanmar, which was-19% less than that of the previous month. The recovery in import volume is mainly due to the gradual reopening of the Sino-Myanmar port in Yunnan Province in November, but it has not yet returned to the pre-epidemic level.

2 the United States: in November, China imported about 13300 tons of rare earth metal minerals from the United States, with a month-on-month ratio of + 135% Compact to 520%. The import volume increased more or because the indicators of domestic separation enterprises were gradually insufficient. In order to meet the strong demand downstream, we have increased the import of raw materials; the import unit price is about 31400 yuan / physical ton, which is + 126% compared with the same period last year, which is the same as the previous month. At present, more than 40% of NdFeB raw materials in China come from imported rare earth ores, but there is almost no increase in overseas rare earth mines in 3-5 years. Generally speaking, the increment of rare earth supply side is limited in the next few years, but the demand side will benefit from the rapid growth of new energy vehicles, the industry may continue to be in short supply, and the price center will continue to move up; 2) in the long run, rare earths are at the starting point of a new era of supply and demand reshaping, and the valuation system is reconstructed. In the future, rare earths are expected to repeat the logic of the high demand for lithium-cobalt new energy in history, and its supply side is even better than lithium-cobalt. As the price center moves up, enterprises may continue to realize high profits and seize the opportunity of price revaluation of core assets with global pricing power. Related subject matter:

North rare earth, Minmetals rare earth, Baotou Iron and Steel Co., Ltd., Shenghe Resources, Xiamen Tungsten Industry and so on.

Risk hints: the risk of supply exceeding expectations, the risk of demand falling short of expectations, and the risk of policy change.