The supply of rare earth quotas is expected to increase, and the profits of smelting and separation enterprises may benefit from the increase in volume and price: according to SMM, the Ministry of Industry and Information Technology promptly organized a "Symposium on promoting the Development of rare Earth Application Industry". Chang Guowu, deputy director of the raw material industry department of the Ministry of Industry and Information Technology, said that the Ministry of Industry and Information Technology is very concerned about the sharp rise in rare earth prices and its impact on upstream and downstream industries, and will respect and collect the opinions and suggestions of associations and parties, consult and coordinate with relevant state ministries and commissions as soon as possible, take appropriate measures to regulate and control, increase quota supply according to market demand, and comprehensively promote and promote the coordinated, healthy and sustainable development of the rare earth permanent magnet industry chain. Recently, the price of SMM praseodymium and neodymium oxide shows an accelerated upward trend. There is still a gap between supply and demand of rare earths in 2022, and the increment at the supply end is relatively rigid. In addition to quotas, American and Burmese ores in imported mines are relatively stable, while waste recovery ores are limited by environmental protection inspection and other factors, so it is difficult to release The demand side benefits from the pull of terminal industries such as new energy vehicles, permanent magnet motors and home appliances and wind power, and the shortage pattern of supply and demand is expected to be maintained. The orderly release of rare earth quotas may alleviate the tension between supply and demand to a certain extent, the smelting separation enterprises that obtain the quota increment benefit from the high price and volume increase, and the profit level is expected to be further expanded. Looking back in history, China's rare earth mining index in 2021 increased by 28000 tons (discounted rare earth oxides) over 2020, all of which were light rare earth mining targets; in 2020, China's rare earth mining targets increased by 8000 tons compared with 2019, all of which were also light rare earth mining targets. According to the target, the North rare Earth Group will increase by 26800 tons and the South rare Earth Group by 1200 tons in 2021.
The crisis in Ukraine and Russia has deepened concerns about overseas electrolytic aluminum supply: recently, relations between Ukraine and Russia have deteriorated, the two sides have deployed a large number of military personnel and equipment in the border areas, and Sina News reported that the United States does not agree with Russia's demands. negotiations are further tense. According to the annual report released by BP, Russia has the largest proven natural gas reserves in the world in 2021. Russian pipeline gas supply accounts for about 35% of Europe's total natural gas imports in 2021, and it is an important energy supplier in Europe. The crisis between Ukraine and Russia has deepened, and market concerns about the energy pressure of European smelters have further deepened. In addition, the market is also worried about the supply of electrolytic aluminum in Russia. In 2021, China imported 1.58 million tons of electrolytic aluminum, accounting for 18.4% of Russia's imports. Referring to the sanctions announced by the United States on Rusal in April 2008, Rusal was not allowed to be included in the list of LME delivery brands, resulting in extremely tight inventories, and LME aluminum surged to 2550 US dollars / ton. Overseas electrolytic aluminum prices may remain high due to supply disturbances for a period of time, while domestic electrolytic aluminum plants are expected to maintain a good profit level. In addition to electrolytic aluminum, there is also concern about whether tensions between Ukraine and Russia will have an impact on the fundamentals of nickel and cobalt. According to Argus Metals, traders are closely watching whether the incident will affect Nornicke (l, Russia's largest nickel and cobalt producer. Nornickel produces 1800-2100 tonnes of cobalt metal a year, although most of it comes from its factories in Finland, but Western banks may be reluctant to finance companies that produce or process sanctioned materials.
The first batch of Model Y with 4680 batteries will be delivered at the end of the first quarter, and the nickel-lithium sector may be boosted: (1) according to the Financial Associated Press, Tesla said that 4680 batteries will be loaded in Texas superfactories and will be ready for delivery after completing certification in the first quarter of 2022. 4680 volume or good power ternary development, continue to be optimistic about ternary materials, especially high nickel ternary demand: 1) 4680 the main advantages are reflected in the battery capacity, production cost, and production efficiency, according to the SMM,4680 battery compared with the 21700 battery capacity increased by almost 5 times, on the one hand, the improvement of battery capacity improved mileage; on the other hand, it will also reduce the number of PACK cells, cost savings. 2) according to SMM,2021, the output of high-nickel ternary materials in China is 147900 tons, and the permeability (accounting for the total case of three elements) reaches 35.1%, of which the output in December is 18900 tons, and the permeability is more than 40%. On the one hand, under the long-life performance, Mercedes-Benz EQA, BMW IX, Ford MustangMach-E, Volkswagen ID.6X and other high-nickel models have brought about an increase in high nickel demand; on the other hand, the main advantage of 4680 batteries lies in the improvement of energy density, and the improvement of battery technology is also expected to open incremental space for high-nickel growth. (2) the demand-side high nickel ternary drive the release of lithium hydroxide production capacity at the supply end, or limited by the shortage of spodumene resources, continue to be optimistic about the companies with high resource ownership rate and good lithium hydroxide release logic.
Risk tips: demand is lower than expected, supply release is higher than expected, etc.
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