Pacific Securities: metal fundamentals are still strong, cobalt and lithium hit a new high

Basic metals: fundamentals are still strong

1. The profit of copper smelting is increased. Us inflation rose to a higher-than-expected 7.5 per cent in January, with both overall and core CPI growth at its highest level in 40 years. Domestic funds are expected to be loose in an all-round way. in January, the scale of social financing increased by 6.17 trillion yuan, 984.2 billion yuan more than the same period last year. According to SMM statistics, the accumulated inventory of domestic society during the Spring Festival is 86600 tons, which is lower than expected during the Spring Festival last year and is at a relatively low level in previous years. Overseas copper concentrate is expected to remain loose, domestic copper concentrate reserves are sufficient, copper TC is expected to continue to improve, leading to smelting profits.

2. The contradiction between supply and demand of aluminum is more prominent. Aluminum prices rose sharply during the week, up 3.28%. Although there were 119000 tons of LME aluminum per day during the week, the increase was 16%, the largest since March 2021. However, the overseas energy crisis continues, relations between Russia and Ukraine are tense, and overseas supply problems occur frequently. Due to the epidemic situation in Baise, Guangxi, the recovery of electrolytic aluminum production capacity is slow. At the same time, in terms of consumption, after the Spring Festival, China ushered in a resumption of seasonal demand, real estate, infrastructure start-up rate resumed, aluminum is expected to remain in short supply.

3. Zinc's overseas profits have rebounded. Russia is unlikely to resume gas supplies to Europe because of strained relations between Russia and Ukraine. But at present, the price of electricity in Europe has fallen, and the cost of zinc has fallen. The profits of domestic smelters are at a low level, and the increase in supply is not obvious.

New Energy Metals: price increases are transmitted downstream

The rise in raw material prices began to spread downstream. Since the Spring Festival, the prices of lithium carbonate, nickel and cobalt have all risen, and the profits of downstream ternary precursors and cathode materials have been squeezed. at present, the profits of precursors and cathode materials are at a loss, and some enterprises take the initiative to reduce production. For the rise in costs, precursor, cathode material companies have begun to raise quotations.

Recommended stocks: northern rare earths, Lizhong Group, Tianqi Lithium Industry, China Mineral Resources

Risk hint: the risk of demand falling faster than expected; the risk of sharp change in industrial policy; the risk of worsening the epidemic situation.