[institutional Review] Lithium-Cobalt strong upstream cobalt-nickel integration ushered in a reassessment

Comment

Lithium: the shortage of supply and demand may intensify, and the price of lithium carbonate is expected to accelerate. Recently, due to the impact of power cuts, the rising rate of domestic lithium carbonate prices has slowed down, with a weekly ratio of + 1.71% and a monthly ratio of + 7.99%. We believe that the shortage of lithium carbonate is expected to intensify in the future, mainly for three reasons. first, the problem of power limitation in cathode material factories has been alleviated, and the factors that suppress downstream demand are expected to be gradually eliminated; second, with the approach of the Spring Festival, the mood of purchasing and stock preparation in the lower reaches is intensified, which is expected to further boost downstream demand. Third, the capacity utilization rate of Qinghai Salt Lake will be reduced in winter. According to historical experience, we estimate that the supply of Qinghai Salt Lake will be reduced by about 30% and 40% month-on-month in the fourth quarter. According to SMM data, lithium carbonate inventories in mid-October smelters and downstream manufacturers are both at low levels during the year, and tightening supply and demand is expected to accelerate the upward trend in lithium carbonate prices.

Cobalt: the influence of power restriction and production restriction is weakened, and the price of cobalt continues to rise. The price of cobalt has risen rapidly recently. MB standard cobalt is quoted at US $29.2-29.9 / lb, and Tetra-cobalt / cobalt sulfate is quoted at 33.75max RMB / ton, up 4.7% Cobalt 2.2% from the end of October. The faster increase in November is mainly due to the slower recovery rate of electricity limitation at the supply end than that of cobalt sulfate. October cobalt sulfate output + 8.7% (October cobalt sulfate price increase 9.9%), four cobalt month-on-month ratio is only + 1.9%, but downstream lithium cobalt production month-on-month ratio + 10.3%. We expect cobalt production to continue to pick up and market transactions to increase on November 4th, so the four cobalt quotation is going up faster at this time. Looking forward, we are still bullish on cobalt prices: first, Wuxi cobalt inventory is currently only 225 tons, which is at an all-time low; second, the recent willingness of the cobalt market to sign is relatively light; third, the problem of lack of core has taken a turn for the better.

Nickel: short-term nickel price has cost support, medium-and long-term high nickel trend and limited supply in Indonesia continue to boost nickel bearing. In the short term, the Ferro-Nickel-stainless steel industry chain tends to be weak in both supply and demand, but the cost of Ferro-nickel maintains a range of US $18-20, 000 / ton, and the high price of nickel is still supported. In the medium and long term, the nickel scene demeanor is still high: first, the Ministry of Industry and Information Technology "lithium-ion battery industry specifications" make it clear that the energy density of the power battery core ≥ 180 whip / kg, which is good for the development of high-nickel ternary materials; second, the Indonesian president once again stressed the ban on coarse ore export, while nickel ore export is still limited; third, Tesla raised the price of the domestic rear wheel drive version of Model 3 by 15000 yuan to 250900 yuan, which gradually highlighted the price increase in the industrial chain from top to bottom.

Valuation and suggestion

1) Lithium: it is recommended to pay attention to Ganfeng Lithium Industry, Rongjie shares (not covered), etc.; 2) Cobalt and Nickel: it is recommended to pay attention to Huayou Cobalt Industry, Dow Technology (not covered), Shengtun Mining (not covered).

Risk

1) the production and sales of new energy vehicles are lower than expected; 2) the new supply is higher than expected; 3) the epidemic repeatedly affects supply and demand.