bingochart| Geophysical risks boost Shanghai zinc higher and lithium carbonate shocks correction

[Shanghai Zinc]

Core viewpoints

Macro: may 20, the central bank in charge of the Financial Times issued an article, market analysts believe that from the perspective of promoting the marketization of mortgage interest rates, the current is a better time window, and the trend of economic recovery for the better is constantly strengthening. all aspects have a deeper understanding of major changes in supply and demand in the real estate market, and further optimize relevant policies is to comply with the trend. ReporterBingochartIt is understood that many local governments have a strong desire to abolish the floor of local mortgage interest rates. Industry insiders judge that if the floor of mortgage interest rates is abolished in most cities across the country, there will be a significant decline in mortgage interest rates in the future, which will help to continue to release rigidity and improve the demand for housing purchases, and ease the pressure on real estate enterprises to pay back money.

Fundamentals: judging from the economic data released for April, there is a clear differentiation between domestic and foreign demand, domestic consumption and investment are still weak relative to exports and production, and geographical situation and supply concerns continue to push up non-ferrous prices. From the perspective of medium-and long-term fundamentals, the demand for zinc in the global manufacturing recovery is weaker than that of copper and aluminum, as copper, aluminum and zinc subdivide the differences in downstream emphasis. The proportion of infrastructure and construction industry in the consumption of zinc downstream is obviously higher. At present, domestic real estate is still bottoming out, and the financial pressure of local governments also restricts the upper limit of infrastructure. Under the environment of high overseas interest rates, the service industry in developed economies is hot, but real estate is still at a low ebb. Global zinc demand is still not significantly increased. On the supply side, under cost pressure, production has been reduced in some overseas high-cost mines, and the increase in global smelting capacity has aggravated the shortage of raw materials. TC and smelting profits have been squeezed to a low level. starting from the third quarter, new zinc mine projects are expected to gradually contribute production, and global zinc mining output is expected to grow again.

Generally speaking, the long-term growth rate of zinc demand is weak, and the supply side has incremental projects on the way, so the current situation of oversupply is still difficult to reverse. However, in the short and medium term, the introduction of domestic real estate policies, the accelerated issuance of government bonds and the periodic shortage of zinc mines interfere with smelting production, supporting the continued upward movement of the zinc price center.

[lithium carbonate]

Supply side: lithium carbonate output this week is 14224 tons, up 3% from last week.Bingochart.9%. Enterprises in Jiangxi Province gradually return to work and production, at the same time, with the warming of the temperature in the salt lake area, the output also gradually increases. The overhaul of the big factory was completed this month and the supply resumed. According to SMM, domestic production of lithium carbonate is expected to be 60100 tons in May, an increase of 14% from the previous month. Chile exported about 22900 tons of lithium carbonate to China, a month-on-month increase, and the goods will arrive at domestic ports in late May. Lithium carbonate continued to accumulate slightly this week. As of May 16, the total inventory of lithium carbonate was 87049 tons, including 48300 tons in the smelter and 22771 tons downstream, while the smelter accumulated slightly and the downstream inventory remained basically flat. From the medium-and long-term perspective, this year and next year is a big year for the release of lithium deposits and salt lakes in the upper reaches, and there is a great pressure on the excess supply of lithium carbonate.

Demand side: the purchasing enthusiasm in the lower reaches of this week is slightly improved, and some positive factories take advantage of low prices to purchase a small amount. According to the survey, the increase of production schedule in the lower reaches of May may be more limited than that in April, and the follow-up should be focused on follow-up observation. In terms of the terminal market, according to the Federation of passengers, the new energy vehicle market retailed 241000 vehicles from May 1 to 12, an increase of 31% over the same period last year and 10% month-on-month growth, slightly exceeding market expectations. On the face of the news, trade barriers have increased. The United States announced additional tariffs on electric vehicles in China, raising tariffs on electric vehicles from 25% to 100% and on lithium-ion batteries from 7.5% to 25%. The EU is under similar pressure and is considering tariff adjustments for Chinese electric vehicles, the EU's foreign trade commissioner said.

Cost side: spodumene concentrate prices were flat this week compared with last week, while domestic lithium mica concentrate (Li2%-2.5%) prices fell slightly, down 4.5 per cent a week. The enthusiasm of lithium salt factory has decreased, and most of them are in a wait-and-see state. There is a surplus in the supply side of domestic lepidolite ore, and there is a slight downward pressure on prices.

Strategy: the reason for the recent correction of lithium price is mainly due to the loosening of the supply margin, the lower-than-expected production schedule and the policy of the United States to impose tariffs. Looking back, the supply gradually turns loose, the fundamental margin weakens, and the lithium price volatility range is expected to move down to [10000010, 000]. In operation, it is recommended that light positions should be operated mainly in the range, and it is still appropriate to sell short at every high in the middle line.

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