Just as the early industrial revolution brought about a large-scale increase in the demand for basic metals such as copper, aluminum, lead and zinc, the emergence of some new industries made small metal usher in spring. In recent years, with the explosive growth of the 3C digital products industry such as new energy vehicles and mobile phones, the demand and price of cobalt, one of the important raw materials for the production of batteries, has grown rapidly.
The industry believes that from the perspective of industrial evolution, the global development direction of new energy vehicles has been set, coupled with consumer electronics upgrades and other factors, small metal cobalt is expected to usher in a major consumer cycle. The market continues to be optimistic about the price of cobalt when end-users lock in supplies. However, taking into account the short-term increase in cobalt prices quickly, and has been out of supply and demand fundamentals, in addition, the price continues to rise, the increase in the probability of supply increases, the possibility of cobalt price correction increases.
Investment opportunities on the outlet
The continuous rise in the price of cobalt has also brought about a large number of investment opportunities. Most of the people who succeeded in chasing the air outlets have received excess returns.
Since 2017, the domestic cobalt market has entered a rising range. The year-on-year increase was close to 100%, which set a new high since September 1, 2011. In January 2018, the prices of cobalt metal in the international and domestic markets continued to rise again. As of January 31, the spot price of cobalt metal in the LME market was 79,750-80250 US dollars / ton, the average price was 80,000 US dollars / ton, compared with the spot closing price of 75,205 US dollars / ton, up 4795 US dollars / ton. Wuxi Stainless Steel Electronic Trading Center on January 31 metal cobalt offer 565000-580000 yuan / ton, compared to the beginning of the spot price of cobalt 517000-530000 yuan / ton average price rose 49,000 yuan / ton.
Wuxi Stainless Steel Electronic Trading Center, an investor involved in cobalt spot trading, told reporters that since the participation in the cobalt spot trading in September 2016, the gains were abundant. “The highest annual earnings were around 20 times, and some trading strategies were later mistaken. The final income is also 10 times."
A shares of some cobalt resource concept stocks also performed surprisingly. According to the financial data big data terminal, Hanrui Cobalt, which was only listed in March 2017, rose more than 1794% in 2017, becoming a well-deserved shareholder. On January 26, 2018, the stock price rushed to a high of 319 yuan, which was more than 20 times higher than the issue price. In addition, the growth rate of Huayou Cobalt Industry and Luoyang Molybdenum Industry in 2017 was also quite alarming.
Zhongtai Securities believes that the direction of development of the new energy automotive industry has been set, the industry is driven by internal development, and the accelerated development phase has come. Driven by this, the demand for cobalt lithium will continue to erupt, the growth characteristics of the industry will be obvious, and the supply and demand of cobalt will continue to be short. For emerging industries where the new energy industry chain Cobalt-Lithium continues to grow, expectations are currently depressed and sentiment is pessimistic. Plate companies are generally trading at around 20x P/E, and some leading companies have valuations that are even less than 20 times their valuation, providing buy-in, Overweight opportunities.
However, market analysts believe that the current price of cobalt is already at a high level, and cannot simply regard downstream purchases such as Apple as a mere price-fixing act, nor can it think that the price of cobalt will only rise.
“Cobalt mineral resources are still oligopolistic at this stage. From the perspective of Shanghai Nonferrous Metal Supply and Demand Balance Sheet, there is no gap in cobalt supply, but the seller’s market leads to shipments and pricing rights at the mining end, so the terminal manufacturing companies jump. The ultimate goal of direct exploration of the intermediate links is to ensure stable prices,†said Hong Wei.
Business analysts also said that cobalt prices soared all the way in 2017, and the good news of the cobalt market continued. On the demand side, the continuous growth of new energy vehicles led to the growth of cobalt consumption. On the supply side, the situation in the Democratic Republic of Congo (DRC) is turbulent, affecting the supply of cobalt resources. However, while paying attention to good news, we must also pay attention to the risks. The acquisition of high-cobalt by a large number of international giants caused high cobalt prices to rise at the same time. The US investigation of lithium batteries in China reduced the export of lithium batteries and restricted the demand for cobalt.
Business analysts also said that now the international cobalt price is far lower than the domestic cobalt price, while the domestic metal cobalt is heavily dependent on imports. The international cobalt price is closely related to the domestic cobalt price. At this stage, the domestic high price of cobalt does not have enough support. In 2018, cobalt is still in a state of supply shortage. Cobalt prices still have room to rise. However, due to the early rise in cobalt prices, there may be a slight correction in the short-term cobalt price.
The "Energy Core" of New Energy Vehicles
“Apple's intervention is just a catalyst. The core factor that really triggers this round of cobalt resource stocks is still the new energy vehicle.†A non-ferrous researcher of a medium-sized brokerage told reporters that the market had been concerned about the reduction of subsidies for new energy vehicles, but The latest policy shows that the government still maintains relatively large support for new energy sources.
New energy vehicles are the largest demand side for cobalt. According to the data released by the China Association of Automobile Manufacturers, in January 2018, China’s new energy vehicles grew at a rapid rate compared to the same period last year. Production and sales were 40,569 and 38,470, respectively, which were 4.6 times and 4.3 times year-on-year respectively.
At present, the mainstream of the global new energy vehicle battery is the three-element lithium battery, and cobalt is one of the core materials of the three-way battery.
Xie Honghe, a non-ferrous analyst at Zhongtai Securities, believes that the proportion of ternary materials will also increase in the context of continued growth in production and sales of new energy vehicles. Although NCM will gradually reduce the unit consumption of cobalt under the high nickel trend, it will come from the whole. Look, the amount of cobalt for power batteries will increase from less than 2,000 tons in 2015 to 31,000 tons in 2020. On the whole, the demand for lithium batteries for new energy vehicles and 3C digital products has grown rapidly. The demand for overseas high-temperature alloys and carbides has also benefited from the economic recovery. Coupled with the steady growth in demand for cobalt in smelting and chemical industries, it is expected that the demand will increase globally by 2020. The demand for cobalt is 146,500 tons, and the average annual growth rate is about 9%.
Analysts of financial institutions said: "Beginning in the second half of 2016, countries around the world have successively issued timetables for the ban on fuel sales, which has greatly accelerated the pace of development of electric vehicles. China decided not to approve new construction at the State Council meeting in October 2016. In the meantime, from the period of 2015 to the first half of 2017, a total of 202 new energy vehicle production projects have been launched in the country, involving an investment amount of over RMB 100 billion, and the published capacity plan exceeds 20 million vehicles. At the same time as the rapid development of electric vehicles, the supply of power batteries is particularly important in its 'heart' site, and power batteries rely on a large number of metal raw materials, such as lithium, nickel, cobalt, etc. Among them, cobalt is a rare resource and cobalt prices have risen. It's inevitable."
In addition to the expansion of demand brought about by the long-term growth of the new energy automobile market, the special nature of cobalt supply and demand is also an important factor in the price increase. Cobalt is a rare metal. The cobalt ore is rare and concentrated, among which Congo (Gold) is the exclusive 50%. At the same time, only a few cobalt mines are monopolized by limited international giants.
As the world's largest producer of cobalt resources, the situation in the Congo (Kinshasa) has been turbulent, which has seriously affected the supply of cobalt raw materials, and cobalt supply pressure has increased. In addition, the Congo (Gold) government recently plans to increase the cobalt royalty rate from 2% to 3.5% through the new mining law. The change in the tax system and the increase in taxation costs have increased the cost of cobalt again.
Apple assists in blowing up the "cobalt" concept stock
On the first trading day of the Year of the Dog, the A-share cobalt resource stocks led the market, Huayou Cobalt, Hanrui Cobalt and other 5 stocks daily limit, and large funds approached 500 million yuan to rush to raise funds. Then the related concept stocks continued to decline. February On the 23rd, Luoyang Molybdenum rose 8.23%. Pengxin Resources and other stocks continued to rise. Wind data shows that during the first two trading days of the festival, the CITIC nickel-cobalt index rose 11.09%.
Earlier there was media news that Apple was in the process of negotiating for the first time a long-term purchase of cobalt directly from miners. Apple is one of the world's largest end users of cobalt. Prior to this, Apple had left the purchase of cobalt to its battery manufacturer. This time, Apple directly involved in the procurement of cobalt resources, to a certain extent, means that Apple's demand for cobalt will remain stable or even grow for a long time.
“The end manufacturer’s exposure to mining companies is to ensure that they can have sufficient supply in advance and that the cost of using cobalt can be stabilized through long-term cooperation, given the limited increase in mine-ends and the surge in demand in the near future.†Cobalt analyst Hong Wei told reporters.
Cobalt is a necessary metal raw material for manufacturing new batteries such as lithium batteries, and is widely used in electric vehicles, 3C consumer electronics, and aviation precision equipment. In the global composition of cobalt consumption, the battery material accounted for the highest proportion, accounting for nearly 60%. In China's cobalt consumption structure, the battery consumption accounted for 78%, mainly used in cell phones, cameras, computers and other electronic products and new energy vehicle battery materials.
In fact, due to natural cobalt mines often associated with nickel, copper and other mineral deposits, high mining costs, production capacity is difficult to effectively release, coupled with very little cobalt metal reserves, mainly in the Congo (gold), Australia and Cuba, the global distribution is extremely uneven. At the same time, due to the current turmoil in the Democratic Republic of the Congo, the largest producer of cobalt, the global cobalt supply chain is very fragile. Therefore, it is not surprising that international giants such as Apple are seeking steady supply of cobalt.
Apple is not the first international giant to seek to stabilize the supply of cobalt. Volkswagen, BMW and other major car companies have also been involved in cobalt resources to ensure material supply in recent years. Volkswagen stated that it is currently promoting the establishment of a long-term supply contract guarantee to avoid material shortages. At the beginning of December 2017, Volkswagen has invited cobalt raw material producers to hold talks with Wolfsburg headquarters. BMW is also holding talks with suppliers of raw materials such as cobalt.
Source: China Securities News
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