The prosperity of the lithium industry is inseparable from the prosperity of the new energy vehicle market

Since November, the signs of recovery in the lithium industry upstream of power lithium-ion batteries have been obvious. According to Antaike data, on November 16, domestic battery-grade lithium carbonate was quoted at 43,000 yuan/ton, and industrial-grade lithium carbonate was quoted at 37,500 yuan/ton, both of which set a new high in more than five months. As prices rebounded, the long-losing lithium industry finally ushered in a boom. According to calculations by Pacific Securities, as of last week, the gross profit of lithium carbonate has been positive for two weeks and reached RMB 1,425/ton. From March to October before this, the industry's average gross profit has been in a negative range. At the same time when the industry turning point appeared, the concept stocks had already 'started to win.' Wind data shows that as of the close of the market on the 17th, Ganfeng Lithium Industry and Shengxin Lithium Energy have increased by more than 20% in November, and Western Mining has increased by more than 35% in November. In the U.S. stock market, since November, the Piedmont lithium industry has gained 49% cumulatively, and the American lithium industry and Chile's mining and chemical industries have both gained more than 20% cumulatively. According to industry insiders, before the epidemic, the downstream demand of the entire lithium industry has rapidly contracted, and the price of lithium has even fallen below the cost line of the mine. Australia-based lithium concentrate has ushered in production clearance and integration. In the future, the supply of lithium concentrate will be concentrated. The degree and bargaining power will be elevated. In terms of demand, since the third quarter, with the accelerated recovery of the new energy vehicle market in my country, Europe and other places, power lithium-ion battery companies have improved their operating levels. The newly announced 'New Energy Vehicle Industry Development Plan (2021-2035)' emphasizes encouragement The company has improved its ability to guarantee key resources such as lithium, nickel, cobalt, and platinum, and the market has seen the importance of lithium resources again. In the future, the valuation space of lithium stocks will be beyond imagination. Inevitably, the cycle law cannot escape the depression of the lithium industry for two years. The production of power lithium-ion batteries is still inseparable from lithium. Lithium resources extracted from upstream salt lakes or ore are further refined into compounds such as lithium carbonate and lithium hydroxide, and finally used in the manufacture of power lithium-ion batteries and 3C products. It can be said that the prosperity of the lithium industry is inseparable from the prosperity of the new energy vehicle market. But as a member of the non-ferrous metal industry, the lithium industry cannot escape the cyclical laws. Since 2018, overproduction has become an important factor restricting lithium prices. Lithium prices once ushered in a surge from the second half of 2015 to the first half of 2016. Data show that in the second half of 2015 alone, the price of lithium carbonate more than tripled. 'At that time, the accumulated production of power lithium-ion battery companies was released in 2015. In addition to the uncertainty of the new energy vehicle subsidy policy in 2016, battery companies accelerated the production of cobalt, lithium and other raw materials. Demand has reached its peak.' A cobalt-lithium product trader in Jiangsu introduced. Seeing profitability, various sources of capital poured into this industry, and the pace of increase and expansion was significantly accelerated. Since it usually takes 2 to 3 years from construction to commissioning of new lithium compound projects, industry output will be released in a concentrated manner from 2018. Beginning in the second half of 2018, the supply of lithium compounds was released rapidly, and prices began to continue to fall. Since the output has been cleared and the industry has ushered in a turning point since 2018, overproduction has become the 'overhanging sword' of the entire lithium industry. In 2020, the epidemic hit the integration industry again. Due to weak demand, prices from lithium concentrates to lithium salts were sluggish, and the former lithium giant also declared bankruptcy. In October this year, the Australian bankruptcy management company KordaMentha announced a notice that the Australian lithium concentrate production company Altura has entered bankruptcy management. Altura is one of the five largest lithium mines currently in production in Australia. Its production and sales exceed 10% of Australia’s total supply of lithium concentrate. Downstream customers include Ganfeng Lithium, Ruifu Lithium, Yongshan Lithium, etc. Raw material suppliers for many lithium salt plants. According to the announcement, due to the heavy debt burden and the price of lithium concentrate falling below the profit and loss line of US$400/ton, Altura's cash flow has continued to be tight since the second half of 2019, and the debt scale is high. The Li Chao team of CITIC Securities believes that the low lithium price has caused large losses in upstream lithium resources and domestic lithium salt companies. This situation is expected to be unsustainable. Altura's entry into bankruptcy management indicates that the supply of lithium concentrate from the second half of 2019 is still continuing. While the low lithium price has caused losses for the entire industry, it has also caused a large number of effective supplies to withdraw from the market. In November, Australian lithium producer Pilbara Minerals announced that it would acquire Altura for approximately US$175 million. According to the analysis of the Li Chao team of CITIC Securities, the output of lithium concentrate will accelerate the restoration of the supply and demand pattern of the lithium industry. At the same time, industry consolidation has also brought about an increase in the concentration of lithium concentrate supply and an increase in the company's bargaining power. The cost support of lithium prices has been strengthened, and price increases are expected to accelerate. 'Australia's lithium concentrate industry integration incident has also sounded the alarm, and the development of domestic lithium resources needs urgent attention. The increase in the voice of Australian lithium concentrate companies may cause the domestic lithium salt industry to bear the adverse effects of rising raw material prices.' Li Chao The team believes that “China’s Sichuan region has relatively rich lithium resources, and the salt lake in Qinghai has begun to take shape in the production of lithium. As the industry chain pays more attention to resource self-sufficiency, it is expected that domestic lithium resource development will enter a period of rapid development.” Feng Securities believes that as the price of lithium rebounds, the profitability of lithium processing is expected to speed up recovery. Most of the domestic lithium concentrate is imported from Australia. The period from the beginning of purchase to the end of the sale is about 3 months. Once the price of lithium starts to continue to rise, the profit of lithium processing is expected to accelerate the restoration, and the profit of the lithium salt factory in the fourth quarter may exceed market expectations. Disclaimer: Some pictures and content of articles published on this site are from the Internet. If there is any infringement, please contact to delete. Previous: Current status and prospects of lithium battery ship applications