Industry perspective
Logic 1: the supply cycle of lithium ore is 6-8 years on average, and the supply growth rate is slow
In the supply cycle of mines in Australia, the exploration and research stage needs to go through three stages: project feasibility study (DFS) and final investment decision (FID), with an average time of more than 5 years; After the feasibility study, the average time of mine design preparation, commissioning and approval is 1-2 years; The average time from mine production to production is 1-2 years; The average production cycle of the mine after shutdown is 2-5 years. Most of the mines to be developed in the world are in the DFS stage and are expected to be put into production in 24-26 years.
Logic 2: mismatch of production expansion cycle of lithium battery industry chain
The price rise logic of silicon and lithium ore in the past 21 years was resumed, and the mismatch between supply and demand was the main reason. However, more than 80% of the silicon production capacity was concentrated in China, and the average period of production expansion was 1.5 years. The release of production capacity in 22 years may stabilize the demand. The industry entered a new round of balance, and the high silicon price is difficult to sustain. 80% of lithium ore production capacity is concentrated abroad. The construction and operation cycle is 3-5 years on average, and the production progress may be less than expected. The release speed and difficulty of the supply side determine the difference between the follow-up trend of lithium ore and silicon material, and the lithium price is difficult to have a big inflection point in recent years.
The average production expansion cycle of materials in the middle reaches of the lithium battery industry chain is 1-2 years, the average production expansion cycle of lithium batteries is 0.5-1 years, while the average production expansion cycle of upstream lithium mines is 3-5 years, and the mismatch time between supply and demand is prolonged. Lithium mine bottomed out in the 20-year Q4 production cycle. Marked by the shutdown of Altura, from 21q1, the development of downstream new energy vehicles + energy storage has driven the rapid recovery of industry demand. Midstream enterprises have accelerated production expansion to seize market share. It is difficult for the upstream to match the rhythm of production expansion in the midstream and downstream. The Australian concentrate inventory is in the downward channel, and the ore price has accelerated to rise.
Logic 3: high quality resources are scarce and the incremental scale is limited
Projects with a single production capacity of more than 50000 tons are very scarce. In the next 2-3 years, most of the new projects are small-scale and can really disturb the increment of supply: talison phase 3, Yabao wodgina2, phase 3, sqm expansion and Manono. The spot supply of lithium concentrate is tight, which is basically sold in the form of underwriting, and only a small part is sold in the form of loose orders.
It is estimated that the supply increment in 22-23 years will be 170000-180000 tons and 250000-26000 tons respectively, and the growth rate will decrease year-on-year. In 22 years, only greenbushes and Atacama have an incremental scale of more than 20000 tons, and Altura, Huashan porcelain ore, Co salt lake and Qarhan Salt Lake have an incremental scale of 10000-20000 tons. In 23 years, the increment scale of more than 30000 tons is only Atacama and Co salt lake, and the increment scale of 20000-30000 tons is Finniss and wodgina.
Investment suggestion & investment object
The deterministic supply and demand gap of lithium mines in 22 and 23 years will be greatly alleviated in 24 and 25 years. The sustainability of this round of supply and demand mismatch will exceed expectations and continue to be optimistic about investment opportunities in the lithium sector. Focus on the idea of "performance + growth". Focus on companies with resources, processing capacity and growth in the future, such as leading Tianqi Lithium Corporation(002466) , Ganfeng lithium industry, elastic targets Yongxing Special Materials Technology Co.Ltd(002756) , Chengxin Lithium Group Co.Ltd(002240) , Keda Industrial Group Co.Ltd(600499) .
Risk tips
The emergence of new technologies for lithium extraction has led to a significant release of supply; Accelerate exploration and mining in new mines and accelerate the release of supply; The output release of lithium company did not meet the expectations, resulting in the performance did not meet the expectations.
