Tesla plans to underwrite core lithium concentrate, and the resource side is still the focus of the industrial chain layout
Event: according to the announcement of core, core has signed a specific legally binding lithium concentrate underwriting agreement with Tesla. Core will provide up to 110000 tons of lithium concentrate to Tesla within four years. The underwriting price refers to the market price of lithium concentrate. The two sides will complete the negotiation and sign the final product purchase agreement before August 27, 2022. The agreement stipulates that the supply of lithium concentrate will be started before July 31, 2023 (subject to the extension of the agreement between the two sides). At the same time, Tesla will support the core integrated downstream lithium salt plant.
Comments: 1 The resource side is still the focus of industrial chain layout. The demand for new energy is uncertain, and the supply of lithium concentrate may be tight for a long time. Terminal vehicle enterprises or battery plants such as Tesla, Byd Company Limited(002594) , Contemporary Amperex Technology Co.Limited(300750) , Gotion High-Tech Co.Ltd(002074) and others actively layout the resource side to ensure the stable supply of key battery raw materials, while lithium salt plants Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Sinomine Resource Group Co.Ltd(002738) Sichuan Yahua Industrial Group Co.Ltd(002497) and others also improve the resource self-sufficiency rate through the mine end layout to open up the profit space. 2. The trend of mine end integration continues to strengthen. Core plans to build a lithium salt plant locally in the future and will get the support of Tesla. Previously, Pilbara, allkem and mineral resource have announced the planning of downstream integration. At present, the price of lithium salt is high, and the trend of downstream lithium salt plant of mine end integration continues to strengthen
Aluminum prices are expected to remain high, and processing links may continue to benefit from the redistribution of profits in the industrial chain
Events: ① Rusal announced in the Hong Kong stock exchange that it would temporarily close the production of Nikolaev alumina refinery in Nikolaev region of Ukraine; It will not immediately have a wider impact on the aluminum production of the relevant aluminum smelters of the group, and all necessary measures will be taken to ensure the sustainability of the business. ② According to SMM, the resumption of electrolytic aluminum production in China has accelerated, and electrolytic aluminum enterprises in Yunnan, Guangxi, Guizhou and other places on China’s supply side have resumed production steadily. The total output of electrolytic aluminum in China is still lower than that in the same period last year.
Comments: 1 Affected by the conflict between Russia and Ukraine, the supply of energy and alumina in Europe may be further limited. At present, the dominant inventory of LME is only 820000 tons, which is a historical low in recent years, or strengthen the tight supply pattern of overseas electrolytic aluminum to form an effective support for aluminum prices.
\u3000\u30002. The resumption progress of electrolytic aluminum production in China may be accelerated, but the short-term aluminum price pricing weight has a greater impact on the domestic and overseas prices. The short-term electrolytic aluminum import and export windows are closed, the overseas demand may be met through the trade of processed products, the profit distribution in the aluminum industry chain will be readjusted, and the export profit of aluminum foil / strip / profile is expected to improve.
Q4 sqm performance increased significantly in 2021, and the proportion of price locked contracts is expected to decrease in 2022
Event: sqm released the quarterly report of Q4 in 2021. The annual revenue in 2021 was $2.862 billion, an increase of 58% year-on-year, of which Q4 in 2021 was $1.084 billion, a year-on-year increase of + 111%. The annual net income in 2021 was USD 589 million, with a year-on-year increase of 257%, of which Q4 net income in 2021 was USD 322 million, with a year-on-year increase of 381% and a month on month increase of 204%.
Lithium business volume price and contract in 2022
(1) sales volume: the annual sales volume in 2021 was 101000 tons, with a year-on-year increase of about 53%, of which the sales volume of Q4 lithium salt in 2021 was 31000 tons, with a year-on-year increase of about 21%.
(2) average price: the annual average price in 2021 is 9281 US dollars / ton, of which the average selling price of Q4 in 2021 is 14600 US dollars / ton, an increase of about 174% year-on-year.
(3) sales volume guidance in 2022: about 140000 tons.
(4) sales contracts in 2022: 20% are fixed or variable price cap contracts, 50% are variable price contracts and 30% are not signed.
Lithium demand expectation
Sqm expects the market to grow by at least 30% in 2022 and believes that it may reach 1 million tons earlier than previously expected.
20222024 project planning
(1) MT Holland project: the planned capacity of 50000 tons of lithium hydroxide is expected to be put into operation in H2 in 2024, with a capital expenditure of US $700 million.
(2) Carmen lithium processing plant: the capacity of lithium carbonate will reach 180000 tons in 2022, and the capacity of lithium carbonate will increase by 30000 tons to 210000 tons LCE from 2022 to 2024. At the same time, the capacity of lithium hydroxide will increase from 21500 tons to 40000 tons, with a total capital expenditure of US $250 million.
(3) Pampa orcoma project: increase the production capacity of 2500 tons of iodine and 320000 tons of nitrate.
Risk tip: the metal price is lower than expected, the supply release is higher than expected, and the project progress is lower than expected
