The core contradiction of the lithium industry in 2022 is still the shortage of lithium resources. On January 5, 2021, we released the special report lithium: the evolution of contradiction, resources are the king. We believe that the core contradiction of the lithium industry in 2021 is the mismatch between supply and demand caused by the shortage of lithium resources and the unexpected growth of demand. Up to now, this contradiction has not been alleviated, but has intensified. In 2021, the price of lithium carbonate increased by more than four times. The sharp increase in lithium price did not lead to the rapid release of lithium resource capacity, mainly because the expansion cycle of lithium resources is long, generally in 3-5 years, while green space projects need more than 5 years. Therefore, the marginal increment of lithium resources in 2022 mainly comes from the expansion and resumption of production of mature projects of leading enterprises. For lithium salt plants, the operating rate may continue to decline in 2022. On the one hand, due to the large amount of new production capacity, on the other hand, the lithium deposits of most enterprises will be exhausted in 2021. At present, there is little left, and the resources circulating in the market are very limited.
Tight balance between supply and demand, lithium resources may become the biggest weakness in the development of lithium battery industry in 2022. According to our calculation of lithium supply and demand, it is estimated that the lithium resource supply will increase by about 177000 tons in 2022. Assuming that the global output growth rate of new energy vehicles is 50%, the annual supply and demand will maintain a tight balance. At present, in addition to lithium resources, other downstream cathode materials, batteries and other links in the lithium battery industry chain have accelerated the expansion of production. According to the current market’s sales expectation of new energy vehicles and the shipment planning of midstream enterprises, the biggest weakness or lithium resources in the development of the industry chain in 2022. At present, the inventory of lithium industry is low, and the expansion progress of resource capacity is mostly in line with or low expectations. We expect that the lithium price center will remain above the current price in 2022.
The value of lithium resources needs to be revalued. For the fundamentals of the lithium industry and related companies, the market expectations are relatively consistent. At present, the main difference lies in whether the valuation of lithium resources enterprises has the same valuation system as other strong cycle commodities. We do not deny that lithium also has strong cyclical properties, which is theoretically consistent with other commodity valuation systems, but we believe that lithium should have a valuation center different from other commodities. The historical valuation centers of related enterprises of gold, rare earth, copper and aluminum, which are also metals, are very different, which is obviously closely related to the growth, scarcity and strategic position of the metal itself. As the core material of lithium battery, lithium will maintain a high-speed growth trend in the next 10 years driven by the application fields such as new energy vehicles and energy storage. In addition, from a static point of view, the supply of lithium resources will continue to be in short supply in the next 3-4 years. The strategic position of lithium resources will continue to improve from various dimensions such as enterprise production guarantee, industrial supply guarantee and national resource security. Therefore, we believe that the value of lithium resources needs to be revalued, and lithium resources enterprises should enjoy higher valuation.
Investment suggestion: before the lithium price breaks through the historical high, the investment of lithium related companies mainly takes the lithium price as the “anchor”. After the lithium price breaks through the historical high, it gradually takes the performance as the “anchor”, and the performance of lithium companies will increase significantly in 2022. At the same time, under the background of the continuous shortage of global lithium resources, the value of lithium resources enterprises is expected to be revalued. It is suggested to focus on undervalued enterprises with rich lithium resources reserves and instant performance. Attention: Tianqi Lithium Corporation(002466) , Ganfeng Lithium Co.Ltd(002460) , Yongxing Special Materials Technology Co.Ltd(002756) , Chengxin Lithium Group Co.Ltd(002240) , Sinomine Resource Group Co.Ltd(002738) , Keda Industrial Group Co.Ltd(600499) , Tibet Mineral Development Co.Ltd(000762) , Zangger mining, Sichuan New Energy Power Company Limited(000155) , etc.
Risk factors: the sales growth of new energy vehicles is less than expected; The capacity release of lithium resources exceeded expectations; Risk of falling lithium prices.
