The earnings of non-ferrous metals sector are mainly driven by valuation
The valuation of non-ferrous metals industry will fluctuate sharply with the performance
The price of resource products is an important factor to promote the cyclical fluctuation of the industry, and the price of resource products often affects the company’s share price by affecting the company’s performance. At the same time, investors’ expectation of the company’s performance will be reflected in the company’s valuation in advance, so the valuation of non-ferrous financial industry will fluctuate greatly
Cyclical stock investment needs to pay more attention to expectations
Cyclical stocks will respond to price expectations in advance, which is reflected in the fact that the stock price has increased to a certain extent (i.e. during the story period) before the bottom rebound of resource prices. When the price of resource products rises sharply, the stock price will generally continue to rise or peak (i.e. cash exchange period). Therefore, our value research pays more attention to the marginal improvement of the bottom of resource prices
The research of cyclical products can focus on forward-looking indicators
In the research of nonferrous metals industry, we can pay attention to forward-looking indicators, such as the willingness of upstream companies to put into production, capacity under construction, etc., as well as the current inventory level (although the inventory level is the result of the previous cycle, it can be used to predict the start of the next cycle. For example, if the current inventory level is low, once the future demand rises and the improvement of industry supply takes time, the price of resource products is likely to rise sharply)
The chemical properties of lithium determine that lithium is most suitable for battery production
Lithium is a metal element with the element symbol Li. The corresponding elemental substance is silver white soft metal, which is also the metal with the lowest density. It is used in atomic reactors, light alloys and batteries. Lithium and its compounds are not as typical as other alkali metals, because lithium has a large charge density and a stable helium type double electron layer, which makes lithium easy to polarize other molecules or ions, but not itself. This affects the stability of it and its compounds. Due to the most negative electrode potential, lithium is the most active metal among known elements (including radioactive elements). In nature, it mainly exists in the form of spodumene, lepidolite and phosphoaluminite.
Lithium battery has the advantages of high open circuit voltage, high specific energy, wide working temperature range, discharge balance and self discharge electronics. It has long-term demand rigidity and demand prospect in the field of power battery and energy storage of new energy vehicles. Using lithium battery to generate electricity to drive the car, the driving cost is lower than that of ordinary fuel vehicles.
70% of lithium is used for downstream battery production. At present, the penetration rate of Shanxi Guoxin Energy Corporation Limited(600617) vehicles is increasing rapidly, which drives the demand for lithium
The new energy vehicle industry has benefited from the encouragement of policies such as carbon peak and carbon neutralization, and its growth rate is significantly faster than the overall growth rate of vehicles
The demand for lithium ore and lithium carbonate will continue to increase by 13.4% in the upper reaches of the industry in 2024, which will support the performance of lithium carbonate and new energy enterprises in the future
Lithium battery mainly consists of positive electrode, negative electrode, diaphragm and electrolyte
Lithium ion batteries use carbon materials as the negative electrode and lithium containing compounds as the positive electrode. There is no metal lithium, only lithium ions. This is lithium ion batteries. The most important four parts of the battery: positive electrode, negative electrode, diaphragm and electrolyte
When the battery is charged, lithium ions are generated on the positive electrode of the battery, and the generated lithium ions move to the negative electrode through the electrolyte. The carbon as the negative electrode has a layered structure, which has many micropores. The lithium ions reaching the negative electrode are embedded into the micropores of the carbon layer. The more lithium ions embedded, the higher the charging capacity. Similarly, when the battery is discharged (that is, the process of using the battery), the lithium ion embedded in the carbon layer of the negative electrode falls out and moves back to the positive electrode. The more lithium ions returned to the positive electrode, the higher the discharge capacity.
Disassembly of lithium battery industry chain: lithium ore lithium carbonate / lithium hydroxide ternary / lithium iron phosphate power battery new energy vehicle
As the lithium battery industry chain accounts for the largest proportion in the downstream demand of the lithium industry and will continue to increase, it mainly compares the pattern of each link of the lithium battery industry chain. The industry chain is specifically lithium mining enterprise – lithium salt processing enterprise – cathode material enterprise – Battery Enterprise – new energy vehicle enterprise.
Upstream raw material enterprises use ores (spodumene, etc.) or brine (generally from salt lakes) to extract lithium raw materials in various ways, and form various lithium compounds through raw material processing, including lithium carbonate, lithium hydroxide, lithium fluoride, lithium chloride, etc.
Taking lithium carbonate and lithium hydroxide as examples, lithium carbonate is mainly used in the production of lithium iron phosphate batteries and ternary low nickel batteries, while lithium hydroxide is mainly used in the production of ternary high nickel batteries. At present, the technical path of ternary batteries is to develop to low cobalt and high nickel.
There are differences in the production expansion cycle of lithium battery industry chain, prolonging the mismatch time between supply and demand
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 production expansion cycle of upstream lithium mines is more than 2 years, and the production expansion cycle of salt lake is longer, so the mismatch time between supply and demand is longer
The sharp rise in the price of lithium carbonate in the second half of 2021 is mainly due to the large expansion of production by midstream and downstream enterprises. The expansion cycle of lithium mines and salt lakes is relatively long, such as approval and environmental assessment for mine expansion, while the expansion of salt lakes requires the expansion of brine production (previously, lithium was used as a by-product of brine processing and production of chemical fertilizer). The expansion cycle of salt lakes is longer than that of mines
Salt lake is the main body of lithium reserves and ore is the main body of lithium supply
Brine exists in the salt lake. The collection method is to extract lithium from the salt lake. However, at present, the supply of lithium still comes from pegmatite and other ores
Pegmatite type has good grade and mature technology: granite pegmatite type mainly includes spodumene and lepidolite. At present, spodumene is mainly used in the production of lithium carbonate in the market, and its technology has been relatively mature; Lithium mica is more suitable for the production of glass ceramics.
Lithium ore supply is highly concentrated and mainly distributed in Australia and Chile
By country, the supply of lithium raw materials is mainly concentrated in Australia, Chile, China and Argentina, with a high concentration of capacity CR3 of 95%, of which Australia accounts for 55%. It is the main supplier of lithium raw materials in the world. In terms of sub items, Cr4 reaches 47%, of which greenbushes accounts for the largest proportion.
Due to its resource endowment, lithium resources are still mainly concentrated in Australia, Chile and other countries. China’s lithium resources are divided into salt lakes and lithium mines: lithium salt lakes are mainly distributed in Qinghai and Tibet. Most of the brine in Qinghai salt lake belongs to magnesium sulfate subtype and chloride type. Dachaidan Salt Lake, East Taijinar Salt Lake, West Taijinar Salt Lake and Yiliping Salt Lake in Qinghai Qaidam Basin are typical sulfate salt lakes with high magnesium lithium ratio, Chaerhan Salt Lake Brine belongs to chloride type. Tibet Salt Lake has good resource endowment and low magnesium lithium ratio. Zabuye Salt Lake is a carbonate salt lake with a magnesium lithium ratio of 0.01:1. However, due to the sectorau area in Tibet, the corresponding mining conditions are poor and it is difficult. Spodumene ore is mainly concentrated in Sichuan, with good resource endowment and low degree of development. Methylka in Ganzi Prefecture and Kerin in Aba Prefecture are two main spodumene mining areas in Sichuan, which are relatively concentrated, including six mines with mining rights. The ore resource reserves of the six mines reach 160 million tons, equivalent to more than 2 million tons of lithium oxide reserves. At present, only methylka and yelonggou lithium mines are under mining, and the rest are in the early stage of the project. Sichuan is endowed with good lithium resources, with an average grade of 1.3% – 1.4%. Spodumene resources in Sichuan need to be developed urgently.
Lithium ore (brine) is processed to form lithium hydroxide and lithium carbonate. The competition pattern of lithium hydroxide is better than that of lithium carbonate
At present, lithium carbonate is mainly used to produce lithium iron phosphate and low and medium nickel cathode materials in ternary materials, while lithium hydroxide is mainly used to produce high nickel cathode materials in ternary materials
Globally, the output Cr4 of global lithium salt processing enterprises is about 69%, with a high concentration, of which the total proportion of Chinese enterprises Ganfeng / Tianqi is 26.3%. From the perspective of China, the Cr4 of lithium carbonate enterprises reaches 39%, which is far lower than that of lithium hydroxide enterprises (Cr4 reaches 77%), and the production process requirements of lithium carbonate are lower than that of lithium hydroxide, so the competition is more intense. Among them, Tianqi / Ganfeng are the leaders in the field of lithium carbonate / lithium hydroxide respectively.
