Investment summary:
The structural appearance of the supply gap pushed the lithium price to a record high. In 2021, the global production and sales of new energy vehicles, the shortage of concentrate supply and the rising demand for reserve storage in the middle reaches promoted the lithium price to rise step by step from the bottom area at the beginning of the year. By the end of 2021, the quotation of battery grade lithium carbonate / lithium hydroxide was 275 / 222500 yuan / ton, an increase of 459% / 370% over the beginning of the year, a record high; Lithium concentrate prices also far exceeded the previous round of highs, highlighting the upstream resource premium.
Supply side: high prices promote the acceleration of upstream output, and the global lithium resource supply tends to be diversified. The lithium price breaking through the record high will effectively improve the supply side growth rate of the lithium industry (maintain high demand growth → maintain high prices in the cycle → comprehensively improve the expectation of profitability → increase the current capital expenditure and subsequent investment → increase the supply and supply growth rate in the next 3-5 years).
In 2022, the expansion of the original project of the head company will contribute to the market increment. Our statistics include: (1) the supply in Australia increased by 27% year-on-year to 293000 tons of LCE, and the increment comes from the second phase of greenbushes and the restart of ngungaju; (2) 50000-60000 tons of LCE will be added to South American salt lakes, including the expansion of sqm / ALB and the commissioning of cauchari olaroz phase I; (3) China may add 32000 tons of LCE, a year-on-year increase of 30%. We expect the global lithium supply to reach 688000 tons in 2022, with a year-on-year increase of 34%. It is worth noting that the tight supply of 22h1 lithium concentrate is difficult to effectively alleviate. Although there is an increase in supply, the proportion of spot is still low. Small and medium-sized lithium salt plants that have not signed an underwriting agreement still face the problem of shortage of raw materials. Looking forward to 2025 and the long term, many green space projects around the world can be put into operation, and the lithium supply territory will show the diversified characteristics of "multi region (Australia + South America + North America + Africa) + multi type (Salt Lake + pyroxene + mica + clay)".
Demand side: the production, marketing and penetration of electric vehicles are expected to be upgraded, and the expansion of production in the middle reaches will help the demand for lithium raw material storage. The two wheel drive of policy and market promotes the significant expansion of the global new energy vehicle market in 2021, with annual sales of more than 6 million vehicles, an increase of more than 85% over 2020. In 2022, the demand for electric vehicles in China, the United States and Europe is expected to continue to resonate, and the penetration rate will rise again. The global sales of new energy vehicles may reach 8.5 million, and it is expected to exceed 20 million by 2025. In addition, the downstream demand expansion is expected to continue to drive the whole chain of "battery material (ferrophosphate / ternary / lithium cobaltate / electrolyte / metal lithium) - lithium salt (lithium carbonate / lithium hydroxide) - lithium ore (pyroxene / brine / mica)"; At present, manufacturers of lithium iron phosphate and ternary materials in the middle reaches are actively releasing production capacity, which will boost the stock demand of lithium salt link. We predict that the global lithium demand may increase by 37.5% year-on-year to 750400 tons of LCE in 2022. By 2025, the data may exceed 1.5 million tons, and CAGR may increase to 29.5%.
Supply and demand pattern: the supply of mineral salt is still tight, and the resource premium may continue. In 2022, despite the large supply of Australian mines and salt lakes, the market demand for new energy vehicles is expected to continue a strong structural expansion. The demand for raw material storage brought by the expansion of midstream materials and batteries will continue to drive the consumption of lithium resources, and the supply of lithium salts and lithium mines may remain relatively tight (especially 22h1). In terms of price, we believe that in 2022, the average price of battery grade lithium carbonate may be 250000-35000 yuan / ton, and the average price of lithium concentrate may be 2500-3500 dollars / ton; Due to the greater shortage of concentrate, the market may present a structural resource premium.
Industry trend: the spot auction mode of concentrate has impacted the current long order pricing mechanism, and the integration trend of lithium industry chain is becoming more and more obvious. In 2021, the spot lithium concentrate in Australia was successfully sold through the bidding auction mode, the anchoring effect of the bidding price has been fully revealed, and the bargaining power of the mine has been significantly improved. The successful implementation of the auction mode and the high premium space relative to the long order may trigger the follow-up new mines to follow suit, driving the decline of the proportion of the long-term association or the adjustment of the pricing formula, which may have a far-reaching impact on the future pricing mechanism of the industry. The profit margin of lithium salt processing in China is facing further compression, and it is more difficult to obtain the underwriting right at low cost. From the perspective of industrial chain, whether it is the extension of processing / battery enterprises to the resource end, the self built processing capacity of mines or the cooperation with downstream enterprises to build factories, all parties in the industry try to create the integration and coordination of their own businesses, so as to achieve the purpose of grabbing excess profits and increasing pricing power. European and American countries have obvious resource advantages and broad terminal automobile market, and strive to improve processing capacity and try to build their own supply chain closed loop. The previous cooperation mode of "Australian mining + Chinese processing plant" may face challenges. Considering geopolitics, industrial upgrading and other factors, China should raise its lithium resource self-sufficiency rate to a more important strategic position; For China's lithium industry, enterprises with good resource endowment, high guarantee rate and strong certainty of performance release will receive higher valuation premium.
Related companies: Ganfeng Lithium Co.Ltd(002460) , Tianqi Lithium Corporation(002466) , Qinghai Salt Lake Industry Co.Ltd(000792) .
Risk tip: the release of mine end supply exceeds expectations, and the production and sales of new energy vehicles are less than expected, resulting in geopolitical risks.
