Lithium prices are expected to remain high in 2022, and policies support accelerating the release of China's lithium resource capacity
Due to the contradiction between supply and demand, lithium prices have continued to rise since July 2021. Up to now, the price of battery grade lithium carbonate is 340000-350000 yuan / ton, the price of industrial grade lithium carbonate is 320000-33000 yuan / ton, and some bidding sales prices are 355000-365000 yuan / ton; The quotation of lithium hydroxide is about 260000-300000 yuan / ton. Recently, the price of lithium carbonate has continued to rise. On the one hand, it is affected by the limited supply of natural gas in the western region. On the other hand, the low temperature in winter affects the lithium extraction capacity of salt lakes. It is expected that the contradiction between supply and demand will be concentrated in Q1 in 2022, and the contradiction between supply and demand is expected to be alleviated by the end of Q1 in 2022. Lithium prices are expected to remain high throughout 2022.
Several projects are concentrated in 2022h2 and put into operation. The performance of lithium price in 2023 needs to be further judged based on the capacity of 2022h2. 2023 is still in the industry growth period, with strong demand, and the progress of supply expansion needs to be observed. In terms of policy, the Ministry of industry and information technology recently said that it would give full play to the role of the inter ministerial joint meeting mechanism of energy conservation and new energy vehicles, formulate corresponding support policies, comprehensively improve the guarantee capacity of key resources, and promote the acceleration of the development of lithium resources in China (focusing on provinces and cities such as Qinghai, Sichuan and Jiangxi). The release of medium and long-term production capacity will drive the price of lithium lower.
The contradiction between supply and demand is large and the industry cycle is long. It is expected that the price of lithium carbonate will remain high in the medium cycle
Supply side: focus on the completion of Salt Lake and mineral projects in 2022. Now it is expected that the capacity will be gradually released in 2022q4, and the annual lithium supply is 760000-800000 tons. The supply side is subject to the long release cycle of new lithium salt capacity (2-3 years) and the division of the world's most important high-quality resources in the last round. Most of the lithium resources recently acquired by lithium companies or battery factories are original mines, so there is some uncertainty in the investment and construction output.
Demand side: however, the penetration rate of new energy vehicles will increase rapidly in the next few years, and the demand may exceed expectations. We predict that the global lithium battery shipment is expected to reach 1300-1500 GWH in 2024. Measured by 700-800 tons of lithium carbonate consumed by a single GWH, the demand for lithium carbonate is expected to exceed 1 million tons in 2024 and 1.5 million tons in 2025 (1700-2000 GWH shipment of lithium batteries).
In the medium and long term, with policy support, superimposed capacity release and cost reduction, lithium price will return to a reasonable level.
The overall price tolerance of the downstream is strong, and the growth is straightened out after the most tense contradiction between supply and demand
Downstream enterprises are relatively receptive to the current lithium price, and the market share is the primary consideration of battery factories and car enterprises.
From the feedback of the industrial chain, downstream enterprises have accepted the fact that resources are tight. At this stage, the price is a secondary issue. The important thing is to ensure the supply of raw materials and ensure the shipment volume, so as to avoid being eliminated in the industry reshuffle.
According to the feedback from the lithium salt factory, the vehicle factory and battery factory have been negotiating with the lithium salt factory for 3 or even 5 years (locking quantity but not price).
From the perspective of the whole downstream industrial chain, the price bearing capacity of power battery is the highest. Some vehicle enterprises have begun to increase the price, and it is expected that the power link will be partially completed. The energy storage market has large capacity and fast growth. Many enterprises are reluctant to withdraw from the market, but their products have low gross profit margin and are more sensitive to price, which is most affected by the rise of lithium price. Besides energy storage, other marginal demand and medium and low-end demand are affected simultaneously. When the high price falls, the growth will be further highlighted.
We mainly recommend battery plants with lithium resources laid out in advance and expected to supply lithium carbonate by 2022: Contemporary Amperex Technology Co.Limited(300750) , Byd Company Limited(002594) , Eve Energy Co.Ltd(300014) , Gotion High-Tech Co.Ltd(002074) . In addition, after the high price of Q1 lithium carbonate in 2022, it is good for core growth and post cycle targets: Yunnan Energy New Material Co.Ltd(002812) , Shanghai Putailai New Energy Technology Co.Ltd(603659) , Shenzhen Dynanonic Co.Ltd(300769) , Ningbo Ronbay New Energy Technology Co.Ltd(688005) , Beijing Easpring Material Technology Co.Ltd(300073) , Gold Cup Electric Apparatus Co.Ltd(002533) .
Risk warning: the completion progress of Salt Lake and mineral projects is not as expected; Demand growth exceeded expectations
