Overseas giants expand lithium resources at a slower-than-expected rate and maintain a tight supply and demand pattern [institutional review]

Lithium tracking: Alb (Yabao) Lithium resource expansion rate is lower than expected, supply exceeds demand and does not change.

Main points of investment:

Event: Albmarle reported production and operation in the fourth quarter of 21, with a net loss of $4 million and an adjusted diluted EPS of $1.01, down 14% from a year earlier. The sales volume of lithium salt in 2021 is 88000 tons, which is expected to increase by 20 percent 30 percent in 22 years over the same period last year, and the output in 2025 will reach 200000 tons. The release progress of the leading capacity of lithium resources is lower than expected, and the high running time of lithium salt may be further lengthened.

1. The company's profitability increased in 2021, but Q4 cost overruns led to quarterly losses. For the whole of 2021, excluding the sale of the fine chemistry business, the company's net sales were $3.3 billion, an increase of 11% over the same period last year. The adjusted EBITDA was $871 million, an increase of 13% over the same period last year. However, in the fourth quarter, the company lost US $4 million, mainly due to the slow progress and cost overruns of the company's Australian Kemerton project as a result of the impact of the epidemic on the supply chain and labor force.

2. The price adjustment of the company's long order is slow. Of the Alb lithium salt products, 50% are based on the international lithium salt price index (Benchmark Minerals, Fast Markets, etc.), 40% are fixed prices for long orders, and 10% are sold at Chinese spot prices. The sales price of 21Q4 has increased by about 18% compared with the same period last year (the domestic lithium salt price has doubled in the same period). The company expects the average price to increase by 40% in 2022 compared with the same period in 2021. Overseas this long-order pricing model reduces the cost pressure on the industry chain.

3. Alb long-term planning 45-500000 tons LCE:Alb expects to increase nominal production capacity to 175000 tons in 2022, increase about 200000 tons through expansion of existing projects in the next 3-5 years, and increase potential projects by about 7.5-125000 tons LCE, to 45-500000 tons LCE.

Chile La Negra Phase III and IV: the production capacity of 40,000 tons was completed and put into production in October 2021, and customer certification is currently under way. It is expected that Q2 will be sold for the first time in 2022.

Kemerton Lithium Salt Plant in Australia: the first phase of the 25000-ton project has been completed and 22H2 is expected to sell its products; the completion of the second phase has been postponed to 22H _ 2 and the sale of products has been postponed to 2023, mainly due to labor and supply chain shortages caused by the epidemic.

Wodgina project: at present, three production lines have been completed, totaling about 750000 tons of lithium concentrate, which has been shut down in 2019. The resumption time of the first phase of 250000 tons of lithium concentrate project has been advanced to 22 Q2.

Domestic lithium salt plant: Guangxi Qinzhou 25000 ton lithium salt plant is expected to complete the acquisition of 22H1, is expected to achieve product sales, the future plans to expand production to 50, 000 tons of lithium hydroxide capacity; Meishan 50, 000 tons of lithium hydroxide plant 2022H1 to start construction, is expected to be completed by the end of 2024; Zhangjiagang 50, 000 tons of lithium hydroxide plant construction began at the end of 2022, is expected to be completed by the end of 2024. The lithium salt factory needs a 6-month product certification cycle and 2 years to reach production.

The release rate of leading capacity of lithium resources is lower than expected, and the supply and demand pattern remains tight: Alb lithium salt production in 2021 is 88000 tons, of which lithium carbonate and lithium hydroxide each account for 50%. The company expects sales to increase by 20% in 2022, 200000 tons in 2025, 21-25CAGR of 23%, and demand-side compound growth rate of 30% +. We can see that major resource countries such as Australia, Chile and Argentina are still affected by the epidemic, resulting in labor and supply chain shortages, which leads to a lengthened production cycle of lithium resources and a higher possibility of lower-than-expected release from the supply side. the supply of lithium resources remains tight.

Risk hint

The risk of industrial policy change, the risk of higher-than-expected release of supply-side, the risk of less than expected sales of new energy vehicles, the risk of repeated and out-of-control epidemics at home and abroad, the risk of deviation in demand measurement, and the risk that the public data used in the research report are not updated in a timely manner.