Analysis of Lithium demand Increment and supply Increment in 2022: the contradiction between Lithium supply and demand is prominent. It is difficult to ease the supply tension in the short term or will continue [Agency Review]

Core points:

The contradiction between supply and demand of lithium is prominent.

Since the second half of 2020, the global sales of new energy vehicles have led to a surge in lithium demand, and the fundamental situation of the lithium industry has been reversed. Due to the previous low lithium price, mines have reduced production and stopped production, and there is no new capacity put into operation; although the production cost of salt lake is low, and the low lithium price does not hinder the salt lake construction / expansion plan, the epidemic has forced the construction of manpower-intensive salt lake capacity to be interrupted and the new capacity put on hold.

At present, the contradiction between supply and demand of lithium is very prominent. On the one hand, the global sales of new energy vehicles have led to a surge in lithium demand since the second half of 2020, and on the other hand, the increase of lithium supply in recent years is extremely limited. Looking to the future, this report focuses on the analysis of lithium demand increment and lithium supply increment in 2022 and explores the marginal changes of supply and demand in lithium industry in 2022.

Lithium demand: from "industrial monosodium glutamate" to "white oil" is a disruptive change. In the early years, lithium was called "industrial monosodium glutamate", reflecting the wide range of uses but scarce use of lithium. Today, lithium is also known as "white oil", which reflects that lithium plays an important role in the energy field and is in great demand and indispensable. According to the SQM annual report, the global lithium demand in 2020 is 330000 tons of lithium carbonate equivalent, of which power batteries account for as high as 54%, and the future lithium demand increment will mainly come from power batteries.

We expect global sales of 9.4 million new energy vehicles (+ 38%) in 2022, corresponding to an increase of about 144000 tons of lithium carbonate equivalent for power batteries in 2022. If the expansion of the industrial chain is taken into account, the actual demand increase will be even greater.

Lithium supply: lithium supply increment can not keep up with lithium demand increment

This report reviews the global production situation of salt lakes and spodumene mines, and shows that SQM, ALB and Pilbara will be the main increase in lithium supply in 2022 with strong certainty, of which SQM contributes 40, 000 tons of lithium carbonate equivalent, ALB contributes 26000 tons of lithium carbonate equivalent, and we estimate that Pilbara will have 16000 tons of lithium carbonate equivalent. In addition, there are some sporadic lithium supply increments that have not been fully described. the larger one is the Lanke lithium industry in Chaerhan Salt Lake, Qinghai, China. We expect the lithium supply to increase by 1-15000 tons of lithium carbonate equivalent in 2022.

Investment suggestion

In 2022, the increase of lithium supply can not keep up with the increase of lithium demand, and the contradiction between supply and demand is difficult to ease. It is expected that the shortage of lithium supply will run through the whole year, and lithium prices will remain high. Benefiting from the high lithium price, the performance of listed companies in the lithium industry is very flexible, and some second-tier companies seize the opportunity to grow and transform. Although the plate rose a lot in the early days, we believe that the market is lack of understanding of the flexibility of the performance of listed companies in the lithium industry and the persistence of high lithium prices for a long time, and there are still investment opportunities in the lithium industry. It is suggested that we should pay attention to the companies with guaranteed lithium resources and real production capacity and production growth in 2022.

Give the lithium industry an "overweight" rating.

Risk hint

The risk of lithium price fluctuation. The rising price of lithium ore squeezes the profits of lithium salt enterprises.

The construction period of salt lake and lithium mine is long, the slope climbing period of production capacity is long, and the production is uncertain.