Molybdenum Enterprise Stock Keeps Hitting Limit Up after Acquiring Lithium Sources despite Government Regulation

SHANGHAI, Mar 25 (SMM) - Recently, although the upside momentum of domestic lithium-related product prices temporarily mitigated after the Ministry of Industry and Information Technology and three other departments vowed to jointly regulate lithium prices, the prosperity of the lithium industry still exists, and there are still many companies extending their footprint into the lithium sector, and strive to share a piece of the pie.

Jixiang Co. (603399), who intended to acquire 100% of the equity of Hunan Yongshan Lithium Co. held by Ningbo Yongshan for 480 million yuan in early January this year, recently recorded three limit up in four trading days!

Jinzhou Jixiang Molybdenum Co., Ltd. is a large domestic molybdenum enterprise, mainly engaged in the production, processing and sales of molybdenum products such as molybdenum furnace charge, molybdenum chemical and molybdenum metal, etc. For this cross-border engagement of lithium-related businesses, Jixiang Co. explained that "in recent years, with the rapid development of new energy vehicles and other downstream industries, and under the company's sufficient financial support and professional management, the target company is expected to bring good prospects for its development.”

It is reported that Hunan Yongshan Lithium mainly produces battery grade/industrial grade lithium carbonate and lithium hydroxide, which are the main raw materials for lithium battery cathode materials, and the downstream applications include power batteries and energy storage batteries.

Recently, many lithium industry chain enterprises have released their 2021 performance report, most of which have achieved sound results. Among them, Nuode Group whose main business is lithium battery copper foil achieved a year-on-year jump of more than 7409% for its net profit. The lithium duo - Ganfeng Lithium and Tianci Materials – both saw their net profit jumping more than 300%.

It is worth mentioning, however, that lithium salt prices have stabilised for several days after the Ministry of Industry and Information Technology released news to maintain supply and stabilise prices of lithium sources.

According to SMM prices, as of March 25, the average spot price of domestic battery-grade lithium carbonate was 503,000 yuan per tonne, its eighth consecutive trading day to maintain stability; the average spot price of battery-grade lithium hydroxide was reported at 491,500 yuan per tonne, and the prices have also been stable for many days.

How is the supply and demand of lithium salt after getting rid of the policy factor?

According to latest SMM research, lithium carbonate supply continues to pick up, and some traders have been actively selling off. Lithium carbonate supply and market circulation both increases. On the demand side, ternary materials prices are affected by nickel prices, and orders in April have downside potentials. The demand for lithium carbonate is expected to rise only slightly. This week, some manufacturers purchased for orders in April, but the centralised procurement period has not yet arrived.

The upstream has become less firm to their quotations, but the actual prices have not dropped palpably. The downstream is still wait-and-see. Lithium carbonate prices are stable as a whole.

As for lithium hydroxide, the supply has been low and the manufacturers are mainly delivering long-term orders, hence the spot supply of lithium hydroxide is tight. On the demand side, the downstream material factories have not yet made bulk purchase partly due to uncertainties concerning orders in April, and the purchase demand is expected to be sluggish. On the price end, although the market supply has been in deficit, the overall momentum in lithium hydroxide, whose prices rise more slowly, has been affected by lithium carbonate prices.

[Disclaimer: The above representation and data is based on market information SMM believes to be reliable at the time of acquiring as well as the comprehensive assessment by SMM research team, and any and all information provided in this article is for reference only. This article does not constitute a direct recommendation for investment or any decisions in any form and clients shall act on their own discreet and any decisions made by clients are not within the responsibility of SMM.]