The net profit of lithium carbonate major enterprises surged in Q3, prices of lithium carbonate likely to remain stable in November

SHANGHAI, Nov 19 (SMM) — According to an SMM survey, the overall prices of battery-grade lithium carbonate have shown an upward trend since the end of August. Daily average prices of battery-grade lithium carbonate stood at 43,000 yuan/mt as of November 18, 8.2% higher than the lowest price of 39,750 yuan/mt since the beginning of the year.

Prices of industrial-grade lithium carbonate have bottomed out and risen again since the beginning of July. Daily average prices of industrial grade lithium carbonate came in at 38,250 yuan/mt, 11.7% higher than the lowest price of 34,250 yuan/mt since the beginning of the year.

The rebound of lithium carbonate prices drive the increase of enterprise profits to a certain extent. Recently, many major lithium carbonate enterprises announced their third-quarter results. For example, the third-quarter net profit of Chengxin Lithium Group surged 1071.4% year on year.

The income of Ganfeng Lithium in the third quarter stood at 1.506 billion yuan, up 8.5% year on year. The net profit attributable to shareholders of listed companies surged 421.32% year on year to 174 million yuan.

It was reported that Ganfeng Lithium had exercised its option to increase its holding of Sonora project in Mexico, and its holding shares increased from 22.5% to 50%, at a cost of 23 million pounds (US$ 30 million). In addition, the Sonora project will be put into production in 2023 if the financing is completed. According to the announcement of Ganfeng Lithium, Sonora Project is a lithium clay extraction project located in Mexico, which is one of the largest lithium resource projects in the world at present. The total lithium resource of the project is about 8.8 million tons of lithium carbonate equivalent. It is estimated that the annualized lithium hydroxide production capacity will stand at 20,000 mt after the first phase project is put into production.

The income of Yongxing Materials in the third quarter stood at 1.403 billion yuan, up 15.41% year on year, and the net profit attributable to shareholders of listed companies fell 5.97% year on year to 90.71 million yuan.

Yongxing Materials once said that the company's lithium battery new energy sales are in good condition. The average monthly output has exceeded 900 tonnes, and the lithium carbonate produced every month is in short supply. The main customers are Xiamen Tungsten, Hunan Yuneng, CITIC Dameng, MGL, which are leading enterprises in various fields of use. In addition, the certification work of Shanshan, Easpring Technology, Changyuan Lico, Guoxuan Hi-Tech and other companies is already underway.

Yahua Group's income in the third quarter stood at 920 million yuan, up 16.08% year on year, and its net profit attributable to shareholders of listed companies surged 611.73% year on year to 62.42 million yuan.

The income of Chengxin Lithium in the third quarter came in at 730 million yuan, up 11.54% year on year, and the net profit attributable to shareholders of listed companies surged 1071.4% year on year to 220 million yuan.

Recently, Galaxy Resources signed a three-year agreement with Sichuan Shengtun Lithium Industry Co., Ltd., a wholly-owned subsidiary of Shengxin Lithium. Shengxin Lithium has agreed to purchase at least 60,000 tonnes of spodumene concentrate from Catlin Mountain every year. The transaction will start in January 2021 and last until 2022 and 2023, when up to 180,000 tonnes of spodumene concentrate will be purchased from the Catlin Mountain Mine.

The net profit of most lithium carbonate enterprises in the third quarter surged year on year. SMM believed that the prices of lithium carbonate gradually started to rebound in August. Inventories of domestic lithium salt plants were under heavy pressure in the first half of the year due to the COVID-19 this year, leading to the decline in the prices. With the gradual recovery of consumer demand in the post-pandemic era, the new energy vehicle end-user transmits the recovery sentiment upstream. The domestic demand for lithium carbonate for cathode materials has turned positive year on year since June, with an average monthly growth rate of 10%. The market prices of battery-grade lithium carbonate in China stood at 41,000-45,000 yuan/mt up to now, and the market prices of industrial-grade lithium carbonate came in at 37,000-39,500 yuan/mt.

In the fourth quarter, the output reduction in Qinghai was larger than that in Sichuan and Jiangxi, and the supply of industrial-grade lithium carbonate continued to be tight. Some manufacturers' sales exceeded the output. The demand continued to rise, and the prices of industrial-grade lithium carbonate still had an upward trend. In terms of battery-grade lithium carbonate, the quotations of major lithium salt manufacturers are basically raised to 44,000-45,000 yuan/ton, and some manufacturers have less spot quantity and few transactions. According to an SMM survey, the downstream demand for battery-grade lithium carbonate procurement has slowed down recently. Demand for lithium carbonate from lithium cobaltate and ternary materials decreased from the previous in November, and the spot purchasing sentiment gradually stabilised. It is expected that prices of battery-grade lithium carbonate will remain stable.