Downstream demand growth, lithium carbonate prices rise again. It is expected that the upward cycle of this round of lithium prices can last at least more than a year, and the price can be seen as high as 12-150000 yuan / ton. The high certainty and long-term growth of the lithium plate is expected to attract continuous capital inflows. We continue to be optimistic about the allocation value of the lithium plate, with emphasis on Ganfeng lithium industry and Shengxin lithium energy. It is recommended to pay attention to China Mineral Resources, Yongxing Materials, Rongjie shares and Koda Manufacturing.

The price of domestic battery-grade lithium carbonate rose again after a quarter.

On July 20, the domestic price of battery-grade lithium carbonate rose 500 yuan / ton to 88000 yuan / ton, the first rise in lithium carbonate price since April. Stimulated by the price increase, the lithium ore index rose 8.7% on July 21. At the same time, the price of "lithium carbonate 2110" (lithium carbonate due for settlement in October 2021) in Wuxi stainless steel electronic trading center soared 9.85% to 117000 yuan / ton, which is significantly ahead of the spot market price. It also reflects the market's expectation that prices will continue to rise.

The increase in the price of lithium carbonate verifies that downstream demand remains strong and the increase is significant.

Unlike lithium hydroxide, which mainly depends on lithium concentrate to extract lithium, lithium carbonate comes from a variety of raw materials, including salt lake brine, mica ore and so on. Domestic lithium carbonate production has increased significantly since the second quarter, with a monthly output of more than 20,000 tons, an increase of 40% over the average level of 2020, but prices are still facing a tight supply situation in the third quarter, so prices have risen smoothly. This shows that the demand for lithium raw materials in the downstream cathode material industry has increased significantly. With reference to the production expansion plans of domestic cathode material enterprises, it is expected that the demand for lithium raw materials will increase by more than 30% in the second half of 2021 compared with the first half of the year.

It is expected that the supply shortage in the lithium industry will not be alleviated this year and next, and there will be sufficient momentum for prices to rise.

The increase in lithium supply this year and next mainly comes from the lithium extraction capacity of South American Salt Lake, including the expansion projects of Yabao, SQM and Ganfeng Lithium Industry, but the above capacity will not be effectively supplied until the second half of 2022. It is expected that the tight situation of lithium supply will not be alleviated for a long time, and there are no factors to suppress lithium prices at present. We expect lithium prices to rise to a range of 12-150000 yuan per ton this time. The price inflection point will occur in the second half of 2022 at the earliest, and is expected to last longer under the pull of higher-than-expected downstream demand. There is a lot of time and space for lithium prices to go up.

Li-Li is one of the links with the highest certainty of price increase in the battery industry chain, and the high prosperity of the plate is expected to continue.

Recently, mid-stream battery material enterprises have announced large-scale production expansion plans, the threshold of capacity expansion of cathode materials has entered the level of 100000 tons or even 200000 tons, and the corresponding demand for lithium salt will also enter the order of 50, 000 tons or even 100000 tons. Looking at the domestic lithium salt production expansion situation, the pace of production expansion of most enterprises is still a small step forward of 10-20, 000 tons, the huge mismatch between the two will make the supply contradiction of lithium salt increasingly serious. Lithium, as the most deterministic link in the battery industry chain, is expected to attract continuous inflows of funds, and the high prosperity pattern of the plate is expected to continue.

"risk factors:

The growth of downstream demand is less than expected; the production of upstream mine / salt lake is higher than expected.

"Investment strategy:

Downstream demand strong growth, lithium carbonate prices rise again, plate heat continues. From the fundamental analysis of supply and demand, it is expected that the upward cycle of lithium prices will last at least more than a year, and the price rise is expected to continue to rise as downstream demand continues to exceed expectations. The high certainty and long-term growth of the lithium sector is expected to attract continued inflows of capital, pushing the company's share price upward.

We continue to be optimistic about the allocation value of the lithium plate, and logically, in addition to the target of high self-sufficiency rate of lithium ore and strong certainty of performance growth recommended in the previous period, we suggest that the allocation should be carried out around the company's "expected difference". It includes the poor expectation of enterprises to obtain upstream lithium resources and the poor expectation of domestic salt lake lithium extraction enterprises in technology and capacity planning. Ganfeng Lithium Industry and Shengxin Lithium Energy are recommended, and China Mineral Resources, Yongxing Materials, Rongjie shares and Koda Manufacturing are recommended.