SMM, Jan. 3: when it comes to the hottest words in the new energy market in 2021, "Grandma Cobalt" and "Grandpa Lithium" are definitely on the list. With the explosive growth of new energy vehicles, the price of lithium, one of the raw materials of power batteries, is strong, with a group of "boys" (lithium salts, lithium compounds, etc.) hitting three-year record highs one after another. Take lithium metal as an example. According to the historical price of SMM, as of December 31, the average spot price of lithium metal was 1.335 million yuan / ton, up 850000 yuan / ton from the beginning of the year, or 175.26%.

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While the price of lithium is accelerating, the performance of lithium carbonate and lithium hydroxide, the main raw materials of power batteries, is also very eye-catching. As of December 31, the average spot price of battery-grade lithium carbonate was 275000 yuan / ton, up 222000 yuan / ton or 418.87% from the beginning of the year. The average spot price of battery-grade lithium hydroxide was 222500 yuan / ton, up 173000 yuan / ton from the beginning of the year and 349.49% this year.

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Review of Cobalt Market in 2021

In 2021, the global cobalt market went out of storage, the price of electrolytic cobalt rose sharply, and the price broke through the three-year record high. On the supply side, the increase in cobalt raw material capacity is low this year, with global cobalt supply estimated at 177000 metal tons, an increase of 7.5 per cent year-on-year. On the demand side, global cobalt demand is expected to be 194000 metal tons, an increase of 27% over the same period last year. The growth rate of the power market in 2021 is obvious. First, due to the serious epidemic in the first half of last year, the demand for cobalt is weak, and the growth rate is higher than the same period last year; second, with the breakthrough in battery technology, many popular models with high performance-to-price ratio and safety have been put on the market this year, causing a sharp rise in market demand for cobalt.

As of December 31, the average spot price of electrolytic cobalt was 487000 yuan / ton, up 213000 yuan / ton or 77.74% over the beginning of the year.

Prospect of Cobalt City in 2022

SMM predicts that from 2022 to 2023, the global cobalt market may tend to accumulate, the growth rate of supply is greater than the growth rate of demand, and the price trend of electrolytic cobalt is downward. On the supply side, new production capacity such as Glencore, Luoyang Molybdenum and Indonesian Nickel and Cobalt projects were put into operation from 2022 to 2023, resulting in an increase in supply growth. It is estimated that the global cobalt supply will reach about 200000 metal tons in 2022.

On the demand side, the consumer market grew steadily, and the power market developed in the direction of low cobalt due to ternary switching iron lithium products superimposed ternary products, and the power growth rate slowed down. It is estimated that the overall global demand for cobalt in 2022 will reach 208000 metal tons.

Review of Lithium Market in 2021

The prices of lithium, lithium salts and lithium compounds have risen since the market for new energy vehicles picked up in the fourth quarter of 2020. As the main components of the raw materials of power batteries, the prices of lithium carbonate and lithium hydroxide began to rise rapidly in the third quarter of this year.

Looking back on the lithium carbonate market in 2021, during the Spring Festival, due to the shutdown and maintenance of smelters and frequent gas restrictions and production reductions in winter, lithium carbonate production declined significantly. Although large enterprises resumed work smoothly after the Spring Festival, it was followed in the third quarter. The impact of mid-year overhaul by mainstream leading manufacturers, delays in the arrival of mineral resources in Hong Kong, and power cuts have reduced about 10% of the production of lithium carbonate market ditch. In the fourth quarter, Qinghai returned to low production due to seasonal reasons.

According to SMM estimates, in 2021, the gap between supply and demand of lithium carbonate is about 36000 tons of lithium carbonate equivalent, which is equivalent to 11% of the gap. Structural shortages have caused some market behavior to push up the price of lithium carbonate.

Price Forecast of Lithium Salt in 2022

With regard to lithium carbonate, SMM believes that from 2021 to 2022, China's lithium carbonate supply will be limited by overseas resource production capacity, and there will be a supply gap of about 7% in 2022. The annual average price will significantly rise to about 280000 yuan / ton, and the high price may reach about 350000 yuan / ton.

In terms of lithium hydroxide, SMM predicts that from 2021 to 2022, subsidies for new energy vehicles in Europe will bring a substantial increase in demand for lithium hydroxide, a substantial increase in domestic exports of high-nickel batteries and cathode materials, and a year-on-year increase in the installed capacity of domestic car companies, and China's demand for high-nickel will rise by about 50% compared with the same period last year. The supply side is also limited by overseas resource capacity, but its demand growth rate is smaller than that of lithium iron phosphate, and the gap of lithium hydroxide is not obvious, but the price gap is expected to widen gradually with the obvious increase in the price of lithium carbonate.

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Institutions look at the market in this way

[China International Capital Corporation: the overall supply and demand of lithium is tight in 2022-2025, and the high lithium price is both deterministic and sustainable]

We estimate that the balance of global lithium supply and demand from 2021 to 2025 is-0.77,1.15,2.90,1.31 and + 15200 tons LCE, respectively. We believe that even though more new projects will be put into production from 2022 to 2023, the overall supply and demand of lithium is still tight, because lithium resource projects generally need a capacity climbing cycle of half a year to two years according to different resource types and process paths. the effective supply contributed by new production projects is relatively limited. Taking into account the complexity of the development of lithium resources, the long-term progress of new supply is also easy to be lower than the current market expectations, so the duration of supply and demand shortage may still exceed current market expectations.

[Cinda Securities: the supply and demand of lithium resources will continue to be in short supply in 2022 or become the biggest deficiency in the lithium industry chain]

Cinda Securities believes that the long-term value of lithium resources needs to be reassessed. The demand for terminal new energy vehicles continues to grow during the peak season. According to EVvolumes's preliminary statistics, global sales of new energy vehicles reached 733900 in November, an increase of 71 percent over the same period last year and 17.6 percent month-on-month. Supply-side lithium resources link capacity release is slow, Pilbara cut 2022 fiscal year production guidelines of about 60, 000 tons to 40-450000 tons, Ngungaju plant restart delayed to mid-2022. We expect that as the sales season of new energy vehicles continues to heat up, the stock boom at the end of the year and the continued shortage of resources, lithium prices will maintain an accelerated upward trend, while we expect that supply and demand of lithium resources will continue to remain in short supply in 2022. And lithium supply may become the biggest deficiency in the lithium industry chain, lithium resources enterprises will face a revaluation.

[Fitch: lithium supply will remain tight until 2030]

Despite the strong growth in lithium production in the coming years, the global lithium market will remain very tight in the coming years as the green transformation accelerates, according to the latest industry report released by Fitch Solutions, a research firm. Fitch expects the global lithium market to be in short supply until 2030. The agency believes that in this context, lithium supply will face many unfavorable factors and bottlenecks, which may profoundly change the market pattern.

[Guoxin Securities: cobalt prices are expected to remain high and lithium will be in short supply for a long time in the future]

Cobalt: cobalt prices are expected to remain high. The global cobalt ore supply is expected to maintain a steady and rising pattern, the global automobile electrification development will still lead to the rapid growth of cobalt demand, and cobalt supply and demand is expected to maintain a tight balance. The global cobalt raw material supply chain is fragile, and repeated outbreaks in Africa and the instability of the political environment may have an impact on cobalt supply.

Lithium: the supply and demand of lithium ore and lithium salt has entered the most tense moment. The current cycle of the lithium industry (the fourth quarter of 2021) is mainly driven by demand, and now the capacity of Australian spodumene mines is tightening, and rising raw material prices push up lithium salt prices from the cost side. From a medium-to long-term point of view, the development of global lithium mines lags behind the growth on the demand side, and there will be a shortage of raw materials for a long time in the future.

[Huafu Securities: it is difficult to change the tight supply and demand pattern of lithium mines in 2022]

Huafu Securities believes that the supply of lithium ore will increase by about 15-20% in 2022, which is significantly lower than the 40% demand growth expected by the current market. The tight supply and demand pattern of lithium ore in 2022 is very difficult to change. At the same time, the market gives companies with a larger range of production expansion higher valuation flexibility in the face of tight supply and demand. Looking forward to 2022, the huge demand for new energy vehicles will benefit lithium panels as a whole, but the priority of the battery end will be significantly increased. Comprehensive consideration: battery end > diaphragm > electrolyte, mine end, positive and negative electrode.

[Dong Zhangbing, Minister of domestic Business of Shengxin LiNeng Group Co., Ltd.: there is hardly room for a substantial reduction in the price of lithium carbonate next year.]

In terms of basic lithium salts next year, the overall increments of lithium carbonate and lithium hydroxide are expected to be relatively small. There may be no new production line in China next year, and most of its new capacity comes from this year's production line capacity climbing, and its increment mostly comes from SQM's lithium salt project. It is expected that the overall increase of lithium salt next year will be about 100000 tons, but the demand in 2022 will definitely exceed this output, so it is expected that there will be no room for a substantial reduction in the price of lithium carbonate next year. On the other hand, most companies' inventories are in a historical position, which will boost the price of lithium salt. It is worth mentioning that the performance of lithium extraction is very obvious in the overall increment of lithium salt. In the future, it is expected that the prices of lithium carbonate and lithium hydroxide will form a linkage, and the price of lithium hydroxide will not decline greatly when the price of lithium carbonate is difficult to fall.

[Huang Shanyan, General Manager of the Industry and Research Center of Ningbo Rongbaixin Energy Technology Co., Ltd.: the future cobalt price may be slightly reduced and the lithium salt price will remain high in the first half of 2022.)

For cobalt, its relatively big risk point is the review of African mineral resources. In the long run, we have great considerations for the safety of cobalt supply. Cobalt prices are expected to be in a downward channel in the future, even if the battery recycling industry forms a complete closed cycle in the future, but considering that cobalt accounts for only 40% of the lithium industry, it is expected that there may be a slight reduction in cobalt prices in the future, but the reduction will not be too large and will remain in a relatively stable price range. As for lithium, I think the biggest limiting factor of lithium is in the stage of mineral processing. The Australian lithium mine was shut down on a large scale in 2019. With the recovery of subsequent consumption, it is difficult to quickly resume mining to make up for the supply gap due to the long process of restarting the certification process in the mining area, so lithium salt prices are expected to remain high in the first half of next year. However, with the restart of lithium mines in Australia and the entering of summer in South America, the speed of lithium drying in salt lakes increases, overseas lithium salts may enter China in the second half of next year to supplement domestic lithium salts, thus easing the rising trend of lithium salts.

Downstream consumer side:

[Taiwan Electronic Times: the rise in battery prices may continue until 2023]

Battery module factories have been informed that the price of cylindrical lithium battery cells will rise again at the beginning of next year, an increase of 5%, 15%, due to rising downstream demand for electric vehicles, energy storage, and so on, and the trend of battery price increase may continue until 2023.

[Ren Zeping, chief economist of Soochow Securities: new energy will become the biggest game in the development of "new infrastructure".)

The "new infrastructure" is becoming a new growth engine of China's economy. In the past, the "infrastructure" was to build roads, bridges and airports, but now the "new infrastructure" are new energy vehicles, charging piles, digital economy, artificial intelligence, industrial Internet, data centers, and so on. New energy is probably the biggest game of chess. In the future, the new pillar industry of China's economy will probably be born in the field of digital economy of new energy, and this field has certain advantages for China itself. With the further development of the new generation of information technology, self-driving and shared travel will appear in the future, and the industries will be trillion-level, detonating the new energy revolution.

In addition to the above review and prospect of the cobalt and lithium industry, SMM also wrote a special article on the battle for the mining end of the cobalt and lithium industry in 2021. You can read this article:

"2021 Cobalt Lithium Mineral contention Fengyunlu Enterprises contend for Lithium Mine has involved more than 40 billion dollars! [annual Review]