First Quarter Reports of "Two Lithium Giants" Released: Tianqi Lithium Turns Losses into Profits, Ganfeng Lithium's Losses Narrow - What's the Industry Outlook?

"The two lithium giants," Tianqi Lithium (002466.SZ) and Ganfeng Lithium (002460.SZ), suffered significant losses to varying degrees in 2024. This year's Q1 reports show that Tianqi Lithium has turned from loss to profit, while Ganfeng Lithium's losses have narrowed.

Tianqi Lithium released its Q1 2025 report yesterday evening, reporting operating revenue of 2.584 billion yuan, down 0.02% YoY. Net profit attributable to shareholders of the publicly listed firm was 104 million yuan, turning from loss to profit YoY. In the same period last year, Tianqi Lithium incurred a loss of 3.897 billion yuan.

Tianqi Lithium stated that the improvement in Q1 performance was mainly attributable to two major factors. On the one hand, the company's controlling subsidiary, Windfield Holdings Pty Ltd, achieved significant results in shortening the pricing cycle for lithium ore. The time-cycle mismatch between the pricing mechanism for chemical-grade lithium concentrates of its wholly-owned subsidiary, Talison Lithium Pty Ltd, and the pricing mechanism for the company's lithium chemical product sales in previous years has been greatly alleviated. With the continuous arrival of newly purchased lithium concentrates in China and the gradual digestion of inventory lithium concentrates, the cost of chemical-grade lithium concentrates consumed in the production costs of the company's various production sites has basically aligned with the latest procurement prices. Meanwhile, influenced by the capacity ramp-up and technological upgrades of its in-house production facilities, the company achieved YoY growth in the production and sales volumes of lithium compounds and derivatives in Q1 2025, further enhancing its profitability.

On the other hand, the impact of the tax dispute ruling on the net profit of the company's significant associate, Sociedad Químicay Minera de Chile S.A. (SQM), was recognized in 2024. According to Bloomberg's forecast data, SQM's Q1 2025 performance is expected to increase YoY. Therefore, the investment income recognized by the company for this associate in the current reporting period increased compared to the same period last year.

Another lithium giant, Ganfeng Lithium, announced on the same day that its Q1 2025 operating revenue was 3.772 billion yuan, down 25.43% YoY. The net loss attributable to shareholders of the publicly listed firm was 356 million yuan. Although this represents a narrowing of losses compared to the 439 million yuan loss in the same period last year, the company is still incurring losses.

Ganfeng Lithium stated in its announcement that the main reasons were the decline in lithium prices and the increase in the proportion of domestic sales, leading to a YoY decrease in cash received from the sale of goods and the provision of services, as well as higher bill discounting interest rates, prompting the company to actively control the scale of bill discounting. Meanwhile, the decline in the share price of Pilbara Minerals Limited, a financial asset held by the company, resulted in a loss due to changes in fair value, but the company has hedged part of this impact through the active use of collar option strategies.

From an industry perspective, lithium prices have continued to fluctuate at lows since Q1. According to SMM spot quotes, the spot price of battery-grade lithium carbonate fell from 75,100 yuan/mt at the beginning of the year to 74,000 yuan/mt by the end of March.

Despite some signs of recovery on the demand side, the previous mismatch between capacity expansion and demand in the lithium carbonate industry has not yet ended. Based on estimates from industry institutions, the lithium carbonate market will continue to face a basic pattern of supply surplus in 2025, although the degree of surplus may adjust compared to 2024.

At a recent performance exchange meeting, Ganfeng Lithium stated that with lithium carbonate prices falling to low levels, capital expenditures in the industry have significantly slowed down, and the growth rate of industry supply is expected to decline. Meanwhile, some mines have begun to cut and halt production. With the continuous growth of demand in the future, the supply-demand pattern is expected to gradually improve.

On the aspect of mine production cuts, Gotion High-tech stated at an investor exchange meeting on April 28 that although lithium carbonate prices have continued to decline recently, the company has achieved certain results by continuously promoting cost reduction and efficiency enhancement in mining, smelting, and other links, in coordination with phased production cuts, and can maintain normal production and operation at the current price level. Meanwhile, the company is also closely monitoring market dynamics to prepare for future capacity releases.