The contradiction between lithium supply and demand in 2022 highlights that it is difficult to ease in the short term. Lithium price will remain high [Agency Review]

The contradiction between supply and demand of lithium is prominent.

Since the second half of 2020, the global sales of new energy vehicles have led to a surge in lithium demand, and the fundamental situation of the lithium industry has been reversed. Due to the previous low lithium price, mines have reduced production and stopped production, and there is no new capacity put into operation; although the production cost of salt lake is low, and the low lithium price does not hinder the salt lake construction / expansion plan, the epidemic has forced the construction of manpower-intensive salt lake capacity to be interrupted and the new capacity put on hold.

At present, the contradiction between supply and demand of lithium is very prominent. on the one hand, the global sales of new energy vehicles have led to a surge in lithium demand since the second half of 2020, and on the other hand, the increase of lithium supply in recent years is extremely limited.

Lithium demand: a subversive change from "industrial monosodium glutamate" to "white oil"

In the early years, lithium was called "industrial monosodium glutamate", reflecting that lithium was widely used but rarely used. Today, lithium is also known as "white oil", which reflects that lithium plays an important role in the energy field and is in great demand and indispensable.

According to the SQM annual report, the global lithium demand for lithium in 2020 is 330000 tons of lithium carbonate equivalent, of which power batteries account for as high as 54%, and the future lithium demand increment will mainly come from power batteries. The agency's analysts expect global sales of 9.4 million new energy vehicles (+ 38 per cent) in 2022, corresponding to an increase in lithium demand for power batteries of about 144000 tons of lithium carbonate equivalent in 2022. If the expansion of the industrial chain is taken into account, the actual increase in demand will be even greater.

Lithium supply: lithium supply increment can not keep up with lithium demand increment

This report combs the global production situation of salt lakes and spodumene mines, and shows that SQM, ALB and Pilbara will be the main forces of lithium supply increment in 2022, with strong certainty, of which SQM contributes 40, 000 tons of lithium carbonate equivalent, ALB contributes 26000 tons of lithium carbonate equivalent, analysts of the agency estimate that Pilbara will have 16000 tons of lithium carbonate equivalent.

In addition, some sporadic lithium supply increments have not been fully described. the larger one is Lanke Lithium Industry in Chaerhan Salt Lake, Qinghai Province, China, and its analysts expect the lithium supply of Lanke Lithium Industry to increase by 1-15000 tons of lithium carbonate equivalent in 2022.

Investment suggestion

In 2022, the increase of lithium supply can not keep up with the increase of lithium demand, and the contradiction between supply and demand can hardly be alleviated. It is expected that the shortage of lithium supply will run through the whole year, and lithium prices will remain high. Benefiting from the high lithium price, the performance of listed companies in the lithium industry is very flexible, and some second-tier companies seize the opportunity to grow and transform. Although the plate rose sharply in the early days, analysts of the agency believe that the market is lack of understanding of the flexibility of the performance of listed companies in the lithium industry and the persistence of high lithium prices for a long time, and there are still investment opportunities in the lithium industry. It is suggested that we should pay attention to the companies with guaranteed lithium resources and real production capacity and production growth in 2022. Give the lithium industry an "overweight" rating.