Flooding in Durban Port aggravates Cobalt supply chain disturbance Ford signs LAKERESOURCES Integrated Lithium Raw material [Agency Review]

What: according to SMM, the largest port in South Africa and the largest port in Africa, Durban, suffered the heaviest rainfall in more than 60 years this week and the resulting flooding has killed at least 45 people and damaged ports, main highways and surrounding areas in KwaZulu-Natal province. Durban Port announced an emergency suspension of terminal operations, flooding led to a large number of containers washed away by the flood.

Comments: recently, heavy rain broke out in many parts of South Africa. Affected by floods, the port of Durban, South Africa's largest container port, was forced to stop work, a number of major highways leading to the port were closed, trucks were unable to reach the port, and some containers were flooded. At present, heavy rainfall continues in South Africa, while at the same time, as an important port for the export of cobalt raw materials from Congo, the shipping production time has been extended again, with an additional delay of 2-3 weeks on the basis of the original shipping period. cobalt raw material exports may seek transshipment from the port of Dar es Salaam or Beira, but considering the limited capacity and the time needed to adjust the route, the shortage of cobalt supply has intensified.

The import ratio of cobalt raw materials continues to decline, and the smelter is under pressure. According to SMM,2022 in January 2000, cobalt wet smelting intermediates imported 6800 tons of metal (converted at 27% grade), a month-on-month decrease of 13% and a year-on-year increase of 12%. In February 2022, cobalt wet smelting intermediates imported 6500 tons of metal (converted at 27% grade), a month-on-month decrease of 5% and an increase of 18% over the same period last year.

Domestic digital and power are under pressure, demand is restrained and the acceptance of price increases is limited. The monthly output of ternary cathode materials in China is 49938 tons, an increase of 15% from the previous month and 60% from the same period last year. However, affected by the epidemic, the supply chain of new energy vehicles has reduced orders from battery factories, and it is expected that the monthly output will be reduced by 5% to 47206 tons. In March, China's output of lithium cobalt oxide cathode materials was 6959 tons, up 4% from the previous month and down 16% from the same period last year. At present, the consumption of lithium cobalt materials and downstream digital terminal products is about to enter the off-season. The superimposed unstable prices of lithium carbonate have weakened the willingness of some small and medium-sized enterprises to take orders. The estimated output in April is 6296 tons, down 10% from the previous month and 20.2% lower than the same period last year.

Under the dual influence of the hindrance of overseas raw material shipments and the reduction of domestic epidemic orders, China's cobalt fundamentals may show weakness in supply and demand, domestic cobalt prices may continue to fluctuate, and the demand for overseas cobalt and cobalt salts is stronger than that at home, and the internal and external price difference may be further enlarged by the current 80,000 yuan / ton.

What: according to the Lake Resources announcement, Ford intends to sign a preliminary agreement with Lake Resources that Lake Resources will provide Ford with 25000 tons of lithium carbonate per year through the Kachi project in northern Argentina.

General situation of Kachi project: the project has a resource capacity of 4.4 million tons of LCE, with a planned capacity of 255,000 tons / year lithium carbonate in the first phase, with a long-term increase to 50,000 tons / year lithium carbonate, and is expected to be put into production in 2024. The capital expenditure for the first phase is US $544 million and the cash cost is US $4178 / ton LCE.

Comments: Ford directly locks battery raw materials, the integrated layout is not the only one. In recent years, car companies have competed for lithium resources, trying to seize the opportunity in raw materials, car factories mainly by signing supply orders to lock upstream high-quality resources, it is expected that with the development of new energy vehicles, there will be more car companies to step up the layout of upstream lithium resources.

Risk tips: lower-than-expected demand for new energy, large fluctuations in the macro-economy, etc.