Lithium price rise slowed superimposed supply expansion accelerated to suppress the trend of lithium plate.
The rise in domestic lithium prices has slowed since November. As of November 17, SMM lithium carbonate was quoted at 197500 yuan per ton, up only 2.1 per cent from the beginning of the month. The market has doubts about the persistence of the subsequent rise in lithium prices. Lithium supply-side growth has accelerated since the fourth quarter, and the production expansion plans of companies such as Yabo and the acceleration of lithium mine resumption in Australia have made the market worried about the pressure of lithium oversupply, which has led to the recent weak trend of the lithium plate.
In 2022, the global lithium production capacity will be about 200000 tons, and the actual supply increment may be lower.
With lithium prices rising to an all-time high, the global lithium resources sector has once again entered an "active period". The new lithium production capacity in 2022 mainly comes from: 1) 40,000 tons of Yabao La Negra Phase III project; 2) SQM continued to increase 50,000 tons of production; 3) Ganfeng lithium industry Cauchari-Olaroz Salt Lake 40,000 tons; 4) Greenbushes lithium mine No. 2 plant capacity of about 40,000 tons; 5) Pilbara increased production of about 20,000 tons; 6) domestic salt lake mica, etc. Increased production of about 30,000 tons. Taking into account the capacity climbing of related projects and the enterprise's sales strategy, the actual supply increment is expected to be less than 180000 tons.
The tight situation of lithium supply is not expected to ease in 2022, and prices are expected to continue to rise.
The new capacity of lithium supply in 2022 mainly comes from the expansion or resumption of production by existing producers. It is not expected that Australia will compete to cut prices after it is put into production in 2018, and the impact on lithium prices is expected to be limited. At the same time, most of the new capacity in 2022 will be integrated projects, while the new supply of lithium ore that can meet the raw material needs of China's lithium salt enterprises is very limited. The problem of "lack of ore" affecting the growth of lithium production in 2021 is expected to continue in 2022. In the context of strong downstream demand, lithium prices are expected to maintain an upward trend, and the price inflection point will not come in the short term.
The configuration logic of Li-Li plate has shifted from "price increase" to "performance".
As lithium prices enter a high range, downstream purchasing sentiment is cautious, and the room for future price increases may narrow. Up to now, the average price of lithium salt in 21Q4 is 189000 yuan / ton, which is about 80, 000 yuan / ton higher than that of 21Q3, and the quarterly increase is significantly higher than that in the previous three quarters. Based on the expectation that lithium prices will continue to rise, the price center of lithium salt will be significantly higher in 2022 than in 2021, leading to a substantial increase in profits of related companies. Although the stimulating effect of rising prices on stock prices is weakened, the lithium plate still has a high allocation value due to the high certainty of corporate profit growth.
"risk factors:
The resumption of overseas lithium mines exceeded expectations; the increase in inventory of downstream battery enterprises affected demand.
"Investment strategy:
The market's persistent disagreement over the rise in lithium prices has led to the recent weak performance of the sector. We emphasize that the supply and demand pattern of the lithium plate has not changed significantly, and it is expected that the industry will maintain a tight supply situation in 2022, supporting prices to continue to rise, and the configuration logic of the plate will shift from "price increase" to "performance". Thanks to the rise in lithium prices, the performance of companies in the sector in 2022 is expected to be significantly thicker than the same period last year, bringing significant valuation advantages.
It is suggested to continue to revolve around two main lines: 1) enterprises with a high degree of raw material protection and high profits per ton; 2) companies whose resource layout is constantly falling to the ground and are expected to achieve great-leap-forward development in the current upward cycle of lithium prices. Recommend Ganfeng Lithium Industry, Shengxin Lithium Energy and Salt Lake shares, and suggest paying attention to Yongxing Materials.
