Behind The Soaring Share Price Of Lithium Industry: The Rising Price Cycle Of The New Lithium Price Is Still Not Yet Coming.

Even if it dropped in January 15th, the lithium power sector rose to 15.22% in the year to date, ranking third in all sectors of Shen Wan. The two companies of Ganfeng lithium and Tianqi lithium industries will double their share price in November 2019.

However, in twenty-first Century, an economic report reporter learned that the industry has not changed significantly in recent years, and that the production, sales and inventory of some of the head enterprises have remained stable.

What causes the lithium industry to rebound? The key is the change in market expectations.

Tesla China's factory put into operation, superimposed domestic new energy vehicle subsidies "will not go down sharply", lithium carbonate falls below the cost of new construction cost line multiple factors, the market generally exists in the lithium power industry bottoming out expectations, some sellers have shouted "Tesla leading the new energy vehicle industry to the third round cycle" point of view.

"The supply side will continue to grow steadily in 2020, the demand side will grow faster than the supply side, and the industry fundamentals will be better than 2019." SMM cobalt lithium industry analyst Qin Jingjing 15 pointed out.

However, the new round of rising cycles is yet to come. According to SMM estimates, the supply and demand relationship will be restored in 2022. As the enterprise level will take the lead in response, the cycle of rising lithium prices is expected to be in the second half of 2021.

Lithium battery "reverse" traceability

The high price of lithium products represented by lithium carbonate appeared in 2017. After 2018, the supply relationship began to deteriorate, and the price of products dropped into a downward path.

"In the first two quarters of 2019, the price of lithium carbonate was stable once the output of domestic Saline Lake dropped less than expected, and when the new energy vehicle subsidies subsidised on the eve of the rush off," Tan Jingjing said that from the end of the subsidy transitional period in the second half of 2019, the operation rate of power battery enterprises was greatly reduced, and the impact on the upstream was obvious. In October of that year, the price of lithium carbonate fell below 60 thousand yuan / ton, and in December, it fell below 50 thousand yuan / ton.

The falling prices of lithium products are accompanied by the bankruptcy and contraction of upstream mines.

In August 2019, Alita Resources, a listed lithium mining company in Australia on 2018, announced that it had appointed the bankruptcy administrator to restructure the company, and the Wodina mine, the lithium giant, the United States, had 60% interest in the company to suspend production and turn it into a maintenance state.

Until the end of October 2019, Gan Feng and Tian Qi did not show clearly in the two tier market. However, in the late stage, with the continuous decline of lithium products, the market expects to see its bottom gradually.

Until this year, a few good results came out.

First, in January 7th, Tesla delivered the first batch of China made Model 3 to the Chinese public, which directly increased the market's expectation of boosting domestic demand.

Chuan Cai Securities pointed out that Tesla Shanghai super factory planned a total of 3 production lines, the end of December 2019, the first production line week production capacity of nearly 2000 vehicles, is expected in 2020 February production capacity of 3000 vehicles per week, the total annual production capacity of 150 thousand. The two phase of the project has been launched and is expected to be put into operation at the end of 2020, with a total capacity of 500 thousand vehicles.

This figure is quite impressive. We need to know that the output of new energy vehicles in China is still less than 1 million 242 thousand in 2019.

The variables from the policy level are also locked down with the relevant positions of the Ministry of industry and commerce.

In January 10th, Miao Wei, Minister of the Ministry of industry and commerce, said at the China electric vehicle 100 person forum that this year's subsidy policy for new energy vehicles will remain relatively stable and will not go down sharply.

"Compared to 2019, the domestic output of new energy vehicles will increase in 2020." Tan Jingjing said, the reasons include, "new energy automotive industry development plan (2021-2035 years)" requires new energy vehicle sales accounted for 25% in 2025, while joint venture car enterprises began to exert their strength in China, and set clear production targets and plans.

After the "bottom" concentration of the new energy vehicle industry appears, the two tier market is expected to reverse.

The future of "lithium industry"

Judging from the absolute price, the upstream lithium products are getting closer and closer to the bottom.

The price quoted by SMM shows that in January 15th, the price of battery grade lithium carbonate was 47 thousand yuan / ton to 50 thousand and 500 yuan / ton, and the level of battery grade lithium hydroxide was 52 thousand yuan / ton to 57 thousand yuan ton.

This price is infinitely close to the previous price rise of lithium carbonate. Before 2014, the price of lithium carbonate had been running in the range of 30 thousand yuan to 40 thousand yuan for a long time.

On the other hand, in 2017, before the price of lithium carbonate exceeded 150 thousand yuan / ton, it attracted a large number of foreign capital to enter the industry.

If the price of lithium concentrate is estimated at US $600 / ton, the cost of the later producers will be higher than the current price of lithium carbonate and turn into a loss.

The expansion process, including Ya Po, has also slowed down significantly. Later, the industry is mainly affected by the high cost of new mining and its own financial constraints. A domestic lithium battery listed company 15 pointed out.

By contrast, the production of Gan Feng and Tianqi two leading companies in China remained relatively stable, and the Tianqi lithium industry increased its annual production capacity from 700 thousand tons to 1 million 340 thousand tons in 2019.

The reason is that the cost of mining is far lower than that of those who came later. Gan Feng has the advantages of better demand and lower cost.

The above increments can match the expansion of Tesla expansion.

Tianfeng securities recent conference call pointed out that "Tesla as the representative of the car companies will directly from the upstream to find materials, and then designated to the positive material suppliers, the core reason is the quality requirements. The world can match the quality of production capacity is not much. China sees Tianqi lithium industry, Gan Feng lithium industry, the surge of future industry is the benefit of several leading companies. "

In January 13th, Tianqi lithium industry said on its interactive platform that customers of the company have entered the supply chain of Tesla, BMW and other auto manufacturers.

Earlier, it was reported that LG chemistry will produce 21700 cylindrical lithium ion batteries in Tesla Model 3 in Nanjing, and LG chemistry is the main customer of Tianqi lithium industry.

The trend of price and output side of the two companies is relatively determined, but for the whole industry, it is difficult to see a sharp rebound in lithium products in 2020.

Even SMM forecast results show that in 2020, the average price of battery grade lithium carbonate was 52 thousand yuan / ton, and the average price of battery grade lithium hydroxide was 67 thousand and 500 yuan / ton, which was lower than the 2019 average price.

"Mining and Saline Lake, the total industry supply is increasing, but the projected demand growth will be even higher." Tan Jingjing said.

In the future, whether the demand side can be released on schedule will require a step by step verification of the market.