On July 13, Tianqi Lithium (002466. SZ； 09696.HK) was broken on the Hong Kong Stock Exchange, and as of the close of the day, Cankanra returned to the issue price of HK$82, which was about 50% discounted from A shares. Another A+H-listed lithium company, Ganfeng Lithium (002460. SZ； 01772.HK), the Hong Kong stock price hovered at HK$76, a discount of about 35% over A-shares.
Red Star Capital Bureau noted that behind the poor performance of Hong Kong stocks of lithium companies is the different expectations of the industry for the future trend of lithium prices.
In fact, from the upstream lithium mine to the battery factory to the vehicle factory, lithium prices have affected the entire industrial chain. However, with the development of the industry, lithium prices may be difficult to maintain a high level in the future. Yu Yakun, senior analyst of antech nickel-cobalt lithium project, said in an interview with Red Star Capital Bureau that lithium is more likely to be in supply than demand in 2023, but it still maintains a long-term good view.
Image according to IC photo
Lithium minerals can be released gradually
The mismatch of the industrial chain and the imbalance between supply and demand will be alleviated
At the beginning of 2021, the average price of domestic battery-grade lithium carbonate is about 50,000 yuan / ton; By the first quarter of 2022, it has exceeded 500,000 yuan / ton. Shanghai Nonferrous Metals Network shows that the price of battery-grade lithium carbonate in July remained at about 470,000 yuan / ton.
The expansion of production by downstream manufacturers, insufficient production capacity on the upstream supply side, and mismatch in the supply chain are considered to be important reasons for pushing up lithium prices.
The sales manager of a cathode material supply company told Red Star Capital that as long as there is production now, there is no need to worry about sales. "Now if you order a hundred tons of lithium (raw materials), or dozens of tons, the other party may not agree, because there is not that much."
According to the Huajing Industry Research Institute, in the second half of 2021, midstream and downstream enterprises will significantly expand production, while lithium ore expansion cycle is longer. The downstream lithium battery expansion cycle of the lithium battery industry chain is on average 0.5-1 years, the midstream material expansion cycle is on average 1-2 years, and the upstream lithium mine expansion cycle is more than 2 years, and the supply and demand mismatch time is extended.
For lithium ore production, Red Star Capital Bureau combed and found that the current industry generally believes that the situation of short supply in 2022 is difficult to change. But in the next 2 years, the problem of tight production capacity will ease.
Yu Yakun, senior analyst of antech nickel-cobalt lithium project, said in an interview with Red Star Capital Bureau that mineral products need a 3-year investment cycle, and 2023 will be a time point for the centralized release of resources.
Yu Yakun said: "The rapid correction of lithium prices in the second half of 2020 has stimulated investment. 2021 is a year of rapid growth in lithium-related capital expenditures, not only because of the rising valuation of the project, but also because of the increase in lithium targets. We look at the announcement, many of the projects acquired or started in 2021, most of the expected production time is in 2023, and it is expected that the output of raw materials in 2023 will increase by 340,000 tons of LCE (lithium carbonate equivalent) on the basis of 2022, and this increase is still very impressive. ”
In addition, the expansion of production areas and technological progress have also promoted the release of production capacity to a certain extent.
Consulting firm McKinsey released a report saying that concerns about lithium shortages may be exaggerated, and that new supply sources and new technologies in the future will be enough to meet market demand.
McKinsey believes that in 2020, Australia, Chile and China will produce more than 90% of the lithium in the market, but countries such as Mexico, Canada, the United States, Ukraine and Bolivia are expected to become new sources of supply in the future. It is expected that by 2030, the traditional lithium supply will increase by more than 300%. In addition, direct lithium extraction (DLE) and direct lithium manufacturing products (DLP) will effectively meet the huge demand of the market.
The largest salt lake in the world, the Uyuni Salt Lake in Bolivia. Image according to Visual China
The growth rate of new energy vehicle production and sales is slowing down
Demand-side pressures may be reduced
Strong demand has provided support for the rise in lithium prices, and also allowed the rise in lithium prices to be transmitted to the entire industrial chain. A practitioner of the lithium battery industry said bluntly: "The water is rising, it (lithium price) is rising, then we are also rising." ”
On the consumer side, the rise in lithium prices this year is reflected in the price increase of new energy vehicles.
In March 2022, nearly 20 new energy vehicle companies announced price increases, involving nearly 40 models. March 19, Ideal Cars (02015. HK； LI.US) CEO Li Xiang posted on Weibo that at present, brands that have contracted with battery manufacturers to determine the price increase in the second quarter have basically announced price increases immediately. Most of the brands that have not yet increased their prices have not yet been negotiated, and they will generally increase prices immediately after they are negotiated. "The increase in battery costs in the second quarter was very outrageous."
Some insiders told The Red Star Capital Bureau that the rising cost of batteries is the main reason for the price increase of new energy vehicles, "in a short period of time, the price of lithium materials remains high, and high oil prices are also conducive to the sales of new energy vehicles. ”
In fact, the production and sales of new energy vehicles are closely related to lithium prices, and with the continuous improvement of penetration, lithium prices have also been pushed to a high point by high demand.
However, at present, the growth rate of new energy vehicle production and sales is slowing down. Peng Guangchun, an analyst at Huachuang Securities, said in a talk show that the sales of new energy vehicles next year will not grow as highly as this year, and the rise in lithium prices will have some relief.
According to the data released by the China Automobile Association, the Red Star Capital Bureau found that the growth rate of production and sales of new energy vehicles remained basically the same. In recent years, the production and sales of new energy vehicles have only declined in 2019 due to the impact of subsidy decline, in addition to showing a growth trend, and ushered in an outbreak in 2021. However, in 2022, the growth rate of new energy vehicle production and sales may fall back to the level of 2018.
From January to June 2022, the production and sales of new energy vehicles reached 2.661 million units and 2.600 million units, respectively, an increase of 1.2 times year-on-year, and the market penetration rate was 21.6%. Caucus predicts that the annual sales of new energy vehicles in 2022 are expected to reach 5.5 million units, an increase of more than 56% year-on-year. The expectations of securities companies are more optimistic, and CITIC Securities has raised its annual new energy vehicle sales forecast from 5.5 million to 6 million.
Based on 6 million units, the sales of new energy vehicles in the second half of 2022 will increase by about 47% year-on-year, and the annual growth rate will be about 70% year-on-year. Compared with the sales growth rate of nearly 160% in 2021, the growth rate this year will slow down significantly, close to the production and sales growth rate of about 60% in 2018.
Red Star Capital Bureau Mapping Data Source: China Association of Automobile Manufacturers
Upstream production capacity is about to be released, downstream demand growth is slowing down, in the face of this phenomenon, Yu Yakun told Red Star Capital Bureau that in 2023 lithium is more likely to be oversupplied, but still maintain a long-term view.
Upstream reluctance to sell, downstream hoarding?
Practitioners: I don't feel that I am sorry to sell
In addition to the imbalance between supply and demand in the upstream and downstream of the industrial chain, there is a view that the upstream lithium salt factory is reluctant to sell, and the middle and lower reaches of the cathode material factory and the battery factory are overstocked, which is also the reason for the rise in lithium prices.
On June 16, Wu Kai, chief scientist of ningde times, said at the 2022 World Power Battery Conference that the supply of lithium ore from a global perspective is enough, and a large part of the price increase has a hype component.
Red Star Capital Bureau learned through interviews that some practitioners do not agree with the claim that upstream manufacturers are holding up their hands and selling.
For the problem of "speculating on lithium prices", the staff of a lithium battery company said bluntly: "I didn't feel the hype, nor did I feel the deliberate holding of the plate." ”
The sales manager of a cathode material supply company said: "There is not so much material, how to cover the plate?" And now the price of lithium has doubled several times, even if you cover the plate, the time is long enough, so it should not be artificial. ”
Yu Yakun also gave a similar point of view: "At the current price level, it is unlikely (to cover the plate), and the proportion of long-term pricing of enterprises has increased, there is no need to sell to raise the price of lithium, and the downstream is not necessarily recognized." ”
As for the inventory problem, Yu Yakun said: "Hoarding goods will be more common in the process of price increases, such as in the second half of 2021. Yu Yakun also pointed out that the current lithium price is higher and does not support hoarding, "Now a car of lithium carbonate is often more than 14 million funds, and the cash flow of the cathode factory will generally be tight." ”
When lithium prices fall, they stockpile goods, and when lithium prices rise, middle and downstream manufacturers lock in materials through long-term orders.
The sales manager told Red Star Capital: "Our company has laid out minerals and will sign long-term agreements with suppliers to hedge risks in this way." ”
Industrial chain inventory stockpiling
Increase lithium price decline expectations
Whether it is hoarding goods first, or signing a long order, it will lead to the existence of a certain inventory in the industrial chain, which compresses the possibility of lithium prices rising.
Peng Guangchun pointed out that the possibility of lithium and lithium batteries continuing to rise behind is not particularly large, because every link will be stockpiled with raw materials, and the price has been reacted in advance.
Red Star Capital Bureau combed and found that in the current lithium battery industry chain, in addition to a certain inventory of raw materials, there is also inventory accumulation in the battery link.
According to the data of China Automotive Power Battery Industry Innovation Alliance, in 2021, the production and sales of power batteries in the mainland have soared, and this trend has continued until the first half of 2022, and as of June 2022, power battery sales have exceeded the whole year of 2021.
At the same time, in recent years, the proportion of power battery production and sales has been relatively stable, but the proportion of production and loading volume has increased significantly in the first half of 2022.
From 2019 to 2021, the production-to-sales ratio of power batteries will remain at about 120%, and the ratio of production to installed vehicles will remain at about 140%. In the first half of 2022, the change in the proportion of production and sales was small, at 100.5%; However, the ratio of production to loading soared to 187%.
Red Star Capital Bureau Mapping Data Source: China Automotive Power Battery Industry Innovation Alliance
In addition, in 2021, while the production and sales of many leading power battery companies are booming, inventory data has also increased significantly.
The 2021 annual report shows that catheter times (300750. SZ) inventory balance rose from $14,791 million to $43,016 million. Among them, raw materials rose from 2.571 billion yuan to 8.129 billion yuan, and inventory goods rose from 5.391 billion yuan to 1.931 billion yuan. In addition, the sales volume of lithium battery materials - cathode and related materials in the Ningde era increased by 313.70% year-on-year, the production volume increased by 255.86% year-on-year, and the inventory volume increased by 680.77% year-on-year.
Penghui Energy (300438. SZ) inventory balance rose from $963 million to $1,672 million. Among them, raw materials rose from 170 million yuan to 679 million yuan, and inventory goods rose from 121 million yuan to 244 million yuan.
Fu Neng Technology (688567. SH) inventory balance rose to $3,007 million from $1,401 million. Among them, raw materials rose from 107 million yuan to 4.49 yuan, and inventory commodities rose from 923 million yuan to 19.42 yuan.
Battery companies seek upstream and downstream integration
Lithium mining companies may have a weakened voice
Lithium prices continue to rise, squeezing the profit margins of battery factories. In 2021, the gross profit margin of the power battery system of the Ningde era fell by 4.56%, and the gross profit margin of Guoxuan Hi-Tech power lithium battery products fell by 27.67%.
In order to alleviate the pressure on raw material prices, many battery manufacturers lay out minerals.
On April 21, CATL announced that its holding subsidiary, Yichun Times, successfully bid for the right to explore ceramic soil (including lithium) in the Zhenkouli-Fengxin County Fengxiawo Mining Area in Yifeng County, Jiangxi Province, with an offer of 865 million yuan.
On May 22, Guoxuan Hi-Tech (002074. SZ) lithium battery new energy industry project with a total investment of 11.5 billion yuan, started construction in the Economic Development Zone of Yichun City, Jiangxi Province.
"In the second half of 2021, battery factories expanded rapidly, under the pressure of bottlenecks from the resource side, and it is not surprising that they extend upstream." Yu Yakun believes that the impact of the battery factory layout lithium ore on lithium prices is that when the original supply and demand balance is broken, the price increase of lithium ore will not be so rapid and obvious. And the battery factory discourse power will be further increased, "such as the iron lithium factory, it is faced with the situation of calculating the price according to the lithium price and processing fee formula recognized by the battery factory, and the cost controllability of new energy vehicles will be stronger." ”
Multiple factors superimposed, Yu Yakun pointed out that in the battery grade lithium carbonate as an example, the short-term price will maintain the current high shock range of 460,000-500,000 yuan / ton, the next 2-3 years to fall back to about 300,000 yuan / ton.
According to the citic securities research report, it is expected that the global lithium supply surplus will account for 6%, 23% and 30% of the total demand from 2023 to 2025, showing an upward trend year by year. In 2023, due to the small proportion of excess, lithium prices are expected to remain above 300,000 yuan / ton. In 2024, the supply is expected to be significantly overdose, and lithium prices are expected to fall significantly, or fall below 150,000 yuan / ton.
Expectations for NIO's lithium price are also reflected in the share prices of listed companies. On July 13, Tianqi Lithium broke its listing on the Hong Kong stock market, and by the close of the day, Cancanola had returned to the issue price of HK$82.
Before the early market on July 14, Tianqi Lithium announced the positive of the semi-annual report, the Hong Kong stock price opened slightly higher at 83.15 Hong Kong dollars / share, but then the shock fell, as of the close of 79 Hong Kong dollars / share, down 3.66%, about 50% discount over A shares.
In the A-share market, Tianqi Lithium has also suffered setbacks, and has fallen 15% this week.
Ganfeng Lithium, another A+H-listed lithium company, has a Hong Kong stock price hovering at HK$76, a discount of about 35% over A-shares. This week, Ganfeng Lithium A shares fell 7.44%, and Hong Kong stocks fell 7.47%.
Red Star News reporter Yu Yao Tao Yueyang
Responsible editor Ren Zhijiang
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