Daiwa reported that lithium prices are expected to rebound. While major pricing agencies, such as SMM and Asia Metal Network, still reported stable lithium carbonate prices, the bank noted that Baichuan Yingfu had reported spot bulk orders for industrial-grade lithium carbonate on May 11, up 1500 yuan from the previous day. The bank expects a recovery in downstream production to quickly push up carbonate prices, which will depend on the resumption of work in Shanghai.

In addition, the CIF price of battery-grade lithium hydroxide reported by Shanghai Nonferrous Network (SMM) in Japan / South Korea is US $76.7kg (that is, 519000 RMB / ton), which is higher than the spot price of 467500 RMB / ton in China. The bank expects lithium hydroxide prices to also soon be supported by overseas demand growth and a rebound in carbonate prices. At the same time, the potential rebound in spot lithium prices at the end of the second quarter of 2022 will adversely affect the third-quarter profit margins of downstream companies, but will be offset by lower prices of other battery materials such as nickel and LiPF6 in the second half of the year.

The bank pointed out that lithium supply is expected to worsen in the second half of 2022 compared with the first quarter as the impact of Shanghai closure is gradually eliminated. However, since the Ministry of Industry and Information Technology has called for a halt to the rise in lithium prices when lithium prices reached a high of 500000 yuan / ton in early 2022, the bank is skeptical of "lithium prices exceeding 500000 yuan / ton". The bank maintains a "positive" evaluation of the industry$Ganfeng Lithium (01772.HK) $The "buy" rating.