There is little room for lithium prices to continue to fall. The upward elasticity is high, and companies with high lithium concentrate self-sufficiency rates still have high profit elasticity.
The Zhitong Finance App learned that SDIC Securities released a research report saying that as global lithium mine exploration projects are gradually completed and put into production, the production and sales volume of mining companies continues to grow steadily; however, the continuous decline in sales prices has further boosted sales and dragged down the company's performance. From a long-term perspective, on the demand side, there is high certainty about the development of the new energy industry, and demand is growing steadily; on the supply side, lithium prices, which are constantly falling, have hit the cost line of some mining companies, and mining companies' enthusiasm for production has been thwarted, or they have chosen to suspend or delay the project construction process to increase cost efficiency. Therefore, it is believed that there is little room for lithium prices to continue to fall, and that the upward elasticity is high, and that companies with high lithium concentrate self-sufficiency rates still have high profit elasticity.
Recommended attention: Ganfeng Lithium (002460.SZ), China Mining (002738.SZ), Tianqi Lithium (002466.SZ), Yongxing Materials (002756.SZ), Shengxin Lithium Energy (002240.SZ), Zangge Mining (000408.SZ), etc.
SDIC Securities views are as follows:
Summary of lithium resource production in Q4 in 2023: production and sales continue to grow, falling prices drag down revenue
In Q4 of 2023, sales of lithium concentrate products in Western Australia increased steadily month-on-month. Major lithium mines in Western Australia produced a total of about 527,000 tons of lithium concentrate in Q4 in 2023, +34.54% year over year, +15.09% month on month; sold 534,000 tons of lithium concentrate (excluding Greensalts), +42.25% year on year and +28.97% month on month. In terms of production and sales rates, MTMarion and Wodgina production and sales rates were 103.6% and 123.48%, up 3.6 pcts and 67.7 pcts month-on-month, while MTCattlin and Pilbara production and sales rates were 85.98% and 90.85%, decreasing 19.6 pcts and 10.7 pcts month-on-month.
The average sales price of lithium concentrate in Australia continued to decline in Q4 in 2023. Concentrate prices for major companies in Q4 in 2023 are as follows:
The average selling price of Greenbush concentrate (chemical and technical grade) reached 3016 US dollars/ton, -19.4% month-on-month.
The average price of MTMarion lithium concentrate was $1,071 per ton, -42.7% YoY.
Pilbara lithium concentrate (SC5.3) sold for 1,113 US dollars/ton, -50.3% month-on-month
The average price of MTCatlin lithium concentrate was 763 US dollars/ton, -70.9% month-on-month.
The average price of SYA lithium concentrate was 946 Australian dollars/ton, -52.3% YoY.
Core lithium concentrate was sold at an average provisional price of $1,418/ton, or -52% month-on-month.
2023 Q4 South American Salt Lake Production Summary: Volume increases and prices decrease, mining companies' enthusiasm to expand production is thwarted
Volume: In 2023, the Q4Olaroz project produced 4144 tons of lithium carbonate, -3% YoY, -7% month-on-month, and lithium carbonate sales volume was 6,991 tons, +123% YoY, +54% month-on-month. Q4SQM shipped 51,000 tons of lithium salt in 2023, +19% YoY.
Price: The average price of Q4SQM lithium products in 2023 was 16,000 US dollars/ton, -73% YoY and -47% YoY. In 2023, the average sales price of lithium carbonate in the Q4Olaroz project was 13,600 US dollars/ton, -71% year-on-year and -48% month-on-month. The overall price of lithium carbonate declined significantly.
Results and guidelines: (1) Livent announced 24-year performance guidelines: In 2024, the company plans to sell 24,000-26,000 tons of LCE lithium hydroxide, 25,000-28,000 tons of lithium carbonate LCE, and 0.25,000 tons of other types of lithium salt LCE, totaling 52,000-57,000 tons of LCE, +40% over the same period last year.
In 2024, the company plans to sell less than 130,000 tons of lithium concentrate, or -36.59% year-on-year. Pursuing synergy and cost reduction, the company will save 60 million to 80 million US dollars in 2024, and the capital expenditure for the full year of 2024 is expected to be 550 million to 750 million yuan. (2) Abbott cuts FY24 capital expenditure guidelines: Abbott announced that it will replan investment projects and optimize cost structures to maintain long-term financial flexibility and release more than 750 million US dollars in cash flow in the short term. Its capital expenditure for 2024 is expected to be US$1.6 billion to US$1.8 billion, which is lower than the full year of 2023 (approximately US$2.1 billion). (3) SQM announced the capital expenditure plan: the company's total capital expenditure for 2024-2025 is estimated to be 1.7 billion yuan, including 70 billion US dollars in maintenance costs.
Risk warning: Demand falls short of expectations, lithium prices fluctuate sharply, and supply releases exceed expectations.