The Zhitong Finance App learned that lithium stocks continued to decline in early trading. As of press release, Ganfeng Lithium (01772) fell 6.42% to HK$24.1; Tianqi Lithium (09696) fell 3.7% to HK$29.9.

Jinrui Futures pointed out that with the current decline in lithium prices, lepidomite mining companies are facing greater production pressure, but the supply of lithium carbonate from salt lake and spodumene is still growing, and the overall supply trend is easing. Demand performance is stable, compounded by a sharp increase in imports. The market overflow situation intensified in May. Lithium carbonate prices are expected to fluctuate weakly. In the future, we still need to pay attention to the pace of supply and electric vehicle consumption.

Jefferies previously published a research report saying that in the short term, the lithium market will be more normal, price stability will make the impact on inventories less obvious, spodumene price adjustments will be more frequent, and high-cost concentrates will be digested. However, the current price trend will only lead to a lower net profit margin. The bank believes that considering current valuations, restoring profit margins will not directly translate into buying time. The bank lowered the earnings estimates of Tianqi Lithium and Ganfeng Lithium by 208% and 58% for the 2024 fiscal year to reflect weak performance in the first quarter.