In June and July, seasonal low season for lithium iron phosphate and ternary production may continue to decrease, and the proportion of downstream customer demand for long orders may increase, highlighting the surplus and continued weakness of lithium prices that are currently in the bottom-finding stage. By product structure, operating income of 1 to 3 billion yuan were respectively 401 million/1288 million/6 million yuan.
According to the news from Zhitong Financial APP, Huafu Securities released a research report saying that in May, the large amount of overseas mining and lithium carbonate arriving at the port has greatly improved, the growth rate of iron-lithium production has slowed down and the demand for ternary is weak, resulting in a downward fluctuation of lithium prices. In the off-season of June and July, the production of iron-lithium and ternary may continue to decline, downstream customers' long orders increase, surplus highlights, and lithium prices may continue to remain weak, currently in the bottom-finding stage. The surplus situation in 2024 has not changed, and the supply and demand balance still needs to be achieved through a excessive decline in lithium prices, but the current prices are close to the central price. Lithium mines are the best and most elastic targets in the electric vehicle industry chain. Pay attention to strategic layout opportunities for stocks and lithium prices at the double bottom.
Lithium Mines: In May, the main imports were 50,500 tons of LCE, an increase of +28% month-on-month and +46% year-on-year. Among them, Australia's 39,000 tons of LCE, an increase of +42% month-on-month and +94% year-on-year, hit a record high. From January to May, cumulative imports of 210,000 tons of LCE equivalent of lithium mines increased by 38,000 tons of LCE (+22%) year-on-year. In May, 106,000 tons of lithium ore were shipped from Australia's Blackstone Port to China, an increase of +106% month-on-month. With lithium prices rebounding and M+1 stimulating an increase in overseas mineral sales, some minerals have been delayed until May due to shipping issues, and some African minerals and Australian minerals have been shipped to the Shengxin Indonesia factory for preparing materials.
Carbonate Lithium: In May, the supply was 87,000 tons, an increase of +18% month-on-month and +111% year-on-year. Among them, domestic production was 63,000 tons, an increase of +18% month-on-month and +92% year-on-year; imports were 25,000 tons, an increase of +16% month-on-month and +143% year-on-year, among which 20,000 tons were imported from Chile, an increase of 0.3 tons month-on-month. From January to May, the cumulative supply was 318,000 tons, an increase of 110,000 tons (+53%) year-on-year. Domestic production was 233,000 tons, an increase of 79,000 tons (+52%) year-on-year; imports were 87,000 tons, an increase of 26,000 tons (+44%) year-on-year. Huafu Securities said that with the warming weather, the salt lake has entered the peak production period, and the environmental protection has affected some mica factories in Jiangxi, but large factories still have increased output, and the production of lithium pyroxene is stable with an increase in commissioned orders. SMM predicts that the domestic output of carbonate lithium in June will be 65,000 tons, an increase of 4% month-on-month, and imports from Chile may remain high.
Lithium Hydroxide: In May, the supply was 11,000 tons, a decrease of -12% month-on-month and -14% year-on-year. Among them, domestic production was 23,000 tons, unchanged from the previous month and -4% year-on-year; Exports were 12,000 tons, an increase of +11% month-on-month and +10% year-on-year. From January to May, the cumulative supply was 54,000 tons, a decrease of 6,000 tons (-10%) year-on-year. Among them, domestic production was 105,000 tons, a decrease of 0.6 million tons (-5%) year-on-year; exports were 54,000 tons, an increase of 0.3 million tons (+5%) year-on-year. The smelting method has increased production due to capacity climbing and good overseas orders.
Cathodes and Hexafluorine: In May, the production was 292,000 tons (lithium iron phosphate 213,000 tons + ternary 51,000 tons + lithium cobalt oxide 0.64 + lithium manganese oxide 0.61 + hexafluorine 1.2), a decrease of -3% month-on-month and an increase of +57% year-on-year. Among them, lithium iron phosphate was 213,000 tons, an increase of +1% month-on-month and +78% year-on-year. From January to May, the cumulative production was 1.2 million tons, an increase of 486,000 tons (+68%) year-on-year. Among them, lithium iron phosphate was 821,000 tons, an increase of 415,000 tons (+102%) year-on-year. It is predicted that the production of ternary and lithium iron phosphate will both decrease in June.
Lithium Supply and Demand: In May, there was a surplus of 15,000 tons, with supply of 97,000 tons, an increase of +14% month-on-month, and demand of 82,000 tons, a decrease of -4% month-on-month. From January to May, the cumulative surplus was 18,000 tons, with supply of 366,000 tons, an increase of 104,000 tons (+40%) year-on-year, and demand of 348,000 tons, an increase of 118,000 tons (+51%) year-on-year.
Stocks: It is recommended to pay attention to Qinghai Salt Lake (000792.SZ), Zangge Mining (000408.SZ), Yongxing Special Materials Technology (002756.SZ), Zijin Mining, and Sinomine Resource Group (002738.SZ). Other stocks to focus on include Jiangxi Special Electric Motor (002176.SZ), Tianqi Lithium Corporation (002466.SZ), and Ganfeng Lithium (002460.SZ).
Risk warning: Electric vehicle demand is consistently lower than expected and resource-side project releases exceed expectations.