Zhixin Finance APP learned that Guolian Securities released a research report stating that the General Administration of Customs announced the import and export data of lithium salt in May. In May, China imported 24.6 tons of lithium carbonate, a month-on-month increase of 15.9% and a year-on-year increase of 143%. The average import price of lithium carbonate in May was 86,200 yuan/ton, a decrease of 3.1% month-on-month and 68.4% year-on-year. After the Lunar New Year, due to environmental inspections in Jiangxi and production cuts in Australian mines in the first quarter, there was a brief imbalance between supply and demand, and prices quickly rebounded. However, after the Jiangxi environmental problem, production capacity began to recover, Qinghai Salt Lake weather turned warmer to increase production capacity, and the import of lithium salt in April and May restored the loose supply-demand pattern and the lithium salt price began to fall. Based on the domestic lithium salt import volume, domestic production and domestic new energy production and sales from January to May, the current supply of lithium salt is still in a loose state.

Guolian Securities' main points are as follows:

Lithium salt import volume increased significantly month-on-month in May, and the cumulative import volume in 24 years hit a new high.

In May, domestic lithium salt imports were 24.6 tons, a new high in nearly two years. As of May 24, China's monthly lithium salt imports showed a monthly upward trend, especially in April and May, when monthly imports exceeded 20,000 tons, making up for the production losses in Jiangxi due to environmental inspections and the production restrictions in March and April. From January to May, China's total imported lithium carbonate was 86,800 tons, a year-on-year increase of 43.7%, and the total import volume as of May 24 in 24 years hit a new high, effectively guaranteeing the domestic supply of lithium salt from the import side.

Chile's lithium salt export to China in May was 18,000 tons, and it is expected that domestic imports will remain high in June.

According to Chilean customs data, the total amount of lithium salt exported to China in May was 18,000 tons, an increase of 37.7% year-on-year. From January to May, the total amount of lithium salt exported to China was 82,900 tons, a year-on-year increase of 53.1%. Considering the shipping cycle and customs clearance, it is expected that domestic lithium salt imports will remain high in June.

In May, domestic lithium carbonate production continued to increase month-on-month, and the total amount of lithium salt increased by nearly 30% year-on-year from January to May.

According to statistics from the Lithium Industry Association of the China Nonferrous Metals Industry Association, in May 2024, the national production of lithium carbonate was about 52,900 tons, a month-on-month increase of 5.3%, and the domestic production continued to recover in May. From January to May, China's total lithium salt production increased by nearly 30% compared with the same period in 2023. Although Jiangxi reduced production in March and April for various reasons, after rectification, production capacity gradually recovered and cumulative production remained high.

Pure electric vehicle demand grows by only 12%, and lithium salt demand growth rate lags behind supply.

In May, the production and sales of new energy vehicles increased by 31.9% and 33.3%, respectively, maintaining a rapid growth. On the surface, the high growth of new energy vehicle demand will drive the high growth of lithium salt demand, but looking closely, in May, the growth rate of pure electric vehicle production and sales was only 7.7%/11.7%, while the growth rate of plug-in hybrid production and sales was 96.4%/91.2%, and the growth rate of lithium salt demand was far lower than the overall growth rate of new energy vehicles. From January to May, the production and sales growth rate of new energy vehicles were +30.6% / +32.5%, while the growth rate of pure electric vehicle production and sales was only 9.5%/12.2%, and the growth rate of plug-in hybrid production and sales was 88.3%/87.6%.

From the perspective of growth rate, the growth rate of domestic lithium salt production and import volume is not as high as that of new energy vehicle production and sales from January to May. Coupled with the lower growth rate of pure electric vehicles compared with plug-in hybrid vehicles, it is judged that the current lithium salt demand growth rate in 2024 is lower than the supply, and the loose supply of lithium salt may further expand, and the price of lithium salt may still have room to fall.

Investment advice

After the Lunar New Year, due to environmental inspections in Jiangxi and production cuts in Australian mines in the first quarter, there was a brief imbalance between supply and demand, and prices quickly rebounded. However, after the Jiangxi environmental problem, production capacity began to recover, Qinghai Salt Lake weather turned warmer to increase production capacity, and the import of lithium salt in April and May restored the loose supply-demand pattern and the lithium salt price began to fall. Based on the domestic lithium salt import volume, domestic production and domestic new energy production and sales from January to May, the current supply of lithium salt is still in a loose state.

In the last round of lithium cycle, lithium resource stocks bottomed out before lithium prices. Currently, lithium prices have touched the cash cost of high-cost suppliers. If prices continue to fall, it may accelerate the clearance of production capacity, and then the lithium price is expected to rebound rapidly. In the new round of the cycle, targets with their own resources safeguarded and increasing production capacity year by year will be more flexible.

Suggested targets to focus on: Sinomine Resource Group (002738.SZ), Tianqi Lithium Corporation (002466.SZ), Yongxing Special Materials Technology (002756.SZ).

Risk reminder: Progress of new lithium resource projects exceeds expectations; new energy vehicle demand is lower than expected; political and geopolitical risks.