①The price of lithium salts has dropped significantly compared to the same period last year. Chengxin Lithium Group's net loss in the first half of the year was in the range of 0.13-0.19 billion yuan, a year-on-year reversal from profit to loss. ②The Q2 performance of the company has reduced losses compared to Q1. However, judging by the trend of lithium carbonate prices, the industry's basic judgment of oversupply has not changed yet.
Caixin reported on July 10 that due to the significant drop in lithium salt prices compared to the same period last year, Chengxin Lithium Group (002240.SZ) expects to have a net loss of 0.13-0.19 billion yuan in the first half of the year, reversing from profit to loss year-on-year. Although the Q2 performance reduced losses compared to Q1, the oversupply of lithium carbonate throughout the year has not reversed, and the company still faces great pressure in the second half of the year.
Chengxin Lithium Group released a statement this evening and predicts a loss of 0.13-0.19 billion yuan in the first half of this year, compared to a profit of 0.611 billion yuan in the same period last year. The company stated that performance in the first half of this year decreased compared to last year due to the market environment for the lithium new energy sector and the significant drop in lithium salt prices that affected the company's profit.
Since the beginning of the year, the fluctuation range of lithium carbonate prices has narrowed and has been hovering between 0.09 to 0.12 million yuan/ton, which is in the price bottom range of the past two years. According to the data from Longzhong Information, the average market price for battery-grade lithium carbonate in the first half of this year was 0.1037 million yuan/ton, a year-on-year decrease of 68.95%.
Price is the main reason why the lithium salt industry's performance has declined. Seven lithium salt companies previously released half-year performance forecasts. Among them, Qinghai Salt Lake Industry Co., Ltd. (000792.SZ), Youngy Co., Ltd. (002192.SZ), Sinomine Resource Group Co., Ltd. (002738.SZ), Yongxing Special Materials Technology Co., Ltd. (002756.SZ) had net profit decreases of 30-70% year-on-year, Tianqi Lithium Corporation (002466.SZ) and Ganfeng Lithium Co., Ltd. (002460.SZ) reversed from profit to loss year-on-year, while Jiangxi Special Electric Motor Co., Ltd. (002176.SZ) continued to lose money.
Looking at Q2 performance, Chengxin Lithium Group had a net loss of -0.144 billion yuan in Q1. Based on this calculation, Q2's net profit was approximately -46 million yuan to 14 million yuan, and it reduced losses compared to the previous quarter.
The reduction of high-priced ore inventory and the decline in raw material prices may be the main reason for the reduced losses in Q2. Caixin Journalist previously learned from insiders in the industry that the high-priced ore inventory in the previous period was one of the reasons for Chengxin Lithium Group's loss in Q1. Tianqi Lithium Corporation was also affected by this and experienced losses in Q1. However, the situation of high-priced ore affecting their performance has improved in Q2, and the phase mismatch of lithium concentrate pricing mechanism has also gradually reduced. The company's losses decreased from the previous quarter, Q2 of 2024.
Chengxin Lithium Group's lithium mine resources for self-supply have also improved. The company stated on its investor interaction platform in May that the Sabi Star Mine in Zimbabwe's lithium mine has officially started production and has begun to transport lithium ore to the company's lithium salt plant.
Judging from the long-term price of lithium carbonate, the industry's basic judgment of oversupply has not changed yet, according to Li Pan, a lithium analyst at Shanghai Ganglian E-commerce Holdings. Five Mines Futures lithium carbonate researcher Zeng Yuke publicly stated that it is expected that the global lithium resource supply will reach 1.55 million tons LCE by 2024 (based on a lithium carbonate price of 0.1 million yuan per ton). This is an increase of about 47% compared to 2023. Combined with the promotion of new energy vehicles and new energy storage, the lithium battery shipment volume is expected to increase by nearly 30% in 2024. The total demand for lithium carbonate is expected to be 0.7059 million tons in 2024.
Shanghai Ganglian E-commerce Holdings' lithium industry analyst Li Pan stated to Caixin that this year's fluctuation of lithium carbonate prices could be maintained in the 0.08-0.11 million yuan/ton range, and 0.08 million yuan/ton is an important support line of cost. If the industrial chain game clears up, the fluctuation center could be maintained at 0.085 million yuan/ton. If the industry chains opt for collective action, the fluctuation center could be maintained at 0.095 million/ton.