Lithium carbonate: industry reshuffle, turning the tide (2)

3) Fundamentals: Domestic supply and demand analysis

3.1) Lithium ore: mine price and lithium salt linkage strengthened

After the listing of lithium carbonate, the sales pricing mechanism of some mines has changed, and the linkage between mine quotations and lithium carbonate quotations is closer. At present, the price for spodumene in Australia is 850 dollars per ton, and the annual price is 750 dollars per ton; The domestic spot market price for Li2O: 5% -5.5% spodumene concentrate is 5595 yuan/ton, with a low of 5025 yuan/ton for the year; The domestic spot market price for 2% -2.5% lepidolite is 1585 yuan/ton, and the low point of the year is 1390 yuan/ton. The low price of minerals in the domestic market appeared at the end of October and lithium salt began to rebound in November. The price of mineral products followed the trend of lithium salt prices, and rebounded to different degrees.

According to data from the General Administration of Customs, the total import of lithium concentrate in China was about 504400 tons in October, an increase of 33.73% over the previous month. Among them, the quantity of concentrate imported from Australia is about 363600 tons, accounting for 72.09%, the quantity of lithium concentrate imported from Nigeria is about 42000 tons, accounting for 8.33%, and the quantity of lithium concentrate imported from Zimbabwe is 52900 tons, accounting for 10.49%. Brazil imported about 8,800 tons of lithium concentrate, accounting for 1.74%. From January to October, China's import of lithium ore was 4,732,400 tons, up 35.8% year-on-year. Among them, 2.9359 million tons of concentrate were imported from Australia, accounting for 62.03%, 359100 tons of lithium concentrate were imported from Nigeria, accounting for 7.59%, and 994300 tons of lithium concentrate were imported from Zimbabwe, accounting for 21.01%.

3.2) Lithium carbonate: cost-effectiveness factor, the proportion of lithium extracted from pyroxene has increased

According to SMM data, the total domestic production of lithium carbonate in October was 59665 tons, an increase of 6% month on month and 56% year-on-year; From January to October, the national cumulative output of lithium carbonate was 541900 tons, a year-on-year increase of 45.29%. Among them, spodumene produced 249900 tons of lithium carbonate, a year-on-year increase of 108.92%; Mica produced 130600 tons of lithium carbonate, a year-on-year increase of 24.69%; The salt lake extracted 106,900 tons of lithium, a year-on-year increase of 35.51%; The output of lithium recovery was 54600 tons, a year-on-year decrease of 21.81% ..

At present, the spot price of lithium salt continues to oscillate at the bottom. After entering October, Xiawo Mine and its smelters in Ningde, Jiangxi Province have stopped production, and the operating rate of lithium mica carbonate production has dropped significantly; The recovery and extraction of lithium have been in a state of long-term loss, and the output has been declining. From the high-frequency data of the week, it can be seen that after entering November, the weekly production began to rebound, mainly due to the rebound of prices following the market, and some loss-making enterprises resumed production.

According to Chinese customs data, the import volume of lithium carbonate in China in October was 23200 tons, an increase of 115.5% year-on-year. Among them, 17900 tons were imported from Chile, an increase of 28.2% month on month and 97.5% year-on-year. Imports of 4791 tons from Argentina increased by 136.5% month on month and 197.9% year-on-year. The import volume of lithium carbonate in China from January to October was 187700 tons, an increase of 54.6% year-on-year. Among them, 148200 tons were imported from Chile, an increase of 40.5% year-on-yeard 35700 tons were imported from Argentina, an increase of 147.4% year-on-year. 

3.3) Downstream Consumption: Production of Positive Electrode Materials and Electrolyte Lithium Hexafluorophosphate

During the peak consumption season of "Golden September and Silver 10", the cathode materials performed well, especially in Ferrous lithium phosphate, which provides strong support for lithium carbonate with continuous high output. According to SMM data, China's production of ternary materials in October was 58770 tons, with a month-on-month increase of 2.57% and a year-on-year increase of 4.83%. In November, the expected output of ternary materials was 55,960 tons, down 4.78% from the previous month and up 0.17% year-on-year. From January to November, the total output was 624400 tons, a cumulative year-on-year increase of 8.55%; In October, China's production of lithium iron phosphate was 260660 tons, an increase of 4% month on month and 105% year-on-year. It is expected that the production of lithium iron phosphate in November will be 279010 tons, an increase of 7% month on month and 145% year-on-year. From January to November, the total output was 2,057,700 tons, with a cumulative year-on-year increase of 74.77; The production of lithium cobalt oxide in October was 7500 tons, a decrease of 15% month on month and 4.2% year-on-year. It is expected that the production of lithium cobalt oxide in November will be 7000 tons, with a month-on-month decrease of 6.7% and a year-on-year increase of 0.3%. From January to November, the cumulative output was 80100 tons, up 15.12% year-on-year; In October, China's production of lithium manganese oxide was 12660 tons, an increase of 2% month on month and 49% year-on-year. From January to October, the cumulative output was 96900 tons, up 21.86% year-on-year; In October, the national production of lithium hexafluorophosphate was 19708 tons, an increase of 9% month on month and 52% year-on-year. From January to October, the cumulative production was 145700 tons, up 33.62% year-on-year. 

4) Inventory and supply/demand balance

4.1) Inventory analysis: inventory turnover rate slows down

During the year, the inventory of the industrial chain changed. From a terminal point of view, new energy vehicles have been destocking this year, but they have not been transmitted to the upstream. Battery stocks have been steadily increasing. By the end of October, the total inventory of lithium battery in China was 194.6 GWh, an increase of 30.1 GWh over the end of December last year. Among them, the power battery was 142.6 GWh, up by 12.2 GWh compared to the end of last year; The capacity of the energy storage battery is 52 GWh, an increase of 17.8 GWh compared to the end of last year. The inventory of finished products in the positive electrode material factory has significantly increased, mainly due to the increase in inventory of finished products in the lithium iron phosphate positive electrode material factory. As the market share of lithium iron phosphate batteries has been greatly increased, the inventory of circulating inventory is also increasing. According to the weekly data, the inventory on November 21 was 80400 tons, and the inventory at the beginning of the year was 33200 tons, an obvious increase. After the establishment of the inventory inflection point at the end of August, the raw material lithium carbonate warehouse continued to dry up. According to the weekly data, the current inventory has dropped to 108300 tons, including 33900 tons from lithium salt factory, 29300 tons from downstream and 45100 tons from other traders and futures dealers. The turnover rate of inventory has slowed down recently. It can be seen from the detailed inventory data that the role of futures as a reservoir has been fully exerted after the listing, and the volume of goods in the hands of futures traders has increased significantly.

4.2) Domestic Supply and Demand Analysis

In 2025, the increment of raw materials provided by the domestic resource is limited. It is expected that the growth of domestic smelting output will mainly come from the supply of mines in Australia and Africa. At the same time, considering the large increase of salt lakes in South America (nearly 100000 tons), it is expected that the amount of lithium salt entering from Chile and Argentina will increase substantially. Therefore, the growth rate of domestic supply side is still significant, and it is estimated that the growth rate of domestic supply side will reach 21%; On the demand side, the comprehensive growth rate of lithium carbonate demand remains at around 24% due to the growth rate of terminal power and energy storage of more than 20% and 50% respectively. Generally speaking, domestic lithium carbonate will continue to maintain the surplus pattern next year, and the surplus will be narrowed. 

5) Summary and outlook

From the supply and demand fundamentals, Australia during the year, although Finiss, Cattlin and Pilbara's projects have stopped, production reduction action, but due to BaldHill resumption of production and KathleenValley put into operation, Australia lithium production volume overall upward trend; superimposed on the release of African and South American production capacity, the supply side of the growth rate will not be reduced; demand side, the new energy growth rate has slowed down but the growth rate is still high (30% above). Growth rate is still high (more than 30%), hybrid proportion of the increase, resulting in a decline in the amount of power, superimposed on the power battery lithium iron phosphate accounted for a further rise, resulting in the growth rate of lithium carbonate demand growth and terminal growth rate does not match the growth rate of energy storage batteries due to the fourth quarter of the rush to install the overall growth rate of the performance of the super-expectations, but due to the base is small, for the total demand for lithium carbonate pull is not very obvious. Overall, 2024 continued the pattern of surplus. 2025 due to the current low price of lithium salt, the resource side of the part of the project delayed production, the supply side of the growth rate has slowed down the trend of consumption due to the energy storage accounted for the proportion of the gradual growth, the high growth rate is expected to continue, so, 2025 continued the pattern of surplus, but the amount of surplus narrowed.

From the cost profit point of view, the mine end of the high-cost mines Cattlin, Finiss, Bald Hill, etc. have production suspension or production adjustment plans, the domestic high-cost mines Ningde Times of the 梘xiawo mine has been shut down; the current capacity has been shut down has not yet fully covered the surplus; the current domestic smelting end of the smelting capacity of lithium extraction from mica in the Jiangxi area in particular has a partial reduction in production, but this part of the reduction can not be used as a basis for We assess the basis of capacity clearing, because the smelting side can quickly resume production after profit repair.

From the perspective of inventory, lithium carbonate ushered in the inventory inflection point at the end of August, and the elimination of terminal automobile inventory was not effectively transmitted to the upstream batteries and cathode materials, the inventory of cathode material plants continued to increase, and lithium iron phosphate cathode materials contributed to all the incremental volume, mainly due to the significant increase in the market share of lithium iron phosphate, which must bring about a corresponding increase in the upstream and downstream reserve stock; the inventory of electric cores continued to increase, of which the power battery Continuing the trend of terminal inventory depletion, there is a significant increment in energy storage.

In summary, 2025 surplus pattern does not change, but the excess volume narrowing, so the long cycle to see the bottom has been basically established, the plate has gradually stepped into the right side of the market, meaning that the fluctuation of the centre of gravity will gradually rise. In the short term, the stage of supply and demand changes will cause the short-term market repeatedly, this tone does not exclude the possibility of the disc bottoming out again, so the short-term to swing operation is the main, control the rhythm. Expected 2025 lithium carbonate disc oscillation intensive area [70000-110000].