New Energy Vehicles With Flying Lithium Price According To "Lithium" Strive To Start A War For Mining

Judging from the price performance of lithium products, the price of lithium carbonate first rebounded, then spread to lithium hydroxide driven by ternary battery and lithium concentrate which has been rising continuously in recent years.

Behind the price performance is a set of strict industrial logic: the business climate of new energy vehicles in the downstream continues to rise, superimposed on the increase in profit margins of lithium carbonate and lithium hydroxide, lithium concentrate inventory has returned to the normal "water level" of previous years, and the short and medium-term lack of increment at the supply side, and the price of lithium concentrate has continuously increased.

According to a group of data provided by a recent teleconference of a securities company, the price of imported lithium concentrate was 420 US dollars / ton by the end of December 2020. At present, the average market price has risen to 735 US dollars / ton, returning to the high level above 700 US dollars. The core reason is the shortage of supply.

The 21st Century Capital Research Institute has learned from many different channels that both Western Australia, the main supplier, and the overall domestic inventory level are in a declining state, and even the possibility of further creating a new low will not be ruled out in the future.

As a result, the domestic lithium carbonate and lithium hydroxide production enterprises are in the stage of "mine competition". In this regard, some people from some leading manufacturers directly said that "to buy ore, it is necessary to set a threshold".

The current situation of the above industry is mapped to the capital market, which corresponds to the continuous strength of lithium stocks.

However, there are some differences in the resource endowment, cost and product structure of each company. Driven by the rising industry prosperity, which listed company will have the best performance elasticity?

The penetration rate of new energy vehicles will continue to increase

New energy vehicles, the largest increment of lithium battery industry. As long as the sales growth trend of the former remains unchanged, the demand pull for the latter will continue to exist.

In terms of this year's data, it will continue to maintain high-speed growth.

In May this year, the domestic sales of new energy vehicles were 217000, up 159.7% year on year. From January to may, the cumulative sales volume reached 950000, with a year-on-year increase of 224.2%.

According to the forecast of CAAC, the annual sales volume of new energy vehicles is expected to exceed 2 million in 2021, reaching 2.4 million.

According to Shi Jianhua, Deputy Secretary General of the China Automobile Association, "when the junior high school Automobile Association made a forecast this year, we had a premonition of the rising trend of new energy vehicles. At present, it is not a problem for the sales of new energy vehicles to exceed 2 million this year."

From the above forecast range, the sales volume of new energy vehicles will increase by 46.3% to 75.57% in 2021.

It should be pointed out that, thanks to the growth of sales, the penetration rate of new energy vehicles in the first half of the year has increased significantly compared with that in 2020.

According to relevant data, the penetration rate of new energy vehicles will be 5.8% in 2020, but it will increase continuously from January to may in the first half of this year to 7.2%, 7.6%, 8.9%, 9.1% and 10.2% respectively.

Different from the previous business cycle, the proportion of new energy vehicles purchased by individuals continued to rise. The most intuitive feeling is the significant increase in "visibility" of model 3, BYD Han EV and ideal one in the urban area.

In addition, according to the national to-C terminal sales data of new energy passenger vehicles jointly released by the intelligent electric vehicle special committee of China Electronic Chamber of Commerce and the new energy vehicle Committee of automobile dealers chamber of Commerce of all China Federation of industry and commerce, the individual purchase of pure electric vehicles in the first quarter of 2021 was 322500, accounting for 74.67% of the sales volume in that quarter.

If plug-in hybrid and extended range vehicles are added, the individual purchasing power will reach 391900 and 90.76% respectively. Before 2019, less than 30% of China's new energy vehicles were sold to individuals.

Comprehensive comparison of sales data shows that the current consumption market of new energy vehicles is characterized by "polarization". The market of more than 200000 yuan is occupied by Tesla, BYD, ideal and Xiaopeng, while the market below 100000 yuan is dominated by "A00" models, such as Wuling Hongguang Mini EV and Benben e-star.

In contrast, there are only a few models such as aion s that can form a certain scale in the mainstream transaction range of RMB 100000 to RMB 200000.

It is not difficult to see that the development of the domestic new energy automobile industry at this stage is similar to the rise of domestic mobile phones in previous years. The supply side is launching various products with obvious characteristics in combination with market demand, including those focusing on female customers, those with luxurious configuration, and those with main performance. The supply of products is in full swing.

The 21st Century Capital Research Institute believes that in addition to Tesla, the current domestic new energy vehicle market is mainly occupied by independent brands, and the latter is making up for its own brand disadvantages through product strength, cost performance and other advantages, so as to quickly occupy the market. However, the overall response and action of foreign-funded and joint venture brands are slow, the market acceptance degree is general, and they have not entered the stage of large-scale development, and the competition of end products is far from climax.

In the future, with the further intensification of market competition and the introduction of more models, for example, one or two popular models can be launched in the mainstream price range occupied by joint venture vehicles of RMB 100000-200000, which will drive the penetration rate of domestic new energy vehicles to a large extent.

"The battle for mining" starts

The increase of new energy vehicle sales will undoubtedly drive the improvement of power battery installed capacity data, and the latter also maintained a basic growth rate in the first half of the year.

According to relevant data, in the first five months of this year, China's power battery loading volume accumulated 41.4gwh, a year-on-year increase of 223.9%. In the same period, the domestic sales of new energy vehicles increased by 224.2%.

The overall growth of the installed capacity has led to the consumption of lithium iron phosphate, nickel cobalt lithium manganate and other cathode materials, while further conducting to the upstream lithium salt and cobalt salt.

Whether lithium iron phosphate or ternary battery is chosen, lithium salt products are indispensable. It is also driven by the above-mentioned terminal demand that related products rebound rapidly after bottoming out in 2020.

In terms of the trend of the second quarter, lithium carbonate maintained a high level of over 85000 yuan / ton, and the rise was significantly slower than that in the first quarter. However, lithium hydroxide increased significantly in the same period, and rapidly exceeded 90000 yuan / ton in late May.

The reason lies in the better shipping pull, and ternary materials form a strong support for the price of lithium hydroxide.

The rapid rise in the price of lithium salt products mentioned above and the significant volume of terminal demand have led to a significant reduction of long-term inventory of lithium concentrate in the upstream.

According to the communication from the above-mentioned seller's telephone conference, the outbreak of the epidemic in early 2020, the inventory level of lithium concentrate in Western Australia reached a new high, and then showed a gradual downward trend. Especially under the continuous pull of the demand side this year, the current inventory has dropped to 33600 tons of lithium carbonate equivalent.

Domestic inventory is also in a state of decline. Since the sharp fall of lithium salt price in 2018, domestic lithium concentrate inventory first increased and then decreased, especially after July 2020, the decline speed accelerated.

The decline of inventory, combined with the above demand side outbreak and supply side short-term difficult to release factors, lithium concentrate began to rebound after lithium salt products.

In this regard, the 21st Century Capital Research Institute also conducted verification from three different sources, and its general feedback is that the current market is in the stage of "ore grabbing". At present, domestic inventory is mainly concentrated in the top lithium salt production enterprises which have arranged upstream in advance, and some enterprises that have centralized stock preparation by the end of 2020.

Although there is no need to worry about the raw material inventory of lithium salt enterprises in the short term, if the future supply relationship further deteriorates, some small and medium-sized production enterprises may face the embarrassment of "no rice in the pot", and even do not rule out the possibility that some lithium salt enterprises have extremely low inventory.

It should be pointed out that the domestic lithium carbonate and lithium hydroxide capacity utilization rate is not high, there is no lack of domestic capacity, what is lacking is the supply of lithium ore, especially the supply of high-grade lithium ore.

Under the background of competing for raw material supply and considering the limited supply elasticity of lithium concentrate in Western Australia in the short and medium term, it is expected that the lithium concentrate will continue to maintain a high level along with the price of lithium salt, and even further increase.

The strength of lithium industry leader

"As long as lithium can be guaranteed, it's OK to look for OEM outside. After all, the processing cost is not high." A person who has worked in a lithium salt enterprise for several years said so.

Of course, combined with the current scarcity of lithium concentrate environment, only the first few enterprises can guarantee the supply of raw materials, such as Ganfeng lithium industry and Tianqi lithium industry, which are known as the "two giants of lithium industry". Both companies hold a large number of high-quality lithium resources.

The difference lies in that Ganfeng lithium industry has obtained the exclusive right to sell lithium concentrate through equity participation. For example, Mount Marion, which produces 400000 tons / year of lithium concentrate, is the second largest spodumene mine in the world.

According to the agreement, from 2017 to 2019, Ganfeng lithium Co., Ltd. will underwrite all lithium concentrate produced by the mine, and after 2020, it will sell no less than 192600 tons of lithium concentrate every year, which is also the main mine of the company at present.

If Ganfeng lithium industry in recent years is called "small step fast running", Tianqi lithium industry is a "three-level jump athlete". It can seize the opportunity and seize high-quality resources regardless of the cost, such as the controlling right of Australia talison, the top lithium mine, and the equity investment in sqm company of Chile, so as to realize the "three brine and one mine" of world-class lithium resources.

Only from the comparison of spodumene resources, talison's Greenbush lithium mine is superior to the Malingshan mine of Ganfeng lithium industry.

Due to the high grade of lithium ore and its operation for many years, its mining and operating costs are at the lowest level of spodumene in the world.

According to the data from Roskill, the UK consulting agency, the lowest cost of lithium carbonate extraction in the world's major lithium chemical enterprises is Yabao and FMC, followed by sqm. Tianqi lithium, Yabao China and China's brine lithium extraction enterprises have the same cost, and Ganfeng lithium and other lithium production enterprises in China are next.

It is difficult to reflect the above differences simply by changing the public data. In 2020, the gross profit rate of "lithium series products" of Ganfeng lithium industry is 23.4%, and that of Tianqi lithium industry is 23.71% in the same period.

In 2017, when lithium salt was at a high level, the above data of Ganfeng and Tianqi were 45.38% and 69.41%, respectively, with a huge difference. The core reason was that the latter consolidated talison.

However, some details can be used to draw a general conclusion.

The lithium concentrate produced by talison is not sold to the public, but only supplied to Tianqi lithium and Yabao shareholders. The specific price changes according to the market price, and a certain discount is given. The raw materials needed by Ganfeng lithium are from the underwriting of Mount Marion and Pilbara, which also refer to the market price, but do not mention the discount.

In terms of product structure and price, Tianqi lithium industry has been slower than Ganfeng lithium industry in recent two years due to debt problems. For example, the lithium hydroxide project of quina in Australia has not yet been implemented, which makes the company's existing product structure still mainly based on lithium carbonate.

In recent years, Ganfeng lithium industry has continuously increased its production capacity, especially the lithium hydroxide production capacity, which has ranked the absolute first-line echelon in the world.

According to data from Minmetals securities in its annual report, in 2020, Ganfeng lithium industry accounted for 28% of the world's lithium hydroxide capacity, 24% of the world's lithium hydroxide output, second only to Abbott's 27%.

To sum up, the 21st Century Capital Research Institute believes that Tianqi lithium industry is strong in the mining end, with the lowest cost of lithium concentrate mining in the world, while Ganfeng lithium industry is superior to the production capacity side, especially lithium hydroxide, which meets the growth demand of ternary batteries.

In contrast, Ganfeng lithium has a sound business style and has not suffered losses in the past. Although it also benefits from the dual drive of lithium salt price and capacity release, its flexibility may be slightly less than that of Tianqi lithium.