According to a research report by Guolian Securities, based on the domestic lithium salt import volume, domestic production and sales volume of domestic new energy from January to June, the current supply of lithium salt is still in a loose state. In the last lithium cycle, lithium resource stocks bottomed out before lithium prices. Currently, lithium prices have reached the cash cost of high-cost suppliers. If the supply and demand remains loose in the second half of 2024, it is not excluded that lithium prices may be further lower and the capacity clearance may be accelerated. In the new cycle, assets with their own resources and increasing production year by year are more flexible. Recommended stocks to watch include: Sinomine Resource Group (002738.SZ), Tianqi Lithium Corporation (002466.SZ), and Yongxing Special Materials Technology (002756.SZ).
Guolian Securities' main points are as follows:
Recently, according to data from Chilean customs, lithium salt export volume in June was announced. In June 2024, Chile's total lithium salt export was 0.0228 million tons, a decrease of 6.46% month-on-month and an increase of 25.45% year-on-year. China accounted for approximately 0.0174 million tons of lithium salt exported to China in June, a decrease of 3.55% month-on-month but an increase of 64.90% year-on-year. It accounted for 76.19% of Chile's total exports, an increase of 2.3 percentage points.
Chile exported 0.0174 million tons of lithium salt to China in June, and it is expected that domestic imports will remain high in June and July. According to data from Chilean customs, the total amount of lithium salt exported to China in June was 0.0174 million tons, an increase of 64.9% year-on-year. From January to June, the total amount of lithium salt exported to China was 0.1003 million tons, an increase of 54.99% year-on-year, accounting for approximately 73.51% of Chile's total exports. Considering the shipping cycle and customs clearance, domestic lithium salt imports are expected to remain high in June and July.
Domestic lithium carbonate weekly production increased unilaterally, and industry inventory reached a high level. According to SMM data, after entering March, the weekly lithium carbonate production in China gradually warmed up and showed a unilateral upward trend. As of July 4th, the weekly lithium carbonate production had rebounded to 0.0148 million tons, an increase of over 100% year-on-year from the low point in February of 0.0071 million tons. In terms of inventory, domestic lithium carbonate inventory also showed a unilateral upward trend, with a significant accumulation. As of July 4th, the total inventory reached approximately 0.111 million tons, an increase of 59.40% compared to the beginning of the year. The continuous inventory accumulation indirectly proves that supply in the second half of 2024 exceeds demand.
Domestic pure electric vehicle demand increased by only 11%, and the growth rate of lithium salt demand is not as fast as supply. The production and sales growth rate of new energy vehicles in June increased by 28%/30%, maintaining a relatively fast growth rate. Apparent demand for new energy vehicles is expected to drive the high growth rate of lithium salt demand. However, looking at the production and sales growth rate of pure electric vehicles in June, it was only 6%/7%, while plug-in hybrid electric vehicles had a growth rate of 80%/88%, with plug-in hybrids growing much faster than pure electric vehicles. This will lead to the growth rate of lithium salt demand being far less than the overall growth rate of new energy vehicles. From January to June, the production and sales growth rates of new energy vehicles were +30%/+32%, while the pure electric production and sales growth rates were only 9%/11%; plug-in hybrid electric vehicle production and sales growth rates were 86%/88%. From the growth rate, the growth rate of plug-in hybrid electric vehicles was higher from January to June, while the pure electric growth rate was lower, causing the real demand growth rate of lithium salt to be less than the apparent growth rate of 30%.
Most lithium resource companies have positive net income in Q2, and current price supply is difficult to clear. Recently, most lithium resource companies have announced their performance forecasts for the first half of 2024. According to Guolian Securities' estimates, among 12 companies, 8 companies have a median net profit forecast for Q2 of 2024, accounting for 66.67%. According to SMM data, the average price of electric carbon in Q2 2024 was 0.1059 million yuan, an increase of 4.29% from Q1. The rising price also promoted the improvement of the Q2 performance of some companies compared to the previous quarter. According to Guolian Securities' estimates, 8 companies showed improvement in Q2 performance compared to Q1, accounting for 66.67%. Under the current price environment, most companies have a profit, and the profitability level has improved somewhat, making it difficult to cause rapid upstream supply clearance, and the lithium price may still fall.
Risk reminder: Progress of new lithium resource projects exceeds expectations; new energy vehicle demand is lower than expected; political and geopolitical risks.