The Zhitong Finance App learned that CITIC Securities released a research report saying that the growth rate of overseas lithium production slowed in 24Q3, and after the price fell to the 800 US dollars/ton range, the industry's decline and shutdown accelerated markedly. Benefiting from low costs and product premiums, South American salt lake lithium companies have maintained steady operations as a whole. Meanwhile, the lithium industrymergers and acquisitionsThe restructuring phenomenon is accelerating. Judging this indicates that the industry is gradually optimistic about lithium prices in the future market and further confirms the bottom of lithium prices. Domestic demand for lithium batteries has increased since the fourth quarter, lithium salt inventories have continued to decline, and the fundamentals of the lithium industry have improved. It is expected that lithium sector stocks will bottom out and rebound ahead of schedule.

The main views of CITIC Securities are as follows:

The growth rate of overseas lithium production slowed in 24Q3, and the price of lithium concentrate fell to 800 US dollars/ton.

In the third quarter of 2024, the main overseas mines produced a total of about 1.047 million tons of lithium concentrate, up 8.8% year on year and basically flat from month to month. The growth rate declined markedly from the previous quarter. Among them, the increase mainly came from Greenwich, Mt Catlin, and Sigma Lithium, and production increased 22.3%/37.9%/22.9% month-on-month, respectively. Additionally, the KathleenValley project was put into operation in July. The decrease was mainly due to Mt Marion and Wodgina, with production falling 23.6%/19.0% month-on-month, respectively. Affected by the continued decline in lithium salt prices in the third quarter, the 24Q3 overseas lithium concentrate price range fell to 770-870 US dollars/ton, down 20%-30% from the previous quarter.

Losses in overseas lithium mines became more serious in 24Q3, and production cuts increased significantly.

Affected by the continued decline in the price of lithium concentrate, a number of overseas lithium mining companies announced a reduction in production discontinuation information:

1) The Finniss lithium mine was completely shut down at 24Q3, with a production capacity of about 0.09 million tons the year before the shutdown;

2) Bald Hill has been in a state of discontinuation of production and maintenance since November, with a production capacity of 0.15 million tons/year before shutdown;

3) Pilbara announced a reduction of the FY2025 production guideline by 0.1 million tons and the shutdown of the Ngungaju plant;

4) MRL's MT Marion and Wodgina both announced layoffs and cost reduction measures, and production declined. The concentrated reduction in Australian lithium production in 24Q3 indicates that current lithium prices have jeopardized corporate cash costs.

The profits of South American salt lake lithium extraction companies continued to decline in 24Q3, but operations remained steady.

24Q3 South American salt lake lithium extraction companies Albemarle, SQM, and Arcadium Lithium lithium business revenue fell 55%/61%/39%, respectively, and 48%/25%/20% month-on-month respectively; lithium product sales were 0.059/0.051/0.009 million tons, +11%/-2%/-19% month-on-month; sales prices were 0.013 million US dollars/ton, 0.0097 million/ton, 0.0162, respectively Million US dollars/ton, down 17%/24%/6% month-on-month, respectively, but the sales price of Albemarle and Acadium lithium products significantly exceeded the industry average. Despite the continued decline in profits, South American salt lake lithium companies remained steady, mainly due to lower costs and premiums brought about by long-order sales of lithium hydroxide by some companies.

Lithium prices are at the bottom of the cycle, and the consolidation of industry acquisitions is accelerating.

On October 9, 2024, Rio Tinto announced that it would acquire Arcadium Lithium for 6.7 billion US dollars, making it one of the largest potential mergers and acquisitions in the history of the lithium industry. On October 25, France's Eramet announced the acquisition of Aoyama's minority stake in Argentina's Salt Lake project for 0.7 billion US dollars. On November 19, Canadian lithium mining company Sayona Mining announced a merger with its offtake partner Piedmont Lithium of the United States. The acceleration of industry acquisitions and consolidation is an important sign in the mining industry's downward cycle. Judging this indicates that the industry is becoming optimistic about lithium prices in the future. It also indicates that the market generally accepts that the current lithium price is in the bottom range, and it is expected that there is limited room for further decline in the future.

Global lithium oversupply is gradually narrowing, and short-term supply and demand have improved.

The continued decline in lithium prices has led to an acceleration in the global supply of lithium resources. It is expected that the global lithium industry's oversupply will narrow from 0.094 million tons in 2024 to 0.023 million tons in 2026. In October, there was a shortage of 5,390 tons of lithium salt in China, and the installed capacity of power batteries increased 8.8% month-on-month. Since November, domestic lithium carbonate stocks have declined 7.1% month-on-month, showing a downward trend for three consecutive months. Domestic demand for lithium batteries and cathode materials is expected to increase month-on-month in the fourth quarter, the fundamentals of the lithium industry continue to improve, and there is limited room for lithium prices to fall later.

Risk factors: the risk of a sharp drop in lithium prices; downstream lithium demand growth falling short of expectations; supply of overseas lithium resource projects exceeding expectations; policy and operational risks of enterprises developing overseas lithium resources.