The performance of lithium resource companies has soared

Among them, Tianqi Lithium, known as top 5 lithium mining companies in China, expects its net profit in the first half of the year to increase by more than 110 times year-on-year.

The above-mentioned companies all said that the increase in the volume and price of related lithium products in the first half of the year was the main reason for the company’s performance growth.

Regarding the future trend of lithium prices, Ganfeng Lithium stated that the specific price depends on the supply and demand of the market.

Profits are expected to surge

Due to the outbreak of demand in the new energy vehicle market, the price of lithium products has risen sharply, which has led to a significant increase in the performance of related companies.

Both China and Europe are subsidizing electric vehicles, and the growth in demand for electric vehicles has led to a surge in demand for lithium batteries.

However, the reserves of lithium resources are limited and the price has risen sharply, which is reflected in the performance of related companies.

The recent performance forecasts released by the above five listed companies show that in the first half of 2022, Ganfeng Lithium is expected to make a profit of RMB 7.2 billion to RMB 9 billion, a year-on-year increase of 408% to 535%;

Tianqi Lithium is expected to make a profit of RMB 9.6 billion to RMB 116 100 million RMB, an increase of 11089%~13420% year-on-year;

Chengxin Lithium was 2.6 billion RMB~2.9 billion RMB, a year-on-year increase of 794%~897%; Youngy were 530 million RMB~630 million RMB, a year-on-year increase of 4081%~4869 %.Tibet Mineral is 4RMB~530 million RMB, a year-on-year increase of 841%~1147%.

Ganfeng Lithium said that during the reporting period, with the rapid development of the new energy industry, the market demand for lithium salt products continued to grow, the price of lithium salt products remained at a high level, and the company’s product sales and average sales prices increased year-on-year, so the company’s operating performance increased significantly year-on-year.

Tianqi Lithium also stated that the company’s performance has risen sharply compared with the same period of the previous year, mainly due to the increase in global sales of new energy vehicles, the accelerated capacity expansion of lithium-ion battery manufacturers, the leading companies are top 10 lithium iron phosphate power battery manufacturers and the recovery of orders for downstream cathode materials.

Tianqi Lithium has a huge production capacity advantage.

The company is mainly engaged in the production, processing and sales of lithium concentrate and lithium chemical products, and its business operations present a global layout. It is the world’s largest lithium ore producer.

At present, Tianqi Lithium is 100% self-sufficient in lithium raw materials with the help of Australia’s Greenbushes lithium mine.

In addition, it is worth noting that Ganfeng Lithium’s performance in the first half of this year is expected to increase by 4 to 6 times.

Among the above five companies, the growth rate is the lowest. A person from Ganfeng Lithium said that the growth rate of Ganfeng Lithium’s performance is lower than that of some companies in the industry, mainly because the price of lithium ore more upstream has increased significantly since last year, so the performance of lithium ore enterprises has increased the price of lithium ore.

The company mainly focuses on lithium salt products. At present, some lithium mines still need to be outsourced, so the company’s performance is more closely related to the price of lithium salt.

Volatile non-recurring gains and losses

In addition to the main business of lithium resources, non-recurring gains and losses also have a certain impact on the performance of the above-mentioned lithium companies.

In the first half of 2022, the non-recurring gains and losses of Chengxin Lithium and Youngy are expected to be between RMB 0 and 10 million.

The non-recurring gains and losses of Ganfeng Lithium and Tianqi Lithium are expected to be about -800 million RMB and 1.2 billion RMB respectively.

Ganfeng Lithium stated in its performance forecast that the changes in the company’s non-recurring gains and losses were mainly due to the decline in the share prices of some of the financial assets it held.

Among them, the most important one is the shares of Pilbara Minerals Limited held in Australia.

Compared with the beginning of the period and the end of the period, its share price has dropped significantly.

Ganfeng Lithium’s 2021 annual report shows that the company holds a 6.16% stake in Pilbara, which has brought more than 2 billion RMB in revenue in 2021, accounting for 39% of the current total profit.

Tianqi Lithium stated that the non-recurring profit and loss of about RMB 1.2 billion indicated that during the reporting period, the company’s shareholding company SES is listed on the New York Stock Exchange, and the company recognizes relevant investment income.

In addition, according to relevant forecasts, the semi-annual performance of the company’s important associate company SQM in 2022 will increase significantly year-on-year, so the company confirmed that its investment income has increased significantly compared with the same period of the previous year.

Lithium price trend in the second half of the year

According to relevant data, in the first half of 2022, the prices of lithium salts led by battery-grade lithium carbonate continued to remain high. From the beginning of the year to the end of June, the average spot price of battery-grade lithium carbonate produced in China rose from the initial 278,000 RMB/ton to 469,000 RMB/ton, a half-year price increase of 191,000 RMB/ton, an increase of 68.7%.

It can be seen from the price trend of lithium carbonate in the first half of 2022 that in the first quarter, Chinese enterprises were driven by the decrease in supply of salt lakes in Qinghai and other places due to the influence of temperature, and lithium carbonate was in a state of destocking at the beginning of the year; in the second quarter, with Qinghai and other regions.

The supply of salt lakes has recovered, and the new crown pneumonia epidemic has affected downstream consumer demand. Under the supply and demand side of increasing supply and decreasing demand, China’s lithium carbonate market briefly reversed to accumulating warehouses.

Therefore, since the second quarter, the price of lithium carbonate has entered a downward channel, starting to fall from the high of 503,000 RMB/ton in the first half of the year.

A person from Ganfeng Lithium told reporters that the high price of 500,000 RMB/ton of lithium in the first half of the year was still quite high.

However, due to the new crown pneumonia epidemic, the production capacity of some lithium products was suspended or reduced, so there was a certain correction in the second quarter of lithium prices.

Of course, it cannot be ruled out that there is still a possibility of breaking through 500,000 RMB/ton in the second half of the year, depending on the supply and demand of the market.

The person in charge of BYD said that the market price of lithium resource products is affected by various factors such as industry conditions, supply and demand, cost and quality.

The new energy industry maintains a high degree of prosperity, and the growth of downstream demand exceeds the growth of upstream resource supply, resulting in a sharp rise in the price of lithium products, which makes the importance of lithium resources for the new energy industry more prominent, and may become a restrictive factor for the development of the industrial chain.

When talking about the possible backlash of high lithium prices on downstream demand, industry insiders said: “Companies do not want lithium prices to rise so fast and stay at such a high level for a long time.

From the perspective of company, downstream demand has not Significantly affected. In the process of rising lithium prices, downstream demand is still increasing.”

Regarding the supply and demand of the lithium carbonate market in the future, SMM predicts that in the second half of 2022, the lithium carbonate market will maintain a slight destocking rhythm, and the gap between supply and demand will gradually widen by the end of the year.

The spot price of lithium carbonate in the fourth quarter of 2022 may further rise.

With the development of lithium ore resources and the expansion of lithium salt processing capacity in the past two years, as well as the gradual rationalization of the supply chain, the supply and demand of lithium products will enter a relatively balanced state.

The competition pattern of lithium batteries has basically been formed, and some lithium top 100 companies will enjoy more deterministic opportunities brought by power batteries and new energy storage systems in the future.

Lithium resources have a certain scarcity. The downstream demand is large and necessary. The downstream high-level willingness to buy goods is relatively large.

It is unlikely to wait for the price of lithium mines and lithium salts to plummet.