Hong Kong stocks concept tracking | Two lithium companies suspend production and lithium carbonate prices rebound, market expects bottoming out of the lithium industry to strengthen (with concept stocks)

Last Wednesday (September 11th), following the news of the shutdown of the Yichun lithium mine under Contemporary Amperex Technology, Jiangxi Jiuling Lithium Co., Ltd. (referred to as "Jiuling Lithium") announced on the same evening that its mines and dressing plants would undergo shutdown for maintenance. The shutdown of Jiuling Lithium is also believed by the market to further push lithium prices to bottom. SMM believes that although the total output of lithium carbonate is expected to decrease, considering the level of lithium carbonate imports and accumulated inventory levels domestically, there is still an oversupply of lithium carbonate in the domestic market, and it is difficult to reverse in the short term. Therefore, even in the current stage where an increase in demand would push up the spot prices of lithium carbonate, the pressure from accumulated inventory would still act as a resistance to its price increase. In the short term, the spot price of lithium carbonate is expected to fluctuate within a range. The Yangtze Nonferrous Metals Network stated that the price of lithium carbonate continued to rise on September 19th, and the trend of market warming remained unchanged. The news of the shutdown of lithium salt enterprises quickly boosted the rebound in lithium carbonate, while also boosting market confidence. With the gradual arrival of the traditional peak season for consumption, the downstream market has shown some vitality. While there has not been a significant increase in the production of ternary materials, there has been an increase in the sectors of power and energy storage in September. The production plans for lithium iron phosphate continue to increase, with some small and medium-sized manufacturers achieving high operating rates, even reaching full production, providing strong demand support for the lithium carbonate market. In the second quarter of 2024, the total production of lithium concentrate from major overseas lithium mines in operation amounted to approximately 1.04 million tons, an increase of 13.2% compared to the previous quarter and 17.7% year-on-year. Among them, the production of lithium concentrate at Greenbushes, Wodgina, Pilbara, Bald Hill, and NAL increased by 19%, 29%, 26%, 17%, and 23% respectively compared to the previous quarter; while the production of lithium ore at Mt Marion, Mt Cattlin, Finniss, and Sigma decreased by 2%, 22%, 17%, and 10% respectively. The bottoming out of lithium prices in the second quarter promoted the smooth ramp-up of low-cost lithium mines, but some high-cost lithium mines either shut down or significantly reduced production, leading to a noticeable differentiation in the operational strategies of lithium mines. A CITIC SEC report pointed out that the rebound in lithium prices in the second quarter of 2024 led to an increase in overseas lithium mine supply; lithium extraction companies in South America saw a year-on-year increase in production in the second quarter of 2024, leading to a rise in performance. In September, domestic lithium carbonate futures prices fell below 70,000 yuan/ton, leading to an accelerated clearance of global lithium resources, prompting us to lower our forecast for supply growth in 2024. With the decline in domestic lithium salt production and the growth in positive electrode materials production in August, we expect the inflection point for lithium salt inventory to be approaching, with limited downside for lithium prices. CITIC SEC expects that as lithium prices hit a low point, market expectations for the bottoming out of the lithium industry will strengthen, and the focus on lithium industry stocks is expected to increase. Lithium mining-related companies: Tianqi Lithium Corporation (09696), Ganfeng Lithium Group (01772)