China Securities Co., Ltd.: Supply, consumption, and environmental protection triple catalysis, the central price of lithium is expected to move up.

China Securities Co., Ltd. released a research report stating that lithium is experiencing overseas supply continuing to decrease, downstream consumption increasing compared to production, and environmental disturbances in the Jiangxi region, all of which are catalysts for the rise in lithium prices. Following the announcements of decreased production and lowered output targets by Australian mines Core and Greenbushes, Australian miner Cattlin announced a reduction in its 2024 fiscal year production target. More and more companies are suspending their expansion plans, leading to a significant narrowing of the surplus in the supply-demand balance sheet compared to previous forecasted data. On the consumption side, according to GGII statistics, power battery companies saw a strong growth in production in March, with some leading companies showing an increase of 70%-80% in production guidance compared to the previous month. This has significantly revised earlier pessimistic expectations, and the peak consumption season in the second quarter can be expected. In the short term, the fundamentals support the rise in lithium prices. It is expected that under factors such as tightening supply, improving consumption, and environmental disturbances, the center of lithium prices is still expected to move higher. China Securities Co., Ltd.'s main points are as follows: Lithium: Industrial lithium carbonate prices have increased slightly due to improving market sentiment According to SMM, this week's industrial lithium carbonate prices are at 94,500 yuan per ton, up 6.0% from last week. Battery-grade lithium carbonate prices are at 102,500 yuan per ton, up 6.5% from last week. The crude granular lithium hydroxide price for batteries is at 88,800 yuan per ton, up 4.4% from last week, and the fine powder lithium hydroxide price for batteries is at 94,700 yuan per ton, up 4.1% from last week. Supply side: After the holiday, lithium salt manufacturers have resumed production one after another, with some manufacturers in the Jiangxi region temporarily suspending production due to environmental factors. At the same time, some large factories are undergoing routine maintenance, leading to a slight decrease in production in the Jiangxi region this week. There are expectations of cargo release in March at Salt Lake Industrial, with continuous cancellations of delivery receipts on the exchange, and the spot market circulation is not tight. The supply of lithium ores is loose, with manufacturers who signed new contracts before the New Year being more proactive in production, while those with insufficient raw materials or pending new contracts have a lower production level. Currently, the tight supply of lithium salt raw materials is gradually easing, transitioning the market towards loose supply. Due to the nature of lithium hydroxide itself, manufacturers will not overproduce, and production is still largely determined by the orders. Demand side: In March, there is a more than 10% increase in production compared to last month, showing some recovery in demand but not strong. Currently, lithium carbonate prices are at a high level, and cathode material manufacturers are not accepting the current high prices. In addition, there was stock replenishment behavior in January, which may inhibit further purchasing demand, so demand may not see a significant improvement. This week, ternary material factories have resumed production one after another, with production levels relatively higher than the previous week. As the first quarter comes to an end, the production of ternary materials increases, paving the way for new demand in the second quarter, which may uplift the overall market demand in a situation where demand has been generally weak. In the market for February, the reductions in supply by mainstream companies may vary, with most leading companies expected to reduce by around 15%. According to data from the China Passenger Car Association, from February 1 to 25, the retail sales of new energy vehicles totaled 283,000, a year-on-year decrease of 22% and a 44% decrease compared to the same period last month. Since the beginning of the year, cumulative retail sales have reached 951,000 units, a year-on-year increase of 38%. From February 1 to 25, national passenger vehicle manufacturers wholesaled 258,000 new energy vehicles, a 40% decrease year-on-year and a 46% decrease compared to the same period last month. Since the beginning of the year, cumulative wholesale figures have reached 940,000 units, a year-on-year increase of 15%.