Will the lithium market be oversupply? What is the price of lithium?

According to statistics from the M&A Research Department of the domestic cross-border investment M&A information service provider, Chinese-funded enterprises deployed nearly 20 lithium mine resources projects overseas in 2017. The acquisition method is divided into two types: acquisition of equity and signing of off-takement agreement. Among them, 15 disclosures involved about 3.748 billion Yuan.

After the rise of the new energy vehicle market, the upstream lithium mine resources became “beacon” and the heat continued to heat up. Many companies that were not related to lithium have laid out lithium resources. However, there are many cases in which lithium ore resources are too late to be exploited. The above-mentioned enterprises are faced with many risks. After the increase in the supply and supply of lithium resources, the future trend of lithium prices, market judgments are divided.

The domestic lithium giant Jiangxi Jifeng Lithium Industry (002460.SZ) released its performance forecast on the evening of February 27. The company's 2017 net profit was 1.457 billion Yuan, a year-on-year increase of 213.95%. One of the main reasons for the increase in performance is that the spodumene mine owned by RIM, a subsidiary of Australia, has been producing ore since February 2017 and the supply of raw materials has been guaranteed.

Ganfeng Lithium acquired part of RIM's shares in September 2015 and has since increased its holdings. In addition, Haofeng Lithium also acquired shares in mining companies such as Lithium Metals of the Americas and Pilbara Minerals, an Australian lithium exporter.

At present, most of the power batteries of mainstream electric vehicles on the market are lithium batteries. Because domestic lithium mines are difficult to mine, domestic enterprises rely heavily on foreign lithium resources, and there are not many enterprises that arrange overseas mineral resources like Ganfeng Lithium. Recently, GCL-Poly Energy (03800.HK) and Linda Holdings (01041.HK) have invested in Canadian lithium miners; New Haiyi (002089.SZ) has invested in Shenzhen Guoao Mining Investment Partnership (Limited Partnership) (hereinafter referred to as Australia and Australia) Fund), the Australia-Australia Fund is a lithium industry fund, and its subsidiaries receive a 60% interest in the Molblan lithium mine in Quebec, Canada.

According to statistics from the M&A Research Department of the domestic cross-border investment M&A information service provider, Chinese-funded enterprises deployed nearly 20 lithium mine resources projects overseas in 2017. The acquisition method is divided into two types: acquisition of equity and signing of off-takement agreement. Among them, 15 disclosures involved about 3.748 billion Yuan.

Many domestic lithium mining areas have already fallen into the "pocket" of listed companies. Ganfeng Lithium Industry, Tianqi Lithium Industry (002466.SZ), Salt Lake (000792.SZ), Tibetan Holdings (000408.SZ), Tibet Mining (000762.SZ), ST Zhonghe (002070.SZ), Ya Enterprises such as Huanhua Group (002497.SZ) and Rongjie (002192.SZ) have divided lithium resources in Qinghai, Tibet, Jiangxi and Sichuan. These places are the main lithium mining areas in China.

Specifically, in recent years, enterprises that have distributed lithium resources mainly include lithium salt processing enterprises, power battery companies, vehicle manufacturers, cross-border listed companies and investment institutions. Driven by the lithium battery market, the temptation of lithium mine resources to enterprises is increasing day by day. However, whether lithium mine resources can bring real profit growth to enterprises and when mineral resources can be effectively converted into performance, there are many uncertain factors.

Lithium mining is affected by infrastructure, climatic conditions, environmental protection, and even social conflicts. The Lijiagou lithium mine under the Yahua Group and the methyl card lithium mine under the Rongjie Group are located in Sichuan, both of which are in a state of suspension.

From the perspective of the entire market, global lithium supply continues to increase. The rapid expansion of the new energy auto industry has helped the lithium price to rise, stimulating the development and expansion of a large number of new mine projects. Major lithium mines such as Chile and Australia are expanding lithium production.

Morgan Stanley downgraded the global lithium stock rating on February 26. The agency analyst said that the supply of lithium mines continues to increase. The electric vehicle industry may not be able to digest, predicting that the lithium battery market will exceed supply in 2019, and prices will fall. By 2021, lithium prices may fall by 45%. Analysts also said that the market is over-reliant on automakers' promises when predicting electric vehicle penetration, without fully considering consumer value propositions and the required infrastructure. Some companies have chosen to sell minerals. The Molblan lithium mine under the Guoao Fund was bought from Zhongjin Lingnan (000060.SZ) last year. In October last year, Zhongjin Lingnan disclosed its intention to sell its 60% interest in the Molblan lithium mine project to Guoao Lithium, a subsidiary of the Australia-Australia Fund. Zhongjin Lingnan said that the sale of lithium mines is to focus on the main business of lead and zinc. The analysis of China Merchants Securities shows that the lithium mine has not yet been developed, the existing infrastructure is relatively simple, and the climate of the project is cold, and the uncertainty of actual mining is relatively large.

Recently, the domestic lithium carbonate has been slightly negative. Android market research institutions and information, according to data from 2017 domestic battery grade lithium carbonate market price is the biggest gain of 47.54%, reached near high price 180000 Yuan/ton. Lithium carbonate is an important raw material of power battery.

According to data from began in December 2017, the domestic market of lithium carbonate and lithium carbonate has battery prices fell about 7%.Some analysts believe that years ago and capacity utilization is low, the lunar New Year holiday enterprises market demand, early stock up enterprise selling pressure is bigger. Years later the market enterprise demand picks up, will be the market price of lithium carbonate form a strong support.

For lithium price will future and lithium market oversupply, analysts are divided over. Bulls and bears in the electric vehicle market to expand growth and lithium supply growth is divided.

Tianqi Lithium said in an institutional research activity in November last year that it is expected that the price of lithium carbonate will be stable before 2020, mainly because the downstream demand is real growth, the cost of new entrants is high, and the price support is formed in the short term; 2021-2023 After most of the production capacity is released, the market supply and demand will reach a balance, and the price may be adjusted, but the possibility of a cliff-type decline is low.

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