recently, multiple lithium ore suppliers have released financial reports and performance forecasts for 2022. looking at the overall situation, the lithium industry has made a lot of money in the past year. tianqi lithium estimates that its net profit in 2022 will be about 23.1 billion to 25.6 billion yuan, with a year-on-year increase of 1011.19% to 1131.45%; according to the performance forecast released by ganfeng lithium, it is expected to make a profit of 18 billion to 22 billion yuan in 2022, with a year-on-year growth of 244.27% to 320.78%; according to yanhu shares, it is expected that the net profit attributable to shareholders of listed companies last year will be 15 billion to 15.6 billion yuan, an increase of 234.94% to 248.33% compared to the same period last year; tianhua super net is expected to achieve a net profit of 6.4 billion to 6.8 billion yuan in 2022, with a year-on-year increase of 602.76% to 646.68%.
in response, several lithium mining companies explained that this is mainly due to the rapid development of the new energy vehicle industry, which has driven the growth of the industry's demand for lithium salts, thereby driving a significant increase in the company's performance in 2022. however, with the frequent decline in the price of lithium carbonate since the end of last year, and the slowdown in the growth of the new energy vehicle industry this year, it is likely that the ultra-high growth trend of the lithium mining industry will be difficult to continue. according to citic securities research report, the inflection point of lithium price may arrive in 2023, and the price may fall back from a high level. in 2024, as the pressure of oversupply increases, lithium price will significantly decline.
"ten thousand taels of gold at the sound of lithium mine"
according to wind data statistics, as of february 8, 129 companies related to wande lithium mine and power batteries had released performance forecasts, and 83 companies had expected positive results (pre increase, slight increase, continued earnings, and turnaround), accounting for more than 60%. among them, four companies, including tianqi lithium, ganfeng lithium, byd, and salt lake, have net profit ceilings exceeding 10 billion yuan. in terms of growth, the performance of 53 companies has doubled, and the net profit of three companies, including rongjie shares, jixiang shares, and tianqi lithium, has increased by more than 10 times.
as for the reasons for the significant increase in performance, tianqi lithium stated that this was mainly due to the improvement in the global new energy vehicle boom, the acceleration of capacity expansion by lithium ion battery manufacturers, and the increase in downstream cathode material orders. in 2022, the sales volume and average sales price of the company's main lithium products significantly increased compared to 2021. ganfeng lithium also believes that in 2022, the demand for lithium salt from downstream customers increased strongly, and the sales price of lithium salt products increased significantly compared to the same period last year.
the "surge" in performance of lithium mining enterprises directly benefits from the rise in lithium prices. according to smm analysis, in addition to the temporary pressing of the pause button for lithium carbonate prices due to the impact of the epidemic on downstream demand last april, the overall lithium salt price in 2022 continued to rise due to terminal power, energy storage demand, and downstream capacity expansion, and hit a historical high of 567500 yuan/ton on november 9. subsequently, against the backdrop of weak downstream demand, the spot price of lithium carbonate experienced a slight correction at the end of the year, but remained at a relatively high level. according to data disclosed by everbright securities, the average price of battery grade lithium carbonate in the four quarters of 2022 was 400000 yuan/ton, 471700 yuan/ton, 479900 yuan/ton, and 547200 yuan/ton, respectively. throughout the year, the cumulative price increase of domestic battery grade lithium carbonate in 2022 was about 84%. no wonder industry insiders joked that "when lithium mines ring, there are ten thousand gold vehicles.".
the fundamental reason for the crazy rise in lithium prices is the rapid expansion of the new energy vehicle industry, which is caused by the imbalance between supply and demand. according to the analysis, in the first quarter of 2022, due to the stimulation of european and american policies, the rapid growth of the terminal market, and the accelerated expansion of production in the middle reaches of the industrial chain, the spot price of nonferrous lithium carbonate (99%) in shanghai rapidly increased from 275000 yuan/ton to 503000 yuan/ton. in the second quarter of 2022, the sales of new energy vehicles significantly decreased due to multiple factors. in the second half of 2022, as the sales of new energy vehicles continued to maintain a high growth, stimulated by policies such as china's extension of the purchase tax exemption policy for new energy vehicles, the implementation of the inflation reduction act in the united states, and the adoption by the european parliament of the 2035 ban on the sale of fuel vehicles, lithium prices stabilized and rose again. driven by the hype of the australian lithium concentrate auction, they hit a record price of 567500 yuan/ton in november 2022.
the supply and demand structure may be improved this year
will the phenomenon of "eating meat upstream and drinking soup downstream" continue this year?
xu ying, a lithium analyst at smm, said that with the expansion of mines in the later stage, the supply and demand relationship for lithium salt may turn to oversupply, but the cost of lithium mines will still form a certain support for the price of lithium salt. as the supply of raw materials is expected to be surplus, the downward trend in cost side prices will further affect the price trend of lithium salts, and the supply and demand structure of lithium salts may be improved.
with the continuous expansion of the new energy vehicle market base, it is widely believed in the industry that the growth rate of the global and chinese new energy vehicle market will slow down this year. bloomberg predicts that the global sales of new energy vehicles will reach 13.6 million in 2023, an increase of about 35% year-on-year, which is significantly lower than the growth rate of up to 55% in 2022. the situation in china is estimated to be similar. according to the prediction of the china automobile industry association (hereinafter referred to as "caac"), the domestic sales of new energy vehicles may exceed 9 million this year, with a year-on-year growth of about 32%. even from the absolute value of market growth, the overall sales of domestic new energy vehicles in 2023 will only increase by about 1 million to 1.5 million units compared to last year, reducing by half compared to the absolute market growth in 2022 (over 3 million units).
industry insiders admit that china will still be the largest new energy vehicle market in the world, but with the official withdrawal of state subsidies, policy support may weaken, or consumption demand may be reduced to some extent. this sign has already appeared at the beginning of the year. according to statistics, the total retail sales volume of the passenger car market in january 2023 was 1.293 million units, a year-on-year decrease of 37.9%, and a month-on-month decrease of 40.4%. both year-on-year and month-on-month growth rates are the lowest in january since this century, and the car market did not achieve a "good start" in january. among them, the wholesale sales of new energy passenger vehicles were 389000, down 7.3% year-on-year and 48.2% month-on-month. the slowdown in sales of new energy vehicles that occurred in december of last year continues. in january, the retail sales of new energy passenger vehicles reached 332000 units, a year-on-year decrease of 6.3% and a month-on-month decrease of 48.3%. "at the beginning of the new year, the market has entered a transitional stage of consumers' policy wait-and-see." cui dongshu, secretary general of the national passenger car market information association, said that after the withdrawal of national subsidies for new energy vehicles, the national new energy passenger car market quickly entered a freezing point in january as scheduled, and will gradually recover. according to a source from a power battery company, since the middle of december last year, some complete vehicle manufacturers have stopped placing orders upstream. on the one hand, they feel that cars cannot be sold; on the other hand, after the withdrawal of subsidies, the market trend this year is still unclear, and new pricing strategies are still in the pipeline. until then, the landing of upstream orders will be postponed.
in addition to the chinese market, europe, as the second largest market for new energy vehicles in the world, also faces great uncertainty. although the european market has gradually emerged from the haze since the fourth quarter of 2022 and the overall growth prospects are promising, geopolitical conflicts continue. the decline of german new energy subsidies to 1500 to 2000 euros per vehicle in 2023 may have some impact. in addition, there has been a rise in global protectionism, which may lead to the interruption of the industrial chain supply chain and inhibit the growth of production and sales of new energy vehicles. in particular, the us inflation reduction act proposes to adopt differentiated subsidy policies to exclude chinese battery companies and material companies from their automotive power battery industry chain, which will also affect other countries, thereby affecting the global demand for lithium minerals.
chain reaction after tesla's price reduction
at the beginning of 2023, tesla launched an unprecedented "price cut": the model 3 sales price dropped by 36000 yuan, the model y sales price dropped by 29000 yuan, and the price reductions for the remaining versions of the two models ranged from 20000 to 48000 yuan, setting a record low for tesla's sales price in china. this immediately triggered more intense price competition in the new energy vehicle industry. before the spring festival holiday, wenjie and xiaopeng automobile quickly followed up and lowered the product price by nearly 30000 yuan; after the opening of the new year, more car companies began to "fancy" price reductions. gac aian introduced a limited time delivery incentive of 5000 yuan per vehicle, as well as three years of zero interest, low down payment and limited time financial subsidies; wuling motor announced that by march 31, the starting price of hongguang miniev would be reduced by 3000 yuan to 29800 yuan; the price of saic feifan r7 electric separation model decreased to 195900 yuan, a decrease of about 20000 yuan; geely's emgrand brand has also reduced the price of some new energy vehicles by 13000 yuan; even weilai, which boasts no price reduction, has made price adjustments by "clearing inventory". it is reported that "weilai has started price reduction promotions for 2022 es6 and es8 models, with a price reduction of up to 100000 yuan.". other car companies have adopted various preferential measures, such as financial subsidies, deposit inflation, limited time free exterior decoration options, discount options, insurance subsidies, and delivery incentives, to reduce prices in disguised form.
the direct impact of the "price war" on the market should be an increase in sales, but unfortunately, in addition to tesla, sales of "weixiaoli" and gac aian, among others, all experienced varying degrees of decline in january. even the domestic leader of new energy vehicles, byd, saw a year-on-year growth decrease in the same month compared to the same period last year.
in the absence of rapid growth in market demand in the short term, under the "price war", cost control has naturally become an urgent issue for automotive companies to pay attention to. among them, power batteries, which account for 60% of the vehicle cost, bear the brunt. industry experts believe that after experiencing forced price increases last year, new energy vehicle companies have made some adjustments to the supply chain, such as increasing the number of suppliers, which has increased the voice of vehicle companies in the industry chain and made it possible for battery manufacturers to reduce prices. subsequently, in order to ensure their own profits, battery manufacturers are likely to further transmit the pressure of cost reduction to the upstream raw material supply chain. under the two-party game, even if the lithium price does not decline rapidly, the possibility of price increase is greatly reduced.
accelerated industrialization of sodium ion batteries
in order to reduce the cost of power batteries and find new technological routes with stable raw material resources and low costs, the industrialization process of sodium ion batteries is expected to accelerate this year, replacing a portion of the market share of lithium ion batteries.
securities institutions have pointed out that due to the high price of lithium, more and more automotive companies are incorporating sodium ion batteries into their research and development focus areas. according to reports, compared to lithium batteries, sodium batteries have the advantages of abundant resources, low cost, good low-temperature performance, magnification, and safety, and can be connected to lithium batteries in the production process. the pain point of practicality lies in the low energy density, typically between 80 and 170wh/kg, and poor recycling performance. according to estimates, the current material cost of sodium batteries is about 0.427 yuan/wh, with the cost of positive electrode, negative electrode, and electrolyte accounting for 30%, 21%, and 23%, respectively. the estimated results show that the material cost after the industrialization of sodium batteries will be 35% lower than that of lithium iron phosphate batteries at that time.
according to public information, several head power battery companies such as ningde times and yiwei lithium energy have begun to layout the sodium ion battery business. as of january 2023, the planned capacity of the national sodium ion battery has reached 48gwh. judging from the scale of construction, ningde times is the largest, with an estimated shipment volume of 2gwh, and zhongke haina 1gwh; chuanyi will also have 1gwh in the second half of the year, with a planned production capacity of 9gwh; hanxing technology expects 0.5 gwh. at the same time, vehicle companies are also experimenting with the loading of sodium ion batteries. it is reported that funeng technology officer xuan has received a notice from jiangling group new energy that "it has agreed to conduct preliminary research on the suitability of sodium ion batteries for ev3 models". the relevant models equipped with sodium ion batteries will be launched and sold in 2023.
soochow securities stated that it is expected that 2023 will be the first year of sodium ion battery industrialization, and small batch shipments can be achieved. in 2024, mass production can be achieved, and the scale is expected to reach 30gwh; zheshang securities believes that the total demand for sodium ion batteries is expected to reach 88gwh in 2025 and 378gwh in 2030. "the theoretical cost of sodium ion batteries is low, and the gap between energy density and cycle life with lithium batteries is gradually narrowing. in addition, its high magnification, low temperature resistance, and safer characteristics have unique advantages over lithium batteries, which is expected to initially form industrialization this year." securities research reports believe that this will to some extent carve up the market share of lithium ion batteries, leading to a further decline in the market demand for lithium minerals.
in particular, as the seventh richest element on earth, sodium has 420 times the reserves of lithium in the earth's crust, and is evenly distributed globally. there is no need to worry about shortages.
limited short-term increments
in terms of lithium ore supply, despite the stimulation of high lithium prices, the global lithium resource development will accelerate significantly in 2022. however, due to many factors such as long construction and production cycle, environmental protection policies and natural conditions constraints, insufficient production factors, and the rise of resource protectionism, the growth rate of lithium supply is still relatively slow, and the imbalance between supply and demand is significantly exacerbated. however, this problem is expected to be alleviated in 2023. several institutions have pointed out that the global lithium resource supply is expected to achieve significant growth in 2023.
it is reported that under the stimulation of excessive profits in the industry, lithium resources and lithium salt plants have rapidly expanded production. on the one hand, after continuous construction and production expansion, several overseas lithium resource projects are expected to be put into production and expanded in 2023, including not only traditional australian large mines and large salt lakes in south america, but also the accelerated development of lithium mine projects in africa. on the other hand, domestic lithium resource industry policies have been loosened, and a large number of lithium mica mines, salt lake brine, etc. are expected to accelerate their entry into the market. china's jiangxi mica, western sichuan spodumene, and qinghai salt lakes will also have 68000 tons of new production released.
according to data calculated by fubao lithium power grid, in 2023, the global lithium resource end is expected to release 352000 tons of new production. among them, 60% of australia's lithium resource projects will have new production releases in 2023, and the annual increment of the seven spodumene projects is expected to reach 115000 tons. overall, it is expected that the global lithium resource production will exceed 1 million tons in 2023, with a year-on-year increase of about 40%. especially in the second and third quarters of this year, the supply and demand situation in the lithium market is expected to reverse and begin to ease.
the forecast of citic securities research report is close to that, and it is believed that the global new lithium supply will reach 400000 tons in 2023. from 2023 to 2025, the global lithium supply surplus will account for 6%, 23%, and 30% of the total demand, showing a trend of increasing year by year. due to the small excess ratio in 2023, it is expected that the lithium price will remain above 300000 yuan/ton. in 2024, there is expected to be a significant oversupply of lithium, and it is expected that the price of lithium will significantly decline, with prices falling below 150000 yuan/ton.
however, due to the unsynchronized supply release, some experts believe that there may still be a gap in the supply of lithium ore this year. "we have noticed that due to various factors such as labor shortages and power constraints, there are currently delays in the supply of some lithium mines, such as those in australia and africa, with limited incremental growth in the short term," said jiang yan.
the downward price is a foregone conclusion
according to data released by shanghai steel union, the quotation of lithium battery materials continued to decline on february 7th, with the average market price of battery grade lithium carbonate dropping by 1000 yuan/ton to 462500 yuan/ton. compared to the historical highest average price of 590000 yuan/ton in the middle of november last year, this offer has fallen by 127500 yuan/ton, a decrease of more than 20%. in fact, the downward trend of lithium carbonate prices in this round started early before the new year's day of this year. since december last year, the price of lithium carbonate has shown a downward trend for two consecutive months, especially on january 9, the price of battery grade lithium carbonate fell below the 500000 yuan/ton mark, hitting a new low in more than four months.
so, what is the trend of lithium price in 2023?
the relationship between supply and demand remains the main determining factor. some institutions have calculated the total supply and demand of lithium resources in the four quarters of 2023. on the supply side, by collecting, sorting out, and comparing the volume of 44 major lithium resource projects worldwide, it is estimated that the increments in the four quarters of 2023 will be 57000, 66000, 100000, and 129000 tons respectively; on the demand side, the demand increment for power batteries, energy storage, and small batteries at the three major tracks will be 57000, 63000, 73000, and 82000 tons respectively from the first quarter to the fourth quarter of 2023, with a total annual demand increment of 276000 tons. it can be seen from the comparison that the supply and demand situation in each quarter is respectively - 0.1 million, 0.4 million, 2.6 million, and 4.7 million tons, and the situation of marginal supply exceeding demand will occur in the second half of 2023.
wang pingwei, chairman of china mining resources group, said in a media interview that the trend of gradual decline in lithium prices would continue as more supplies emerged to reduce the exceptionally high profit margins of lithium producers. he expects lithium prices to drop by about a quarter from current levels, but as the market remains tense, prices will not plummet. in 2023, the price of lithium carbonate will drop to about 400000 yuan per ton. at the same time, he believes that even at a lower price level, china mining will still have a good profit margin. "overall, the downward trend in lithium carbonate prices in 2023 is an inevitable trend, but it is unlikely to return to the past levels of tens of thousands of yuan and hundreds of thousands of yuan per ton, with a fluctuating rate of 300000 to 400000 yuan per ton." yu qingjiao, secretary general of the zhongguancun new battery technology innovation alliance and director of the battery hundred people association, told reporters.
author: yao meijiao source: china energy news · china energy storage network