Lithium Price Slump Continues To Haunt Ganfeng Lithium

Core Insights - The lithium industry continues to face significant challenges, with major producers like Ganfeng Lithium and Tianqi Lithium reporting substantial losses and struggling with profitability due to low lithium prices and oversupply [3][9][19] Company Performance - Ganfeng Lithium expects a net loss of 300 million to 550 million yuan ($41.76 million) for the first half of 2025, which is an improvement from a 760 million yuan loss in the same period of 2024, but still indicates ongoing financial difficulties [3][4] - The company's expected loss, excluding non-recurring items, is projected to be between 500 million and 950 million yuan for the first half of 2025, significantly wider than the 160 million yuan loss reported in the previous year [4][10] - Investment gains from the disposal of energy storage projects contributed to a narrowing of the overall net loss, but these gains are not related to Ganfeng's core lithium mining and production business [5] Market Conditions - The average price for battery-grade lithium carbonate in China was 64,950 yuan per ton in mid-July, down 17.6% from the start of the year and nearly 90% from the peak price of 580,000 yuan per ton at the end of 2022 [11][12] - Oversupply in the lithium market, driven by increased production from new mining projects, has led to weak prices, while demand growth from electric vehicles is slowing [12][19] - Current spot prices are nearing the cost floor for many small and medium-sized producers, with production costs estimated between 50,000 and 60,000 yuan per ton [14] Competitive Landscape - Tianqi Lithium forecasts a net profit ranging from nil to 155 million yuan for the first half of 2025, recovering from a significant loss of 5.21 billion yuan a year earlier, but its operating profit excluding non-recurring items is expected to be much smaller [7][8] - Both Ganfeng and Tianqi are struggling with profitability, relying on factors outside their core lithium businesses to achieve any semblance of financial recovery [9][19] Investor Sentiment - Ganfeng's shares fell over 7% following its profit warning, reflecting investor surprise at the extent of the losses, although the shares are still up 19.7% year-to-date [16] - Long-term optimism remains as Ganfeng's shares have rebounded from around HK$19 to nearly HK$26, driven by hopes of a price bottom and policy support for EVs [17] - However, investment banks express skepticism about the sustainability of this rebound, with Morgan Stanley maintaining an "underweight" rating and UBS assigning a "sell" rating [18][19]