Core Viewpoint - The recent surge in lithium carbonate prices, driven by rising costs, demand, and market sentiment, suggests a potential new "super cycle" for lithium battery materials may be on the horizon [1][3][7] Price Movements - On November 17, 2023, lithium carbonate futures on the Shanghai Futures Exchange rose by 9%, closing at 95,200 yuan per ton, with a daily increase of 7,840 yuan per ton [1] - Major lithium producers in the A-share market, Tianqi Lithium and Ganfeng Lithium, saw significant stock price increases of 9.87% and 7.48%, respectively, on the same day [1] Demand and Supply Dynamics - Ganfeng Lithium's chairman indicated that if lithium carbonate demand grows over 30% next year, prices could exceed 150,000 yuan per ton, with potential to reach 200,000 yuan per ton if demand growth hits 40% [3] - The projected global demand for lithium carbonate is expected to reach 1.9 million tons by next year, with supply potentially increasing by 250,000 tons, leading to a balance in supply and demand [3] Cost Factors - The increase in lithium carbonate prices is attributed to rising costs, particularly due to expectations of higher lithium mica costs [5] - The cost of producing lithium carbonate from lithium mica is estimated to rise by approximately 3,500 yuan per ton, bringing the total production cost to around 77,000 yuan per ton [6] Storage Demand - The primary driver of the recent lithium carbonate price increase is the surge in demand for energy storage solutions, which is expected to significantly boost the demand for lithium batteries [7] - The domestic energy storage market is experiencing a turning point in economic viability, driven by marketization of renewable energy and capacity pricing [7] Supply Chain Considerations - The current supply situation for lithium carbonate differs significantly from previous cycles, with new lithium resources being developed globally [8] - There are concerns about potential supply bottlenecks, particularly with the Jianshanxia Mica Mine not expected to resume production in the short term, which could impact prices [8]

Core Viewpoint - Lithium has become a prominent focus in the capital market, with carbonate lithium futures reaching a new high of 95,200 yuan/ton, marking a 9% increase on November 17 [1] Group 1: Market Performance - The lithium mining index in the A-share market rose by 7.16%, leading all index sectors, with 9 out of 23 constituent stocks hitting the daily limit [1] - Several stocks, including Tibet Mining and Salt Lake Shares, saw increases of over 5% [1] - Seven constituent stocks have experienced price increases exceeding 110% year-to-date, with a notable 264.12% increase for Zhongda Mining [1] Group 2: Supply and Demand Dynamics - The recent surge in carbonate lithium prices is attributed to a combination of supply-demand dynamics, news factors, and capital inflows [1] - Strong demand from the energy storage sector is a key driver of the current rise in lithium prices, with battery-grade carbonate lithium prices increasing by 15.76% from the beginning of November [2] - The domestic energy storage market is experiencing growth due to improved profit margins, while overseas demand is driven by policy changes and aging grid infrastructure [2] Group 3: Future Projections - Predictions indicate that by 2026, carbonate lithium demand may grow by 30% to reach 1.9 million tons, with supply capacity expected to increase by approximately 250,000 tons [4] - The U.S. energy storage capacity is projected to grow significantly, with a 53% increase expected in 2025 compared to 2024 [3] - The lithium battery supply chain is anticipated to maintain a tight supply-demand structure, with a projected inventory reduction of over 10,000 tons in November [5] Group 4: Price Trends and Market Sentiment - Analysts suggest that the current price rebound in the lithium battery supply chain is primarily driven by short-term factors rather than a fundamental reversal in the industry [3] - There are concerns about potential price corrections due to market sentiment cooling and profit-taking by investors [5] - The market is currently experiencing a supply shortage due to low operating rates in domestic salt lake production and underperformance in overseas lithium mining [5][6]

1. Report Industry Investment Rating - Upgrade PLS to Overweight, MIN, IGO, LTR to Neutral [1] 2. Core Viewpoints of the Report - The demand for energy storage systems (ESS) will lead the market into a deficit, and short - term and long - term prices are upgraded [1] - In 2026, the supply - demand pattern of battery production will improve, and the potential for price increase will emerge. The explosion of ESS demand and supply disruptions of Chinese lithium mines jointly drive up lithium prices and industry prosperity [7] - Currently, the demand expectation for lithium carbonate is intensifying. With strong reality and strong expectation, the price of lithium carbonate has risen significantly and is expected to remain strong above 90,000 yuan/ton [7] 3. Summaries According to Related Information Information about Lithium Carbonate Demand and Supply in 2025 and 2026 - In 2025, the global demand for lithium carbonate is estimated to be 155 tons, while the supply capacity is over 170 tons, resulting in an excess of about 20 tons and low prices this year [6] - In 2026, the demand for lithium carbonate is expected to grow by 30% to 190 tons, and the supply capacity is estimated to increase by about 25 tons, with a basically balanced supply - demand situation and potential for price increase [6] Information about Lithium Carbonate Price Changes - On November 16, the market's bullish sentiment fermented after the statement of Ganfeng Lithium's chairman, and the price of lithium carbonate exceeded 90,000 yuan/ton, rising to 93,800 yuan/ton with a 7.47% increase [7] - If the demand growth rate of lithium carbonate in 2026 exceeds 30% or even reaches 40%, the price may break through 150,000 yuan/ton or even 200,000 yuan/ton [6] Information about the Market Outlook - The resumption of production at Xiawo will partially ease market tension but is difficult to change the trend of the supply - demand gap [7]

Core Viewpoint - Lithium carbonate futures have surged over 7%, with the main contract exceeding 94,000 yuan/ton, marking a new high in over a year, driven by supply constraints and strong downstream demand [2][3] Group 1: Market Performance - As of midday trading, the lithium battery sector in the A-share market saw significant gains, with companies like Shengxin Lithium Energy and Rongjie Co. hitting the daily limit, while Tianqi Lithium, Yongxing Materials, and Ganfeng Lithium also experienced notable price increases [2] - In October, the production of new energy vehicles reached 1.772 million units, a month-on-month increase of 9.59%, while sales were 1.715 million units, up 6.12% [3] Group 2: Demand and Supply Dynamics - The demand for lithium carbonate is showing unexpected resilience, particularly driven by the robust performance of the new energy vehicle sector, with a reported 84.1 GWh of power batteries installed in October, reflecting a month-on-month increase of 10.7% and a year-on-year increase of 42.1% [2][3] - The storage sector is also contributing to increased demand, with significant growth in orders for related companies, as evidenced by a 45.6% year-on-year increase in power cell production [3] Group 3: Future Price Predictions - Ganfeng Lithium's chairman predicts a 30% increase in lithium carbonate demand by 2026, potentially reaching 1.9 million tons, with supply expected to grow by 250,000 tons, suggesting a balanced supply-demand scenario [3] - Current market sentiment is optimistic regarding lithium carbonate prices, with potential for prices to exceed 150,000 yuan/ton if demand growth surpasses 30% next year [3][4] Group 4: Divergent Market Opinions - Despite the strong price momentum, there are differing opinions among institutions regarding future price trends, with some analysts suggesting a strong price environment due to declining inventories and storage policy support [5] - Others express caution, noting a slight month-on-month decline in bidding data and potential seasonal slowdowns in demand, particularly in the traditional off-peak season [5]

Group 1 - The lithium mining sector in the A-share market continues to show strong performance, with energy metal stocks rising over 6% as of the midday close on November 17, 2023 [1] - Notable stocks include Shengxin Lithium Energy, which hit the daily limit up for four consecutive days, and Rongjie Co., which achieved the same for three days [1] - Lithium carbonate futures saw a significant increase, with the main contract rising over 8% to exceed 94,000 yuan/ton [1][2] Group 2 - The recent activity in the lithium battery sector is attributed to a recovery in the lithium battery industry chain, with prices of multiple products on the rise [4] - Analysts suggest that there are supply bottlenecks in lithium mining, while demand from the power terminal remains strong, leading to a favorable fundamental outlook [4] - The demand for energy storage is expected to significantly support lithium carbonate demand, potentially matching the demand levels from new energy vehicles [4] Group 3 - Prices of battery-grade lithium carbonate have increased, with a reported rise of 3,600 yuan/ton, bringing the average price to 90,350 yuan/ton [3] - The price of lithium hexafluorophosphate has surged from approximately 55,000 yuan/ton in mid-September to 120,000 yuan/ton, reflecting an increase of over 114% [5] - The expansion of energy storage and fast-charging applications is expected to continue driving price increases across various lithium battery materials [5]

Core Viewpoint - The price of lithium hexafluorophosphate (LiPF6), a key material for lithium-ion battery electrolytes, has surged over 200% in four months, with some market quotes exceeding 150,000 yuan per ton, driven by strong demand in the energy storage and power battery markets [1][3][15]. Industry Demand and Supply - A production facility in Huzhou, Zhejiang, reported a 50% year-on-year increase in electrolyte shipments by the end of September, with energy storage demand rising by 80% [3]. - The production capacity of a certain new energy materials company is currently at full capacity, with a designed capacity of 150,000 tons [5]. - The supply of lithium hexafluorophosphate is tight, with inventory levels dropping significantly from a typical 7 days of production supply to just 2-3 days [9][11]. Market Dynamics - The lithium hexafluorophosphate industry is highly concentrated, with the top five companies holding about 70% of the market share [11]. - After a period of low prices over the past two years, the rapid increase in demand has led to a supply-demand imbalance [13]. - The high technical barriers and long construction cycles for lithium hexafluorophosphate production make short-term capacity expansion challenging [15]. Future Outlook - Industry experts suggest that the tight supply situation may persist until 2026, with potential for further price increases [15]. - Analysts indicate that while the cost of fluorochemical and lithium salt may limit price increases, the average price next year is expected to be higher than this year [17].

Industry Supply and Demand and Capacity Status - The operating rate is expected to increase significantly from approximately 50% before August 2025 to 80% after, driven by surging energy storage demand, with leading companies reaching 100%-110% by November 2025 [5] - The nominal industry capacity is projected to be around 5.3-5.5 million tons by the end of 2025, but the actual effective capacity is only about 4 million tons due to 20% being outdated capacity [5] - Actual shipments are estimated at 2.5 million tons in 2024, with a forecast to exceed 4 million tons in 2025, driven by both power and energy storage [5] - New capacity additions are expected to be at least 1 million tons annually from 2026 to 2027 [5] - New production lines have significant advantages in energy consumption, with old lines consuming about 4500 kWh/ton compared to less than 3000 kWh/ton for new lines [5] Cost and Price Analysis - The cost of iron phosphate has risen from 9,000 CNY/ton to 10,000 CNY/ton for non-resource companies, while resource companies can maintain costs between 8,000-9,000 CNY/ton [3] - The price of iron phosphate lithium is expected to rise to 11,000-12,000 CNY/ton by 2026, with leading companies potentially achieving profits of 500-1,500 CNY/ton [5] - The price of phosphoric acid has increased from 6,300-6,500 CNY/ton to 6,800-7,000 CNY/ton, and ferrous sulfate has risen from 200-260 CNY/ton to 300 CNY/ton [5] - Current costs are approximately 36,000 CNY/ton, with lithium carbonate at 80,000 CNY/ton, and processing fees between 15,000-17,500 CNY/ton [5] - Price increases have been cumulative since the second quarter of 2025, ranging from 1,000-3,000 CNY/ton, with leading companies nearing breakeven and some starting to profit [5] Key Players and Market Dynamics - Major manufacturers are balancing performance and cost in their procurement of battery cells [6] - BYD is expanding its presence in Southeast Asia [6] - CATL is experiencing growth in the energy storage market that exceeds that of the power market [6]

Core Insights - JPMorgan has reversed its bearish stance on the lithium industry, acknowledging a significant underestimation of the explosive demand in the energy storage (ESS) market [1][3] - The bank upgraded its ratings for Tianqi Lithium and Ganfeng Lithium from "Underweight" to "Neutral," indicating a major correction in its outlook on the lithium market fundamentals [1][3] - JPMorgan expects a supply shortage in the global lithium market in 2025 and 2026, prompting a substantial increase in its lithium price forecast for 2026 from RMB 70,000 per ton to RMB 90,000 per ton, a nearly 30% increase [1][6] Energy Storage Demand - The surge in energy storage demand is identified as a key driver of stock prices, outweighing the negative impacts of supply factors such as the resumption of operations at CATL's mines [3][4] - Energy storage batteries accounted for over 25% of global battery production since June, with 40% of lithium iron phosphate (LFP) battery production attributed to this segment [4] - JPMorgan forecasts a 30% year-on-year increase in global energy storage battery shipments by 2026, reaching approximately 770 GWh, driven by policy incentives and ongoing deployment of grid-level projects [4] Supply Dynamics - The resumption of production at CATL's Jiangxi mine, with an annual capacity of approximately 45,000 to 50,000 tons of lithium carbonate equivalent (LCE), is expected to provide some relief to the current market tightness, but it will not be sufficient to fill the significant supply gap [5][6] - Even with the inclusion of the Jiangxi mine's output, the market is anticipated to remain in a state of shortage in 2025 and 2026 [6] - JPMorgan's supply forecasts remain largely unchanged, with slight increases in projections for 2029/2030, while noting that expansions in Australia and Chile may not fully offset delays in Brazil due to financing constraints [6] Price Target Adjustments - JPMorgan has raised its price targets for Ganfeng Lithium and Tianqi Lithium significantly, with Ganfeng's A-shares target increased from RMB 30 to RMB 65, and H-shares from HKD 22 to HKD 48 [6] - Tianqi Lithium's A-shares target has been adjusted from RMB 30 to RMB 54, and H-shares from HKD 28 to HKD 50, reflecting the revised outlook on lithium prices and market conditions [6]

Core Insights - The renewable energy sector has significantly outperformed the market since the second half of the year, with the China Securities New Energy Index rising by 62.23% compared to an 18.87% increase in the CSI 300 Index [1] - The surge in demand for energy storage has been a primary driver of this trend, benefiting various segments of the supply chain, including energy storage systems, lithium batteries, and supporting electrical equipment [1] - The construction of AI data centers in North America has led to a rapid increase in electricity demand, highlighting weaknesses in local power infrastructure and prompting new investments in power generation and grid upgrades [2] Renewable Energy Performance - The photovoltaic industry index increased by 60.45%, the new energy vehicle index by 39.30%, the grid equipment index by 43.77%, and the wind power industry index by 19.65% [1] - The implementation of the 136 document by various provinces in China has advanced market-oriented electricity construction, ensuring that independent energy storage projects yield returns above 8% [1] Energy Storage Market Dynamics - From July to October, China saw a significant increase in energy storage system and EPC tender capacity, reaching 157.9 GWh, a year-on-year increase of 161.3% [1] - The U.S. faces a potential electricity shortfall during peak demand periods due to accelerated AI data center construction, necessitating substantial energy storage solutions by 2028 [2] Investment Opportunities in Energy Storage - Investment opportunities in the energy storage supply chain are identified, with downstream storage systems benefiting from strong local project channels and brand capabilities, particularly in Europe and North America [3] - Midstream lithium battery production is expected to favor leading companies with scale and cost advantages, while upstream materials such as lithium hexafluorophosphate and lithium carbonate are under scrutiny due to capacity constraints [3] - The narrative of electricity shortages abroad is expected to extend to power generation equipment, including gas turbines and nuclear units, as well as grid equipment like transformers [3]

Core Insights - The lithium market is experiencing a fundamental shift from supply-side concerns to demand-side optimism, driven by the explosive growth in battery energy storage systems (BESS) [1][2] - UBS predicts that BESS will become a significant driver of lithium demand, comparable to electric vehicles, with demand expected to account for 22% to 26% of total battery demand by 2030 [1][4] Demand Growth - UBS forecasts that global BESS demand will grow from 396 GWh in 2026 to 873 GWh by 2030, representing a compound annual growth rate (CAGR) of 24% starting from 2025 [4] - By 2026, BESS is expected to generate a demand of 360,000 tons of lithium carbonate equivalent (LCE), which will surge to 680,000 tons by 2030 [5][6] - The annual incremental demand from BESS is projected to be around 90,000 tons of LCE, compared to 170,000 tons from electric vehicles [5] Supply Dynamics - UBS indicates that the lithium market may shift from a slight surplus of 55,000 tons in 2026 to a potential shortage due to the explosive demand from BESS [9] - The report highlights that while supply-side disruptions exist, the near 100% year-on-year growth in storage demand will have a more significant impact on market balance [9] Macro Drivers - The surge in BESS demand is attributed to three macro drivers: the inability to quickly increase new power generation capacity, the need for battery storage to balance the grid, and the growing demand for renewable energy [8][10] - The annual electricity demand growth in the U.S. has reached approximately 3%, driven by high-energy industries such as AI and data centers [10] Price Outlook - UBS maintains a positive outlook on lithium prices, predicting an increase of over 20% by mid-2026, with average prices reaching $1,100, $1,150, and $1,350 per ton in 2026, 2027, and 2028 respectively [13] - The structural explosion in storage demand is reshaping the fundamentals of the lithium industry, indicating a shift towards a tighter supply balance [13] Market Sentiment - Strong expectations for large-scale battery storage demand have significantly improved market sentiment, with lithium carbonate futures recently rising by 5% [2] - Citigroup notes that the recent upward momentum in the lithium market is primarily driven by robust demand rather than potential supply disruptions [2][7]