23 November 2025 | 10:52PM GMT Commodities Research Lavinia Forcellese +44(20)7774-9243 | lavinia.forcellese@gs.com Goldman Sachs International Eoin Dinsmore +65-6889-2401 | eoin.dinsmore@gs.com Goldman Sachs (Singapore) Pte Aurelia Waltham +44(20)7051-2547 | aurelia.waltham@gs.com Goldman Sachs International Daan Struyven +1(212)357-4172 | daan.struyven@gs.com Goldman Sachs & Co. LLC Samantha Dart +1(212)357-9428 | samantha.dart@gs.com Goldman Sachs & Co. LLC BATTERY METALS ANALYST Lithium: ESS Boom Tighte ...

Investment Rating - The industry investment rating is maintained as "Positive" [5] Core Viewpoints - The report highlights the positive impact of India's cancellation of BIS certification and anti-dumping duties, which is expected to boost PVC exports. India is the largest importer of PVC globally, with an estimated import volume of approximately 3 million tons in 2024, primarily driven by agricultural and construction demands [2][8] - The report emphasizes the anticipated recovery in chemical industry sentiment and the sustained high growth expectations in energy storage, particularly in the MDI, PVC, and phosphate chemical sectors [7][8] Summary by Relevant Sections Investment Recommendations and Targets - The report suggests focusing on PVC-related companies that are expected to see a recovery in demand, including Zhongtai Chemical, Xinjiang Tianye, Chlor-alkali Chemical, and Tianyuan Co., with Wanhu Chemical rated as "Buy" due to its leading position in MDI. In the phosphate chemical sector, companies like Chuanheng Co. and Yuntianhua are highlighted, while in the oxalic acid industry, Hualu Hengsheng, Huayi Group, and Wankai New Materials are recommended as "Buy" [3] Industry Insights - The report notes that the demand for oxalic acid is expected to rise due to increased energy storage needs, particularly from lithium iron phosphate. The development of the oxalic acid route is anticipated to significantly boost demand, with limited new domestic production capacity projected [8]

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 is approaching [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]. - Leading companies in the A-share market, Tianqi Lithium (002466) and Ganfeng Lithium (002460), 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, potentially reaching 200,000 yuan per ton if demand growth hits 40% [3]. - The projected global lithium carbonate demand for 2025 is 1.45 million tons, with an updated estimate of 1.55 million tons due to increased energy storage needs [3]. - Current supply capabilities are over 1.7 million tons, indicating a potential surplus of around 200,000 tons if demand does not exceed expectations [3]. Cost Factors - The increase in lithium carbonate prices is attributed to rising costs, particularly the anticipated increase in lithium mica costs [5]. - The cost of producing lithium carbonate from lithium mica is estimated to have risen by approximately 3,500 yuan per ton, bringing the total production cost to around 77,000 yuan per ton [6]. Market Sentiment and Speculation - The current price surge in lithium carbonate futures is largely viewed as capital speculation, as the spot market does not reflect the same level of activity [4][3]. - The sentiment in the market is influenced by the strong demand for energy storage solutions, which is expected to drive lithium battery demand growth exceeding 30% next year [8]. Supply Chain Considerations - The supply side is facing uncertainties, including the impact of increased imported lithium resources and the potential resumption of production at the Jiangxi lithium mica mine, which could affect lithium carbonate prices [8].

Group 1: Market Performance - As of November 17, the A-share lithium battery sector has strengthened, with 15 stocks including Hubei Zhongyi Technology and Ningbo Rongbai New Energy hitting the daily limit [1] - The new energy storage market in China has seen a significant increase, with installed capacity exceeding 100 million kilowatts by the end of September, accounting for over 40% of the global total [1] Group 2: Demand and Supply Dynamics - The storage industry is driving the core battery materials sector out of a previous downturn, leading to increased production and prices [2] - In the first nine months of 2025, Chinese companies signed 308 overseas energy storage orders, with a total new order scale of 214.7 GWh, a year-on-year increase of 131.75% [2] - The price of core battery materials has been rising, with lithium iron phosphate prices reaching 37,350 yuan/ton and energy storage lithium iron phosphate at 34,350 yuan/ton as of November 17 [3] Group 3: Policy Support - The National Development and Reform Commission and the National Energy Administration have set a target for new energy storage capacity to reach over 180 million kilowatts by 2027 [3] - Recent policies aim to promote advanced and efficient new energy storage construction [3] Group 4: Future Growth Projections - The independent energy storage demand is expected to grow by 30% to 40% in 2025 due to the cancellation of mandatory storage requirements [4] - The supply of core battery materials is anticipated to remain tight, with prices likely to enter a stable upward trend [4] Group 5: Technological Innovations - Key battery material companies are focusing on technological innovation and product iteration to meet the surging demand in the storage industry [5] - New advancements in lithium iron phosphate and lithium hexafluorophosphate are being developed to enhance battery performance [6] Group 6: Strategic Recommendations - Companies in the battery materials industry should capitalize on the growing global storage demand, focusing on price-sensitive segments like lithium hexafluorophosphate and lithium iron phosphate [7] - Emphasis on technological upgrades and establishing overseas production capacity is crucial for maintaining competitive advantage [7]

Core Viewpoint - The lithium carbonate futures market has seen a significant price increase, reaching a new high since July 2024, driven by strong demand from the electric vehicle and energy storage sectors [1][2]. Group 1: Price Movements - On November 17, lithium carbonate futures opened higher and closed at 95,200 yuan/ton, marking a new high since July 2024 [1]. - The price of lithium carbonate has increased nearly 18% in November alone, with a more than 60% rise from the June low [2][3]. - The spot market for high-quality lithium carbonate was reported between 90,500 yuan/ton and 90,900 yuan/ton, reflecting a price adjustment of 3,600 yuan from the previous trading day [3]. Group 2: Demand Drivers - Demand for lithium carbonate is expected to grow by 30% to 1.9 million tons by 2026, with potential price increases if demand growth reaches 40% [1]. - The electric vehicle sector is experiencing rapid growth, with a 42.1% year-on-year increase in battery installation in October, totaling 84.1 GWh [3]. - The energy storage market is also thriving, with a 57.5% year-on-year increase in energy cell production, indicating a dual demand boost for lithium carbonate [4]. Group 3: Supply Dynamics - The supply side has shown improvement, with lithium carbonate production increasing by 385 tons to 23,850 tons last week [5]. - The market is experiencing a significant reduction in inventory, with expectations of over 12,000 tons of inventory reduction in November [6]. - The ongoing high operating rates in the supply chain, coupled with new production capacity from overseas salt lakes, may limit the upward price potential in the long term [6].

Core Viewpoint - The lithium carbonate futures market has seen a significant price increase, reaching a new high since July 2024, driven by strong demand from the electric vehicle and energy storage sectors [3][4]. Demand Recovery and Price Increase - Lithium carbonate futures have risen nearly 18% in November, with the main contract closing at 95,200 yuan/ton [5]. - Compared to the price low in June, the continuous main contract for lithium carbonate has increased over 60% [6]. - The current market price for high-quality lithium carbonate is between 90,500 yuan/ton and 90,900 yuan/ton, with battery-grade prices in the same range, reflecting a daily increase of 3,600 yuan [6]. Market Dynamics - The demand for lithium carbonate is being driven by rapid growth in both commercial and passenger electric vehicles, as well as a robust energy storage market [7]. - The production of power batteries in October reached 84.1 GWh, a year-on-year increase of 42.1%, with new energy vehicle sales reaching 1.715 million units, up 6.12% month-on-month [7]. - The energy storage market is also experiencing significant growth, with a reported production of 861.04 GWh for power batteries and 355.1 GWh for energy storage batteries in the first three quarters of the year, reflecting year-on-year growth rates of 45.6% and 57.5%, respectively [7]. Supply Chain and Inventory Trends - The market is currently experiencing a significant reduction in inventory, with expectations of over 12,000 tons of inventory reduction in November [10]. - Recent supply chain disruptions, including a three-month shutdown of the Jiangxia mine and regulatory reviews affecting production in Yichun and Qinghai, have contributed to supply constraints [10]. - Analysts predict that if the Jiangxia mine does not resume production, inventory reduction could reach approximately 8,000 tons in December [10]. Future Outlook - The demand for lithium is expected to continue growing, with UBS forecasting that global energy storage demand will increase from 396 GWh in 2026 to 873 GWh by 2030, representing a compound annual growth rate of 24% [7]. - However, there are concerns about potential price pressures due to high production levels and the release of new overseas salt lake capacities, which may limit price increases in the long term [11].

Core Viewpoint - The recent surge in lithium carbonate prices, driven by increased demand and speculative trading, suggests a potential new "super cycle" in lithium battery materials may be on the horizon [1][3][8]. Price Movements - On November 17, lithium carbonate futures hit a limit up, with the main contract rising by 9% to close at 95,200 yuan/ton, an increase of 7,840 yuan/ton in a single day [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 [1]. Demand and Supply Dynamics - Industry experts attribute the price increase to rising costs, demand growth, and market sentiment [3][5]. - Predictions indicate that if lithium carbonate demand grows by over 30% next year, prices could exceed 150,000 yuan/ton, potentially reaching 200,000 yuan/ton if demand growth hits 40% [4]. Supply Considerations - Current global lithium carbonate demand is projected to reach 1.45 million tons by 2025, with an updated estimate of 1.55 million tons due to increased energy storage needs [4]. - The supply capacity is estimated at over 1.7 million tons, indicating a potential surplus of around 200,000 tons [4]. Cost Factors - The increase in lithium carbonate prices is partly attributed to rising costs associated with lithium mica extraction, with production costs estimated to rise by 3,500 yuan per ton of lithium carbonate [6]. Energy Storage Demand - The primary driver of the current lithium carbonate price surge is the explosive growth in energy storage demand, which is expected to significantly boost lithium battery requirements [8]. - The domestic energy storage market is experiencing a turning point in economic viability, driven by marketization of renewable energy and capacity pricing [8]. Market Sentiment and Speculation - The rapid rise in lithium carbonate futures is seen as largely speculative, with actual spot market activity not reflecting the same level of enthusiasm [1][4]. - There are concerns about potential price corrections in December due to increased imports and the possibility of domestic supply resuming from key mines [9].

Group 1: Market Overview - Lithium carbonate futures surged by 9% to 95,200 yuan/ton, leading to a rally in A-share lithium mining stocks, with several companies hitting the daily limit [2] - As of November 17, among 23 listed lithium mining companies, 7 have seen their stock prices rise over 100% this year, with Dazhong Mining, Tianhua New Energy, and Shengxin Lithium Energy leading with increases of 264%, 168%, and 160% respectively [2] - The recent price rebound is attributed to a combination of supply contraction and a structural shift in demand driven by the explosion of energy storage needs [2][3] Group 2: Supply and Demand Dynamics - The price of battery-grade lithium carbonate has increased by 21.33% since mid-September, rising from 71,500 yuan/ton to 90,350 yuan/ton, and over 50% since June's low of 59,900 yuan/ton [3] - Supply constraints are evident as mining operations have been halted, notably in Jiangxi province, reducing domestic monthly supply by approximately 0.8 million tons, which is about 8% of the total supply [3] - Demand is strong, with analysts predicting that lithium demand will grow by 30% in 2026, reaching 1.9 million tons, while supply capacity is expected to increase by only 250,000 tons, leading to a balanced supply-demand scenario [4] Group 3: Company Performance - Leading lithium companies like Tianqi Lithium and Ganfeng Lithium have reported significant profit increases, with Tianqi Lithium achieving a net profit of 180 million yuan in Q3, marking a 119.26% year-on-year growth [6] - Ganfeng Lithium's revenue for the first three quarters reached 14.625 billion yuan, a 5.02% increase year-on-year, with Q3 net profit soaring to 557 million yuan, a 364.02% increase [6] - Analysts have upgraded Tianqi Lithium's rating to "buy," citing its global presence in high-quality lithium resources and the growing demand for lithium batteries [6][7] Group 4: Future Outlook - The market remains divided on the future trajectory of lithium prices, with short-term demand expected to support prices, but long-term supply pressures may limit price increases [5] - The energy storage sector is identified as a key driver for future lithium demand growth, with predictions of a significant increase in demand due to economic factors [5][7] - Analysts maintain a cautious yet optimistic outlook on lithium prices, suggesting that the supply-demand balance will be crucial in determining future price movements [5][7]

Core Insights - As of September 2025, China's new energy storage installed capacity is expected to exceed 100 million kilowatts, representing a growth of over 30 times compared to the end of the 13th Five-Year Plan, and accounting for over 40% of the global total installed capacity, making it the world's largest [1] Industry Overview - The demand for energy storage in China continues to rise, with companies experiencing order backlogs extending into next year, and some firms operating at full capacity [1] - According to Everbright Securities, the increasing penetration of global renewable energy highlights the core value of energy storage as a "stabilizer" and "regulator" of the power system, leading to rapid market demand growth [1] Market Data - From January to September 2025, global energy storage battery shipments reached 428 GWh, marking a year-on-year increase of 90.7% [1] - Domestic demand for energy storage cells is robust, with leading companies like Hichain Energy and EVE Energy scheduling orders into 2026, resulting in some orders being redirected to mid-tier companies [1] Lithium Battery Sector - The rapid growth of the energy storage industry is driving a significant increase in lithium battery demand, with a reported 1.5% month-on-month growth in battery production among sampled companies in November [1] - Recent strong downstream demand has led to price increases in upstream materials such as lithium hexafluorophosphate, electrolytes, and separators, suggesting a focus on leading companies in the lithium battery materials sector [1]

Summary of Key Points from the Conference Call Industry Overview - The conference call focuses on the lithium market, particularly the carbonate lithium segment, and its investment value as of November 2025 [1][2]. Core Insights and Arguments - **Lithium Market Dynamics**: The current inventory of carbonate lithium is decreasing faster than expected, with a weekly reduction of over 3,000 tons, despite the resumption of production by Ningde Times, which has an annual output of approximately 100,000 tons [3][4]. - **Downstream Demand Growth**: The demand for energy storage is expected to grow significantly, with projections for 2025 reaching 580 GWh, a 75% increase year-over-year. Each additional 100 GWh of storage demand translates to a need for 60,000 to 70,000 tons of lithium carbonate equivalent [4][5]. - **Impact of Ningde Times**: Ningde Times dominates the Yichun region's mining sector, and its production resumption has a diminished impact on the current rapid inventory reduction [5][6]. - **International Supply Adjustments**: Rising domestic lithium prices have benefited overseas mining companies, particularly in Australia, which have raised their production forecasts for the upcoming year. However, capital expenditures have declined since 2024, leading to a slowdown in actual supply growth over the next 2-3 years [6][7]. - **African Mining Supply Trends**: African mines, while previously significant, are experiencing a slowdown in growth due to cost pressures and price fluctuations. Many companies are adjusting their supply plans in response to these challenges [7][8]. Price Expectations - **Future Price Projections**: The price of carbonate lithium is expected to exceed 100,000 yuan per ton in 2026, driven by increased demand and potential shortages due to downstream stocking and trading activities [9][14]. - **Cost Reduction Potential**: There is potential for cost reductions in lithium spodumene through process optimization and local production of lithium sulfate in Zimbabwe, with some companies targeting a fully loaded cost below 60,000 yuan [10]. Regional Developments - **Domestic Salt Lake Lithium Production**: The expansion of lithium production from Qinghai salt lakes is limited due to resource constraints, while projects in Tibet show promise but will not significantly impact supply in the short term [11][12]. - **Sichuan Lithium Spodumene Mines**: Several lithium spodumene mines in Sichuan are operational, with larger projects expected to come online, but they will not significantly affect the supply-demand balance in the near term [13]. Investment Opportunities - **Investment Focus**: Companies with future production growth potential, such as Shengxin Lithium Energy, Tianhua New Energy, Guocheng Mining, and Dazhong Mining, are highlighted as attractive investment targets. Additionally, leading firms like Ganfeng, Tianqi, and Zhongmin Yongxing are also recommended for long-term investment due to their strong performance in previous cycles [9][18]. Market Behavior and Corporate Strategies - **Proactive Corporate Actions**: Companies are taking proactive measures regarding production adjustments to respond to market conditions, with a lower likelihood of bankruptcies due to strong cash positions [15][16]. - **AISC Cost Considerations**: The All-In Sustaining Cost (AISC) concept may limit the ability of Australian mining companies to expand significantly due to high operational costs relative to selling prices [17]. This summary encapsulates the key points discussed in the conference call, providing insights into the lithium market's current state, future expectations, and potential investment opportunities.