Global Metals & Mining Global Metals & Mining 2026 Outlook: Lithium's mood is very slowly improving...but not in 2026 Bob Brackett, Ph.D. +1 917 344 8422 bob.brackett@bernsteinsg.com Andrianto Guntoro +44 20 7676 6825 andrianto.guntoro@bernsteinsg.com This note revisits our previous bearish views on lithium (Americas Energy & Transition/Global Metals & Mining: Lithium's depressed recovery towards 2030?), with a focus on potential demand from Energy Storage Systems (ESS), and medium- & heavy-duty vehicles. W ...

Summary of Key Points from the Conference Call Industry Overview - The discussion focused on the energy storage systems (ESS), robotics, and solar anti-involution themes, with key companies mentioned including Sungrow, Canadian Solar, CATL, Tesla, Nidec, Orbbec, Shuanghuan, and Sanhua [1][2]. Core Insights 1. **Energy Storage Systems (ESS) Valuation Concerns** - Investors find the risk/reward for several ESS companies unattractive at current valuations due to policy risks and margin uncertainty [1][2]. - There is a strong demand outlook for 2026 driven by AI data centers and aging electricity grids, but concerns exist regarding the sustainability of the ESS theme post-2028 as alternative solutions may scale up [2]. 2. **Robotics Market Challenges** - There is skepticism regarding the near-term mass production of humanoid robotics, leading to a preference for companies with resilient core businesses rather than those heavily reliant on robotics [3]. - Investors are particularly interested in understanding the mass production timelines and application sequences of leading players in the robotics sector, including Tesla and various Chinese companies [3]. 3. **Solar Polysilicon Sector Dynamics** - Ongoing discussions about solar polysilicon supply consolidation highlight investor interest in anti-involution initiatives, but there is limited visibility on actual progress and price stabilization [5]. - The anti-involution campaign's rationale is being closely examined, with potential implications for other oversupplied sectors like solar cells and EVs [5]. Additional Important Insights - **Client Preferences** - Client interest is concentrated in companies perceived to have competitive advantages, such as Tesla, Sungrow, CATL, and Orbbec, rather than a broad positive sentiment across the sector [1]. - There is a notable shift in conviction towards US beneficiaries and alternative technologies to address energy shortages, with some investors opting to remain on the sidelines until clearer visibility on margins and policies emerges [2]. - **Geopolitical and Margin Risks** - Specific concerns were raised about Sungrow facing near-term headwinds due to gross margin erosion and geopolitical risks, which could impact its performance [2]. - **Market Sentiment** - The overall sentiment indicates a cautious approach among investors, with a preference for companies that can demonstrate visible growth in their core operations while treating robotics as a speculative investment [3]. This summary encapsulates the key points discussed during the conference call, providing insights into the current state and future outlook of the ESS, robotics, and solar sectors.

Summary of Key Points from the Conference Call Industry Overview - The focus is on the Energy Storage Systems (ESS) industry, particularly in relation to lithium, aluminium, and copper demand driven by the growth of ESS [2][10][12]. Core Insights and Arguments 1. **Increased Demand for ESS**: Demand for ESS is stronger than expected for 2025 and is projected to continue into 2026, driven by China's decarbonization efforts and renewable energy trading mechanisms [3][11]. 2. **ESS Shipment Growth**: ESS shipments have reached over 410 GWh in the first nine months of 2025 and are expected to total 550-600 GWh for the full year, significantly exceeding installation estimates [3][19]. 3. **Metals Demand Surge**: The growth in ESS is expected to drive metals demand significantly, with lithium demand potentially exceeding 380 kt in 2025 and reaching 575 kt in 2026, while aluminium and copper demands are also projected to rise [4][51]. 4. **Market Dynamics**: The lithium market may shift from surplus to deficit by 2026 due to subdued supply growth and low inventories, with prices already showing upward momentum [5][29]. 5. **Regional Demand Drivers**: - **China**: The introduction of a renewable energy trading mechanism has improved ESS economics, leading to higher expected installations [11]. - **US**: ESS demand is driven by rising AI electricity demand and government-led programs to stabilize the grid, with North America being the fastest-growing region for ESS [12][13]. - **Europe**: Europe has become the largest market for China's battery exports, with significant growth in ESS installations [13]. Additional Important Insights 1. **Dislocation Between Shipments and Installations**: There is a notable dislocation between ESS batteries shipped and installed, with shipments outpacing installations, which may lead to inventory build-up and potential market slowdowns if not managed [18][21]. 2. **Impact of Tariffs**: The increase in tariffs on non-EV batteries from China is expected to affect US imports, leading to a shift towards sourcing from Korea and domestic production [12][20]. 3. **Technological Shifts**: Companies are pivoting from EV batteries to ESS batteries due to stronger demand outlooks, with significant repurposing of manufacturing facilities [14]. 4. **Price Volatility**: Lithium prices have surged, with expectations of further increases if demand continues to rise, although there are concerns about the sustainability of these price levels [29][59]. 5. **Risks to Growth**: Potential risks include overcapacity in the market if shipments cannot keep pace with installations, as well as the impact of recycling and new technologies on metals demand [54][55][56]. Conclusion The ESS market is poised for significant growth, driven by strong demand for lithium, aluminium, and copper. However, the industry faces challenges related to inventory management, tariff impacts, and potential shifts in technology. The outlook for 2026 remains robust, but careful monitoring of market dynamics is essential to navigate potential risks.

Summary of Conference Call Notes Industry Overview - The focus of the conference call is on the **Energy Storage Systems (ESS)** sector within the **battery value chain** in China, highlighting the demand outlook for 2025 and 2026 [1][2]. Key Points and Arguments 1. **Demand Growth for ESS**: - The demand for ESS is projected to grow significantly, with various players in the battery value chain confirming a bullish outlook for 2025 and 2026. Capchem (electrolytes) anticipates approximately **50% year-over-year (YoY) sales volume growth** in 2026, while Nuode (copper foil producer) expects around **80% YoY growth** [2][3]. - Shenzhen Senior forecasts a **50% YoY industry demand growth** in 2026, although it expects only **20% YoY sales volume growth** for itself [2]. 2. **Investment Returns**: - The Internal Rate of Return (IRR) for ESS projects is attractive, averaging over **10%**, with some regions reaching as high as **20%**. This is supported by subsidies and power trading strategies [3]. 3. **Material Demand and Supply**: - A significant increase in metal demand is expected, with projections of over **300 GWh** increase in demand for metals in 2026, indicating a potential supply-demand deficit [5]. - Specific metal consumption estimates include: - **40-60 kt of copper** for every **100 GWh** of ESS capacity, depending on the type of copper foil used. - **160 kt of aluminum** for the same capacity, used in various components [9]. 4. **Price Trends**: - There are ongoing but mild price hikes for battery materials, with separators and copper foil prices expected to rise, particularly among second-tier battery makers. Top-tier makers will experience price increases last due to their stronger bargaining power [10]. - The price of lithium carbonate impacts battery cell costs, with a **Rmb 0.02/Wh** increase for every **Rmb 10,000/ton** rise in lithium carbonate prices [3]. 5. **Capacity Expansion and Market Dynamics**: - Battery materials companies are cautious about capacity expansion due to lessons learned from previous cycles, leading to slower growth in production capacity [11]. - There is a notable concern among battery producers regarding tight materials supply, prompting the establishment of supply guarantee contracts, which were rare in the past [12]. 6. **Company-Specific Insights**: - **GEM Co Ltd** aims to increase nickel shipments from **120 kt** this year to **150 kt** by 2026, with plans to further expand capacity to **300 kt** by 2030 [13]. - **Kedali** is guiding for **30% YoY revenue growth** in 2026, reflecting a conservative estimate compared to broader market expectations [14]. - **BYD** anticipates delivering over **1.5 million units** overseas in 2026, with a focus on Europe, APAC, and Latin America [15]. Additional Important Insights - The overall sentiment in the battery materials sector is optimistic, with all players in the value chain reporting high demand growth expectations for 2026 [2][5]. - The current market dynamics suggest a potential shift in pricing strategies and supply agreements as companies navigate the anticipated demand surge [10][12]. This summary encapsulates the critical insights from the conference call, focusing on the ESS sector's growth prospects, investment returns, material demand, and market dynamics.

Summary of Sungrow Power Supply Co. (300274.SZ) Earnings Call Company Overview - **Company**: Sungrow Power Supply Co. (300274.SZ) - **Industry**: Clean Energy & Technology, specifically focusing on solar inverters and energy storage systems (ESS) Key Financial Results - **3Q25 Results**: - Revenue: Rmb22,869 million (+21% YoY) - Gross Profit: Rmb8,202 million (+47% YoY) - EBIT: Rmb5,023 million (+62% YoY) - Net Income: Rmb4,147 million (+57% YoY) - Gross Profit Margin (GPM): 36% (+6pp YoY) - Operating Profit Margin (OPM): 22% (+6pp YoY) - Net Profit Margin (NPM): 18% (+4pp YoY) - Compared to Goldman Sachs Estimates (GSe): Revenue -5%, Gross Profit +12%, EBIT +12%, Net Income +8% [1][20][21] Growth Drivers - **Energy Storage Systems (ESS)**: - Sales increased by 105% YoY in 1-3Q25, reaching Rmb28,800 million - 3Q25 sales were Rmb10,997 million (+78% YoY) - Total shipment reached 29GWh in 1-3Q25, with 83% from overseas markets [2][19] - **Solar Inverters**: - Sales increased by 6% YoY in 1-3Q25, totaling Rmb23,400 million - 3Q25 sales were Rmb8,073 million (+3% YoY) despite a significant decline in domestic solar installations [18] Market Outlook - **2026E Global ESS Installation Growth**: Expected to grow by 40%-50% driven by: - Higher renewable energy mix - Diversifying revenue mechanisms - Rising demand for grid stability and data center power [19] - **US Market Uncertainties**: - Ongoing uncertainties for ESS projects starting after January 1, 2026, due to One Big Beautiful Bill Act (OBBBA) restrictions - Management anticipates US ESS shipments of 13GWh in 2025E and 17GWh in 2026E [19] Strategic Initiatives - **AIDC Power Products**: - R&D on AI data center power products, including solid-state transformers and high-voltage direct current systems - Initial product launch and small-scale delivery targeted for 2026E, but no significant financial contribution expected in the near term [17] - **Supply Chain Optimization**: - Addressing OBBBA restrictions and ensuring supply chain efficiency for ESS projects [19] Financial Projections - **Revised Net Income Forecasts**: - 2025E-30E net income forecasts raised by 6% on average - 12-month target price adjusted to Rmb162.3 from Rmb148.9, reflecting solid global ESS outlook and GPM improvement [20][24] Risks and Challenges - **Domestic Solar Demand**: - Anticipated 0% to -20% growth in inverter and solar EPC sales in 2026E due to headwinds in the Chinese market [20] - **Regulatory Risks**: - Trade conflicts and OBBBA restrictions may impact long-term ESS business, which constitutes 32% of total sales [24] Conclusion - **Investment Rating**: Neutral - **Key Factors**: The balance of risks and rewards at the current stock price, with ongoing monitoring of global trade policies and company strategies to mitigate tariff impacts [24]

Core Viewpoint - SES AI has successfully completed the acquisition of UZ Energy, significantly broadening its product range and enhancing its position in the energy storage systems market [1][2]. Group 1: Acquisition Details - SES AI announced the completion of its acquisition of UZ Energy, with a purchase price of approximately $25.5 million, excluding potential earnout adjustments based on financial performance [2]. - UZ Energy specializes in energy storage systems (ESS), having achieved over 500 megawatt-hours of storage deployments [4]. Group 2: Market Strategy - The acquisition is expected to accelerate SES AI's growth strategy by utilizing UZ's marketing team and hardware platform to increase market share in the $300 billion ESS market, particularly in the United States [5]. - Data centers are identified as a key customer demographic for SES AI's new business, with projections indicating that their share of electrical consumption in the U.S. will triple by 2028 due to the rise of artificial intelligence technology [5].

APRIL 29, 2025 Disclaimer This presentation does not constitute an offer to sell or issue or the solicitation of an offer to buy or acquire securities of JinkoSolar Holding Co., Ltd. (the "Company") in any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever. The information herein has been prepared by the Company solely for use in this presentation. The information contained i ...