J P M O R G A N North America Equity Research 20 August 2025 Lithium July China Export/Import Data Chemicals: Specialty, Commodity, Agricultural, and Paper & Packaging Jeffrey J. Zekauskas AC (1-212) 622-6644 jeffrey.zekauskas@jpmorgan.com Katie Zhang (1-212) 622-3262 katie.zhang@jpmchase.com Silke Kueck (1-212) 622-6503 silke.x.kueck@jpmorgan.com Lydia Huang (1-212) 622-0086 lydia.huang@jpmorgan.com J.P. Morgan Securities LLC See page 6 for analyst certification and important disclosures. J.P. Morgan does ...

Investment Rating - The report provides a "Buy" rating for companies IGO, NST, NEM, CMM, BGL, VAU, WGX, and PNR, while recommending a "Sell" rating for MIN and RRL [4]. Core Insights - The report highlights the potential upside for various companies based on their current pricing and NAV valuations, with IGO showing a 2% downside to its price target and NST having a 14% upside [4]. - The report emphasizes the strong performance of gold and lithium sectors, with specific companies positioned favorably for growth [4][8]. Company Summaries - **IGO**: Rated "Buy" with a market cap of US$2.1 billion, current price A$4.32, and a 12-month price target of A$5.03, indicating a 2% downside [4]. - **NST**: Rated "Buy" with a market cap of US$17.4 billion, current price A$18.56, and a 12-month price target of A$22.53, indicating a 14% upside [4]. - **NEM**: Rated "Buy" with a market cap of US$66.7 billion, current price A$90.58, and a 12-month price target of A$98.83, indicating a 7% upside [4]. - **CMM**: Rated "Buy" with a market cap of US$2.7 billion, current price A$9.44, and a 12-month price target of A$10.09, indicating a 6% upside [4]. - **BGL**: Rated "Buy" with a market cap of US$0.9 billion, current price A$0.93, and a 12-month price target of A$0.97, indicating a 29% upside [4]. - **MIN**: Rated "Sell" with a market cap of US$3.2 billion, current price A$24.44, and a 12-month price target of A$20.30, indicating an 18% downside [4]. - **RRL**: Rated "Sell" with a market cap of US$2.2 billion, current price A$4.53, and a 12-month price target of A$4.24, indicating a 1% downside [4]. Commodity & FX Forecasts - The report includes forecasts for various commodities, with gold expected to reach US$3,503 per ounce in Q4 2025 and lithium carbonate projected at US$8,005 per ton in 2025 [8]. - Nickel prices are forecasted to stabilize around US$7.17 per pound in Q4 2025, while copper is expected to be around US$4.52 per pound [8].

Investment Rating - The report does not explicitly state an investment rating for the lithium industry or specific companies within it [1]. Core Insights - Lithium hydroxide exports from China in May 2025 decreased by 54% year-over-year to 5.6kt, with year-to-date net exports down 70% compared to the same period last year [2][4]. - Lithium carbonate imports in May 2025 fell by 14% year-over-year to 21.1kt, while year-to-date net imports are 15% higher than in 2024 [2][7]. - The average lithium carbonate import price decreased by 23% year-over-year in May 2025, averaging $9,392 per ton [2][10]. - The average export price for lithium hydroxide in May 2025 was $12,093 per ton, down 44% year-over-year [2][10]. Summary by Sections Lithium Hydroxide Trade Data - Exports in May 2025 were 5.6kt, a 54% decrease from 12.0kt in May 2024 [2]. - Year-to-date net exports are 15.1kt, down 70% compared to the same period last year [2][4]. - Full-year 2024 net exports are projected at 113kt, which is 11% lower than 2023 [2][4]. Lithium Carbonate Trade Data - Imports in May 2025 were 21.1kt, a 14% decrease from 24.6kt in May 2024 [2]. - Year-to-date net imports are 98.0kt, which is 15% higher than in 2024 [2][7]. - Full-year 2024 net imports are expected to reach 231kt, a 55% increase compared to 2023 [2][7]. Price Trends - The lithium carbonate import price averaged $9,392 per ton in May 2025, down 2% month-over-month and 23% year-over-year [2][10]. - The lithium hydroxide export price averaged $12,093 per ton in May 2025, reflecting a 15% month-over-month decrease and a 44% year-over-year decline [2][10].

Investment Rating - The industry view for Greater China Materials is rated as Attractive [6] Core Insights - Lithium demand may be pressured by trade tensions, with a market surplus expected to increase to approximately 10,000 tons of lithium carbonate equivalent (LCE) in April, leading to downward pressure on prices [2][3] - Uranium fundamentals remain solid despite a spot price correction, with term pricing stable at around US$80 per pound, indicating a constructive medium-to-long-term supply-demand outlook [3] - Solar glass prices are likely to stabilize due to supply responses, although pressures are expected to persist in the second half of 2025 as demand decreases [4][10] Summary by Sections Lithium - Demand in 1Q25 was stronger than expected due to EV trade-in programs and energy storage system (ESS) demand, but the peak season in 2Q25 is anticipated to be muted due to earlier demand pull-forward [2] - Tariff uncertainties have caused large EV makers to pause April order books, leading to a potential price bottom for lithium carbonate at approximately Rmb65,000 per ton [2] Uranium - The spot price has declined to around US$60 per pound, influenced by uncertainties regarding Russian enriched uranium and US tariffs, but the gap between spot and term prices has widened, limiting further downside [3] - Supply imbalances are expected to gradually reflect in the market, potentially pushing uranium prices higher and benefiting companies like CGN Mining [3] Solar Glass - A reasonable recovery was noted in 1Q25, with prices rebounding due to increased demand from module producers, but a decrease in demand is expected in June as rush installations conclude [4][10] - The near-term supply and demand for solar glass could remain solid, supporting earnings recovery for producers, but increased industry supply may pressure prices again in 2H25 [10] Rare Earth Magnets - An upward trend in rare earth prices is anticipated due to new smelting regulations and tariffs, which could tighten supply from imports, benefiting producers [11] Stock Ratings - Overweight-rated stocks include Xinyi Solar, CGN Mining, and various rare earth magnet producers, with significant upside potential noted for several companies [12][13]

Summary of China Lithium Research Call Industry Overview - The report focuses on the **China lithium industry**, particularly the supply dynamics and production forecasts for lithium carbonate and hydroxide in 2025 and 2026 [2][3][4]. Key Points and Arguments 1. **Increased Supply Forecasts**: - China's lepidolite/spodumene supply is expected to exceed previous expectations, leading to a **5.9% increase in 2025E** and **4.5% increase in 2026E** global lithium supply [2][3]. - The updated forecast for **China lithium lepidolite production** in 2025 is **194kt LCE**, a **22% YoY increase**, significantly higher than the previous estimate of **124kt LCE** [3]. 2. **Inventory Levels**: - As of February 2025, the total lithium feedstock inventory is approximately **1.5 months**, with lithium carbonate inventory also around **1.5 months**, indicating a healthy supply despite strong demand from LFP batteries [2][3]. - Lithium hydroxide inventory remains stable but has a higher inventory duration of nearly **4 months** due to weaker demand for NCM batteries [2]. 3. **Demand Growth**: - China’s lithium demand is projected to grow by **51.9% YoY** in March 2025, with total lithium carbonate and hydroxide output expected to increase by **26% and 29% MoM**, respectively [4]. 4. **Market Dynamics**: - The supply growth in March slightly outpaces demand, indicating a potential shift in market dynamics where supply increases may limit price improvements during peak season [4]. - The report notes that lithium names in China are trading stronger than the lithium price itself, driven by potential catalysts like solid-state batteries [5]. Stock Implications - The report provides a **pecking order** for lithium companies based on their performance and market conditions: - **Qinghai Salt Lake Industry**: Buy - **Tianqi Lithium**: Neutral - **Ganfeng Lithium**: Sell [5]. Risks and Considerations 1. **Upside Risks**: - Stronger-than-expected EV sales and better-than-expected ESS battery shipments could drive demand higher [27][29]. - Potential supply disruptions could also impact market dynamics positively [27]. 2. **Downside Risks**: - An increase in lithium supply could lead to lower prices, especially if demand does not meet expectations [27][28]. - A prolonged downcycle in lithium prices could delay recovery in the sector [28][31]. Conclusion - The China lithium market is experiencing significant changes with increased supply forecasts and strong demand growth. However, the balance between supply and demand will be crucial in determining future price movements and investment opportunities in the sector. The report emphasizes the importance of monitoring inventory levels and market dynamics closely to identify potential risks and opportunities.