Flash | 28 Aug 2025 06:29:25 ET │ 9 pages China Battery Materials Lithium into 4th week of Aug – Stagnant weekly data; Increasing spod import in Jul CITI'S TAKE Latest weekly data from SMM suggests lithium production and inventory level still hovers at high level, largely flattish WoW last week. 3 interesting points we would like to share – (1) inventory structure had a material change in the last couple of weeks, evidenced by increasing inventory shifting to downstream clients, traders and GFEX; and (2) re ...

Flash | 21 Aug 2025 06:17:09 ET │ 12 pages China Battery Materials Lithium into 3rd Week of Aug – Weekly Data Suggests CATL Halted its Conversion Production CITI'S TAKE After CATL's mine closure as of 9th August, SMM weekly data suggests CATL halted its lithium conversion production during this week (vs ~9k LCE tons in Jul-25), indicating CATL may have run out of its lepidolite inventory currently. Offsetting the output drop from CATL, spodumene- based smelters have accelerated its production pipeline in th ...

Investment Rating - The investment rating for Tianqi Lithium is set at "Hold" with a target price of HK$23.0 for H-shares and Rmb26.26 for A-shares, reflecting a valuation based on P/B multiples [19][21]. Core Insights - The report indicates a near-term bottom for lithium prices at Rmb60k/t, with expectations of supply discipline to help rebalance the market. However, there are concerns about potential supply resumption if prices rebound to Rmb70k/t [1]. - The report maintains a bullish outlook on lithium in the short term, despite anticipated pressure from oversupply in the next 12 months [1]. - Recent data shows mixed trends in lithium prices, with Li2CO3 and LiOH ASP quoted at Rmb60.6k/t and Rmb58.1k/t respectively, indicating slight fluctuations week-over-week [2]. Summary by Sections Lithium Price Trends - Lithium prices are currently experiencing a mixed trend, with Li2CO3 and LiOH ASP at Rmb60.6k/t and Rmb58.1k/t as of June 26, 2025, compared to Rmb60.5k/t and Rmb59.2k/t the previous week [2]. - The production of Li2CO3 in China increased by 2% week-over-week to 18,767 tons, with varying outputs from different sources [2]. Inventory and Production Insights - Total inventory of Li2CO3 reached 136,837 tons, reflecting a 1% increase week-over-week. Inventory levels for downstream players, smelters, and others also showed increases [2]. - The report highlights ongoing production increases across various lithium sources, with brine and lepidolite outputs up by 2% and 3% respectively [2]. Company Valuation - Tianqi Lithium's H-shares are valued at HK$23.0 based on a 0.70x 2025E P/B multiple, while A-shares are valued at Rmb26.26 based on a 1.0x 2025E P/B [19][21].

Investment Rating - The report does not explicitly provide an investment rating for the lithium industry but indicates a bearish outlook on lithium prices and forecasts [1][2] Core Insights - The lithium market is experiencing a significant surplus, with an estimated surplus of around 6% of total supply for the year [1] - Citi Commodity Team has downgraded their price forecasts for lithium salts and spodumene (SC6) by an average of 13% for CY25, 27% for CY26, and 20% for CY27 [1] - Average selling prices (ASPs) for lithium carbonate (Li2CO3) and lithium hydroxide (LiOH) have shown a downward trend, with current prices at Rmb60.5k/t and Rmb59.2k/t respectively [2] Summary by Sections Market Outlook - The lithium market is building large surpluses, leading to downward pressure on prices [1] - The price for SC6 spodumene has been downgraded to US$600/t from US$700/t [1] Production and Inventory - China's Li2CO3 production increased by 2% week-over-week to 18,462 tons [2] - Total inventory of Li2CO3 reached 134,901 tons, reflecting a 1% increase week-over-week [2] - Inventory levels for downstream players, smelters, and battery makers showed mixed trends, with downstream inventories decreasing by 1% [2]

Investment Rating - The investment rating for the lithium sector has been adjusted to a pecking order of steel > aluminum > lithium > copper > gold > battery > thermal coal > cement [1] Core Insights - The national "trade-in" subsidy for new energy vehicles (NEVs) has been suspended in some provinces earlier than expected, which may exert downward pressure on NEV demand, but the impact is estimated to be limited due to OEMs offering price discounts and diminishing marginal impact of subsidies [1] - Supply side dynamics are critical, with expectations of more supply cuts for lithium compounds sourced from spodumene and lepidolite in the next three months, as current prices are testing the cost curve for most lithium producers [1] - The market is expected to experience lingering pressure over the next 12 months due to significant oversupply this year [1] Summary by Sections Lithium Market Overview - As of June 5, 2025, the average selling prices (ASP) for lithium carbonate (Li2CO3) and lithium hydroxide (LiOH) are Rmb60.2k/t and Rmb62.3k/t respectively, showing a decline from the previous week [2] - China's Li2CO3 production increased by 5% week-over-week to 17,471 tons, with production from brine, lepidolite, and spodumene showing varied changes [2] - Total inventory of Li2CO3 reached 132,432 tons, reflecting a 1% increase week-over-week, with downstream players' inventory decreasing slightly [2] Company Valuations - Aluminum Corporation of China (Chalco) has a target price of HK$7.60 per share based on a price-to-book (P/B) ratio of 1.59x for 2025E, reflecting stronger than historical average returns due to higher aluminum margins [18] - Tianqi Lithium's A-share target price is set at Rmb26.26 per share based on a P/B multiple of 1.0x for 2025E, which is approximately 1.2x standard deviation below the historical average [22] - The target price for Tianqi Lithium's H-shares is HK$23.0, applying a 30% discount to the A-share target P/B, consistent with historical averages [24]