2025-11-12 11:15Summary of Conference Call on China Battery Materials Industry Overview - The lithium market is experiencing volatility due to potential supply disruptions from lepidolite mine suspensions and a stronger-than-expected battery production pipeline [1][2] - A demand-driven landscape is emerging, with expectations of a price and margin recovery in battery materials extending into 2026-27 [1] Key Insights - Demand Growth Forecast: Battery demand is projected to grow by 31% YoY in 2026, with Energy Storage Systems (ESS) and Electric Vehicle (EV) demand expected to increase by 45% YoY and 26% YoY, respectively [2][9] - Destocking Trends: Lithium destocking is estimated at ~15,000 tons during November 2025, with expectations that this trend will continue, favoring average selling price (ASP) increases and margin recovery in the lithium sector [3][19] - Price Projections: Forecasts for lithium prices (including VAT) are set at Rmb85,000/ton and US$890/ton during FY26 [3] Company-Specific Updates Ganfeng Lithium - Rating Upgrade: Ganfeng Lithium's stock rating has been upgraded to Buy, with a target price of Rmb85.51, reflecting a strong outlook due to robust battery demand and improving cost competitiveness from low-cost upstream resources [4][26][28] - Financial Model Update: FY25 EPS has been revised down by 16%, while FY26-27 EPS is revised up by 17% and 20%, respectively, indicating a positive outlook for the company's performance [27][34] Tianqi Lithium - Rating Upgrade: Tianqi Lithium's stock rating has also been upgraded to Buy, with a target price of Rmb71.69, supported by anticipated ASP and margin recovery due to strong battery demand [37][39] - Financial Model Update: FY25 EPS has been revised down by 29%, while FY26-27 EPS is revised up by 2% and 14%, respectively, reflecting a cautious yet optimistic outlook [38][45] Market Dynamics - Supply Concerns: The JXW mine's suspension has led to a decrease in lithium carbonate supply, but the resumption of operations is not expected to significantly alter the current destocking pattern [22][23] - Backward Integration: Battery manufacturers are increasingly integrating backward into lithium supply chains, indicating a potential upcycle in the lithium market [25] Additional Considerations - Economic Factors: The improving economics of ESS, particularly in China, are expected to support demand growth, with ESS projected to account for ~30% of total battery demand by 2030 [9][11] - Investor Sentiment: There are concerns regarding the sustainability of ESS demand growth, but industry checks suggest robust demand is likely to continue, driven by significant capacity expansions from major battery manufacturers [16][17] Conclusion - The lithium market is poised for recovery, driven by strong demand from the battery sector, particularly in ESS and EVs. Both Ganfeng and Tianqi Lithium are well-positioned to benefit from these trends, with upgraded ratings reflecting positive market sentiment and financial outlooks.