The Zhitong Finance App learned that lithium stocks generally declined in early trading. As of press release, Ganfeng Lithium (01772) fell 4.28% to HK$25.75; Tianqi Lithium (09696) fell 2.89% to HK$31.9.
Societe Generale Securities pointed out that according to Baichuan data, the average price of electricity and carbon this Tuesday was 112,000 yuan/ton, a slight increase of 0.05 million yuan/ton over the previous month. Production by enterprises in the Jiangxi region has gradually resumed, and production in Qinghai Salt Lake has increased. Lithium carbonate production is expected to increase 1.63% month-on-month this week. On the demand side, downstream demand growth slowed in May. Currently, price pressure sentiment in Cathode factories is strong, and procurement is cautious. Judging from the supply and demand pattern, we expect that lithium salt prices will still be under downward pressure in the future, but considering that sector valuations are already in a low position, there is an opportunity for stocks to lay out on the left.
According to a research report published by Jefferies, the lithium market will be more normal in the short term. Price stability will make the impact on inventories less obvious, spodumene price adjustments will be more frequent, and high-cost concentrates will be digested. However, the current price trend will only lead to a lower net profit margin. The bank believes that considering current valuations, restoring profit margins will not directly translate into buying time. The bank lowered the earnings estimates of Tianqi Lithium and Ganfeng Lithium by 208% and 58% for the 2024 fiscal year to reflect weak performance in the first quarter.