GTJA issued a Research Report stating that although lithium prices will continue to be under pressure in Q4 2024, a significant increase in prices is unlikely, but they have already entered the bottom Range.
According to Zhito Finance APP, GTJA has released a Research Report stating that although lithium prices will continue to be under pressure in Q4 of 2024 and are unlikely to see a significant increase, they have entered a bottom Range. The pace of market recovery depends on the speed of recovery in end Consumer demand. Companies worth investing in the future should have advantages such as low costs (leading in resource cost control), high certainty in capacity expansion (having entered the ramp-up phase with clear future output), global supply chain layout (which optimizes costs and market risks), and financial stability (ample cash flow to withstand cyclical fluctuations). Overall, the lithium market is expected to gradually move towards balance after hitting the bottom in the next year or two. With the growth of the electric vehicle and energy storage markets, optimism remains about the reversal of long-cycle lithium carbonate prices. However, during the bottoming process, companies need to cope with cost pressures and uncertainties in the external environment.
The main points of GTJA are as follows:
Mining output is declining, and an inventory inflection point has appeared.
In Q4 of 2024, Australia remains the world's largest lithium supplier, but quarterly output has decreased by 6.4% year-on-year and 5.9% quarter-on-quarter, mainly due to maintenance at some mines, proactive production cuts, and market strategy adjustments. However, some new mines have started production, bringing additional volume and optimizing the supply structure. Lithium output in North American mines has decreased in the fourth quarter.
On the other hand, in Q4 of 2024, multiple new projects have made breakthroughs, with Australia's Kathleen Valley, Pilbara Minerals, and South America's Centenario salt lake and Hombre Muerto West entering the phase of production expansion. However, some companies have scaled back their expansion plans due to funding issues, resulting in production volumes lower than expected. Globally, lithium supply from Africa is growing rapidly, and its proportion in China's lithium concentrate imports has significantly increased, becoming an important source of growth in the lithium supply market. In terms of inventory, Australian lithium mines have collectively reduced stock by about 0.0094 million tons, and an inventory inflection point has appeared.
Lithium prices continue to show a downward adjustment trend, with signs of bottoming out, and low costs provide risk resistance advantages.
The average price of mainstream 6% grade lithium spodumene concentrate in Australia fluctuates in the range of $700-800 per ton. The prices of lithium carbonate and lithium hydroxide dropped significantly throughout the year due to oversupply in the earlier stages, but stabilized in Q4, with supply and demand adjustments already underway. The market anticipates a gradual recovery by 2025. In response to price fluctuations, enterprises generally adopt cost reduction and efficiency enhancement measures to maintain profitability. Sales models among enterprises are diverging; some rely on long-term contracts for stable pricing, while others flexibly adjust their contract mechanisms. High-cost mines face significant operational pressure, with some having suspended production. Low-cost producers exhibit strong risk resilience: for example, the total costs for Chile's Atacama salt lake and certain salt lake projects in Argentina are in the $5,000-6,000 per ton LCE range, placing them in the first quartile of the global cost curve.
Long-term demand remains robust, while high interest rates limit expansion, and fluctuations in the dollar exchange rate have varying impacts.
Global lithium demand continues to grow in 2024, with the expansion of the new energy vehicle and energy storage industries as the main drivers. Overall, the long-term demand in the lithium industry remains solid. In terms of policy, major global lithium-producing countries are tightening industrial management: Chile is strengthening nationalization of lithium resources, while Argentina is adopting more market-oriented stimulus measures. High inflation and a high-interest-rate environment have increased financing costs for lithium mining companies, and some ongoing projects are facing financing difficulties. The strong dollar has different impacts on lithium mine exports; Australian lithium mines benefit from dollar pricing, while Latin American companies face certain pressure due to currency depreciation.
Risk warning: New energy vehicle growth may not meet expectations, and there are risks associated with battery technology iterations. Lithium mining companies face financing and cash pressure.
