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Lithium cobalt battery industry chain may usher in a big opportunity?


In July 2019, Glencore announced the closure of the world's largest copper cobalt mine, mutanda, which triggered concerns about insufficient cobalt supply in the market; In August, Alita lithium mine in Western Australia announced bankruptcy and reorganization, which was regarded as a "life and death disaster" after the overcapacity of lithium mine in the industry.

As the seller's team that has the most thorough research on the lithium cobalt industry chain, Guotai Junan research all color team brings in-depth discussion of lithium cobalt resonance, the most popular topic in the nonferrous industry, in this issue of chief relativity.

On the one hand, there is a gap crisis, on the other hand, there is a backlog of inventory. Driven by the tide of new energy vehicles and 5g mobile phone replacement in 2020, why is it that the lithium cobalt battery industry chain may usher in a big opportunity?

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Why does lithium change from a small metal to a "super big metal" in the next few years?

We believe that in the metal sector, lithium is one of the few minerals that may become large metals in the next few years.

From the demand side, the current global demand for lithium carbonate is about 280000 tons, one third of which is new energy vehicles, one third is consumer electronics, tablet computers, mobile phones, and one third is used in traditional industries, such as glass ceramics and lubricants. Basically, it is a situation in which the world is divided into three parts. However, in the next two years, we will see a considerable increase in demand, mainly in 3C products and power batteries, which is a very certain market that we can predict at present.

What is the growth rate of lithium carbonate industry next year?

Although the industry now has some relatively pessimistic expectations for new energy vehicles, we believe that the popularization of new energy vehicles is the general trend. In the long run, the direction will not change, and new energy vehicles account for one third of the demand of the whole lithium carbonate sector. If the industry growth rate of new energy vehicles in the future is 30-40%, accounting for only one-third of the contribution, the pull on the lithium carbonate industry is about more than 15%. Then, coupled with the five points of growth contributed by the original 3C field, the demand pull of the whole lithium carbonate industry in the future will be more than 20 points.

Under the current situation of oversupply in the global lithium carbonate industry, can lithium prices rise?

Now the whole industry is indeed facing a relatively severe situation of capacity liquidation.

First of all, there is a high-cost mine in Sihu No.7 mine, called Alita, which has declared bankruptcy. This news has still attracted considerable attention in the industry. There is also a mine called atura, which also has a big problem with capital flow at present. In addition, the liquidation pace of the whole industry is actually much slower than we thought, because we have also seen some battery material industries, in fact, have been injecting capital and acquiring shares in upstream lithium mines, and some mines with tight capital chain have also received new blood transfusion.

But as we said at the beginning, lithium is actually a demand driven industry.

In the future, with the increase of the proportion of new energy vehicles, we believe it will bring a new round of boom to lithium carbonate.

However, the decisive factor in whether this super market will come is whether the total amount of demand side can be greater than the current mine capacity.

What is the difference between the application of cobalt and lithium?

The cobalt industry actually has many similarities with the lithium carbonate industry.

For example, lithium carbonate inNew energy vehiclesCobalt is also used in these fields for consumer batteries, but the proportion will vary greatly.

Cobalt accounts for only about 18% of new energy vehicles, and more than 50% of cobalt is actually used in the consumer electronics industry.

In consumer electronics, there is indeed a 5g replacement trend that can be expected next year. We can expect the shipment of mobile phone batteries, but on the whole, we believe that the growth rate is certainly not as fast as that of new energy vehicles.

Therefore, the demand of cobalt industry is not as good as lithium carbonate on the whole, but it should be the second best demand in the non-ferrous industry.

What is the difference between the global supply pattern of cobalt and lithium?

Why did we just say that lithium may become a big metal? A very important reason is that lithium reserves are very large and its distribution is relatively reasonable, mainly in some countries with relatively stable political situation in Western Australia.

However, the supply of cobalt is completely opposite to that of lithium carbonate.

Cobalt reserves are not only small, but 70% of its production is mainly concentrated in a country called DRC in Africa. The political situation in this country is relatively chaotic. In other words, its supply chain is not absolutely safe.

Can you look forward to the increase and decrease of cobalt production in the next year?

There may be a balance between supply and demand on the whole next year.

First of all, the largest leading company in the cobalt industry is also the controlling company, which is known as Glencore. It has a KCC project, which can add about 30000 tons of new supply to the industry. At present, the project has been in the middle of its development. About 14000-15000 tons of production capacity has been released this year, and will continue to be released next year.

Another copper cobalt project of Eurasian resources in the DRC, with an overall scale of about 14000 tons, has also released almost half of its production capacity this year. The third is Jinchuan company, which is also a Chinese company. Next year, it will have a production capacity of 6000-8000 tons. The fourth China Nonferrous Mining Authority will also have a new production capacity of 6000-8000 tons next year.

Therefore, on the whole, the supply increment next year should be in a relaxed state. But one of the more striking news is that in July and August this year, Glencore announced that it would shut down its largest Mutan mine, with a production capacity of almost 27000 tons, accounting for about 20% of the industry supply.

So with such an increase or decrease, we will find that the original increase of 20% is offset by the shutdown of 20%, and the final result may be to return to the balance of supply and demand.

At the beginning, you also mentioned that 5g mobile phones may bring a big boost to the cobalt industry next year. Will such cobalt supply fall short of demand?

If the development of 5g mobile phones exceeds expectations, we will probably cross the supply-demand balance of cobalt and enter a tight state next year. Cobalt should be the first to enter the high business cycle of 5g mobile phones and power batteries before lithium.

Article source:Battery China Network

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