Concerns on Lower Lithium Prices Overdone; Our Positive View on Tianqi and Ganfeng Unchanged

Stock prices of the H-shares of Chinese lithium producers, Ganfeng Lithium and Tianqi Lithium, fell 23% and 21%, respectively, over the past month on concerns of prolonged lithium prices decline. The battery grade lithium carbonate price in China dropped to the CNY 380,000 level on Monday from the peak of CNY 570,000 in November last year. This comes amid media reports (as first reported by 36Kr on Feb. 17) that battery producer Contemporary Amperex Technology, or CATL, plans to offer four of its customers a battery price that fixes lithium carbonate prices at CNY 200,000 per metric ton, roughly half that of current spot prices.