Bank of America Securities: Ganfeng Lithium (01772) Lithium price correction reflects multiple concerns. The company says market demand expectations are too pessimistic

The Zhitong Finance App learned that Bank of America Securities released a research report saying that Ganfeng Lithium (01772) discussed the recent weak lithium price in a conference call, which seemed to reflect multiple market concerns, including rumors of major industry players cutting orders, supply and demand mismatches and inventory accumulation concerns caused by strong battery shipments but not keeping up with downstream energy storage installations and electric vehicle sales, hidden inventory speculations caused by Shanghai Nonferrous Metals Network (SMM) data revisions, and issues such as high position orders not necessarily indicating sufficient inventory. The bank maintains a “buy” rating, with a target price of HK$70 for H shares.

According to the bank, Ganfeng does not agree with the pessimistic statement. He doesn't think that batteries have a large inventory. The company's inventory is low, the industry is tight, and spot supply and demand are very tight. There is a shortage and continuous inventory removal this year; it is not a market where demand has collapsed. The company assumes that supply will increase by 20% to 25% and demand will increase by about 25% next year, and believes that market demand expectations are too pessimistic; fair lithium prices are about 150,000 yuan, but 100,000 to 120,000 yuan is the key support. Costs are rising faster than expected, and a decrease in supply can already be seen at the level of 120,000 yuan.

On the project side, Goulamina security has been improved. The C1 cost is about 300 US dollars per ton. The second phase of construction is expected to begin in the first half of 2027; the battery will be fully produced and sold at about 40 gigawatt-hours this year, and it is expected to be over 55 gigawatt-hours in 2027; commercialization of solid-state batteries is underway.