On September 4, Yahua Group announced that its wholly-owned subsidiary, Ya'an Lithium Industry, has signed a purchase agreement with CATL. The agreement stipulates that from 2026 to 2028, CATL will purchase battery-grade lithium hydroxide and lithium carbonate products from Ya'an Lithium Industry.
This is not the first cooperation between the two parties. According to Yahua Group, from March to December 2023, it also cooperated directly with CATL, with a transaction amount of about 1.05 billion yuan, accounting for about 11% of the company's annual sales of lithium salt products in the year. In August 2023, the purchase agreement signed by both parties stipulated that from August 1, 2023, to December 31, 2025, CATL will purchase a total of 41,000 tons of battery-grade lithium hydroxide.
Lithium salt prices continue to fall. In 2023, the price of lithium carbonate experienced a significant decline, with the spot price falling from 500,000 yuan/ton at the beginning of the year to 100,000 yuan/ton by the end of the year, a total decrease of 81%. In 2024, after a slight rebound in the first quarter, the price of lithium carbonate once again showed a continuous downward trend, with prices having fallen by more than 30% since March of this year.
Market data shows that recently, lithium prices continue to fluctuate at low levels, with the average price of lithium carbonate spot market in the latest week being around 74,500 yuan/ton. In the latest round of lithium carbonate bidding held by Albemarle, the lowest bid price has even reached 73,000 yuan/ton. The price trend of lithium hydroxide is basically the same as that of lithium carbonate, with the average price of battery-grade lithium hydroxide in the latest week having fallen to 77,500 yuan/ton. The current lithium salt price is at a historical low and is approaching the cost line.
Industry insiders speculates that CATL's signing of a long-term lithium salt purchase order at this moment is to further strengthen control over the supply of upstream raw material when it is at the valley price. In addition, in terms of demand, in the first half of this year, CATL's capacity utilization rate was 65.33%, with a production of 211 GWh, and the construction capacity was 153 GWh, which shows the demand for raw materials such as lithium salts remains strong.
Yahua Group entered the lithium industry in 2014 by acquiring State Lithium and Blossom Lithium, and currently has two lithium mines, Sichuan Lijiagou Lithium Mine and Zimbabwe Kamativi Lithium Mine, and three production bases, Ya'an Lithium, State Lithium and Blossom Lithium, with a built lithium salt comprehensive annual production capacity of 73,000 tons. After the third phase of 100,000-ton lithium hydroxide and lithium carbonate project by Ya'an Lithium is put into production, the production scale will be expanded to 170,000 tons.
In addition to CATL, Yahua Group's lithium customers also include well-known domestic and foreign OEMs, battery manufacturers, and material manufacturers such as Tesla, BYD, Panasonic, LG Energy Solution, SK on, Panasonic Energy, LGC, and Easpring Technology etc. Among them, Tesla is the largest customer of Yahua Group. According to Yahua Group's annual report, the total amount of the contract between the two parties from 2021 to 2025 is 5.611 billion yuan, and the confirmed sales income in 2023 is 2.953 billion yuan, accounting for 35.5% of the total lithium business income for the period. On June 19th this year, Yahua Group announced that Ya'an Lithium has signed another agreement with Tesla, agreeing that from 2025 to 2027, Tesla will continue to purchase lithium carbonate products from Ya'an Lithium.
In the first half of the year, Yahua Group's lithium product output increased by 35% year-on-year, and sales volume increased by 114% year-on-year. In the first half of the year, Yahua Group achieved a total operating income of 3.936 billion yuan, a year-on-year decrease of 36.69%, and a net profit attributable to shareholders of the parent company of 102 million yuan, a year-on-year decrease of 89.25%.
According to statistics from the statistics from China Nonferrous Metals Industry Association, in the first half of the year, domestic production of lithium carbonate and lithium hydroxide were 298,000 tons and 175,000 tons, respectively. Adding the production of lithium salts such as lithium chloride and metallic lithium, the cumulative output of China's lithium salts in the first half of the year, if converted to lithium carbonate equivalent (LCE), was 489,000 tons, a year-on-year increase of 34.3% compared to the same period in 2023.
