Gangbong Lithium, Tight Supply Continues... "Record-Breaking Performance Expected Again This Year"

[Asia Economy Reporter Ji-hwan Park] Hana Financial Investment forecasted on the 1st that Gangbong Lithium is expected to record strong performance in the fourth quarter of last year, exceeding market expectations by nearly 20%. This year as well, it is evaluated that the trend of breaking the all-time high record will continue due to the continued tight supply and demand of lithium.

Seunghye Baek, a researcher at Hana Financial Investment, stated, "The preliminary net profit for the fourth quarter (the midpoint of the company's guidance) is expected to be 2.68 billion yuan, representing a high growth of 286% year-on-year and 153% quarter-on-quarter."

With solid front-end demand, the increase in sales volume due to the full-scale operation of the annual 50,000-ton lithium hydroxide production line expanded at the end of 2020, the rise in average selling price (ASP) caused by the sharp increase in spot prices of lithium hydroxide and lithium carbonate in China in the fourth quarter of 2021, and the increase in the value of financial assets held by lithium mine companies contributed to the high growth of the company's net profit in the fourth quarter.

Researcher Baek said, "Gangbong Lithium is understood to have renegotiated prices with customers for more than half of the long-term lithium hydroxide orders reflecting the soaring lithium spot prices," adding, "Although there were concerns about rising costs as the price of spodumene concentrate, a lithium raw material, surged 117% quarter-on-quarter in the fourth quarter of last year, net profit increased significantly by utilizing existing inventory purchased in large quantities when spodumene concentrate prices were relatively low."

There is also an analysis that this year, the company is expected to benefit simultaneously from rising lithium prices and increased sales volume. Researcher Baek said, "Gangbong Lithium expects the global lithium supply and demand to remain tight until the first half of 2022," adding, "Although the lithium supply shortage will be partially alleviated as new global projects start operating in the second half, lithium supply and demand are expected to remain tight continuously as the demand from cathode material manufacturers expanding during this period of capacity expansion."

This content was produced with the assistance of AI translation services.