JPM-CHINAHK FIRST TO MARKET Top Stories-20251111

What if CATL's mine restart is not enough? Upgrade Tianqi and Ganfeng to NShare prices of Ganfeng and Tianqi ranged from -4% to +20% in 1H25 (vs. lithium carbonate prices down 19%) and have subsequently shot up by 79-137% since July (vs. lithium carbonate prices up 34%). Share prices have outperformed lithium prices significantly largely due to 1) strong demand outlook from ESS; 2) supply disruption from mining license renewals in China; and 3) solid state battery development headlines. We recently raised our lithium price forecast upon factoring in the material lift in demand in our lithium S/D review (link). We therefore close our UW rating and upgrade Ganfeng A/H and Tianqi A/H to N, to factor in higher lithium prices and higher margin on Ganfeng’s battery business. While our S/D forecast is showing a deficit market, we believe supply will start to ramp-up when the lithium carbonate price hits ~Rmb90k/t (vs. spot at Rmb82k/t). Post a Rmb247 million retrospective royalty payment and a higher ongoing tax obligation, we expect CATL’s Jiangxiawo mine to restart in late Dec 2025/ Jan 2026. The inventory trend and incremental mine ramp-ups/restarts will likely be the key focus going forward, in our view.