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Lithium producers including Ganfeng and Tianqi expect their net profits in 2023 to be much lower than in 2022, with the common reason being a sharp drop in lithium prices.
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Lithium carbonate prices are expected to still have room to fall, with the supply-demand balance point expected to occur by the end of 2024 or 2025, an expert said.
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The average price of battery-grade lithium carbonate in China is falling close to RMB 150,000 per ton, about half of what it was at the end of June, as supply-demand imbalances continue.
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Nio CEO William Li told CnEVPost last month that every RMB 50,000 drop in the price of lithium carbonate would result in roughly a 1.5 percent improvement in gross margin for the company.
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The price of battery-grade lithium carbonate fell below RMB 200,000 per ton for the first time in four months, as industry players' expectations of supply-demand balance changes.
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Battery-grade lithium carbonate prices are still sinking, but lithium suppliers have begun to cut production and the market is looking forward to the September-October demand season, TrendForce said.
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Strong increases in lithium carbonate prices will not be immediately reflected in lithium battery prices, and prices of other raw materials are still falling, TrendForce said.
Prices for power battery cells continued to fall in May, even though the price of lithium carbonate, a key raw material, saw a big drop, according to a new report.
The average price of battery cells used in electric vehicles (EVs) fell about 9 percent in May from April, local research firm TrendForce said in a research note today.
The average price of square ternary cells fell 9.4 percent to RMB 0.75 ($0.1054) per Wh in China in May, while square lithium iron phosphate cells fell 9.5 percent to RMB 0.67 per Wh and soft pack ternary cells fell 9 percent to RMB 0.79 per Wh, according to the report.
The average price of battery-grade lithium carbonate in China has rebounded to RMB 254,300 per ton in May, up more than 28 percent from April, TrendForce said.
As of the end of May, battery-grade lithium carbonate was priced at RMB 305,000 per ton in China, up 57.22 percent from RMB 194,000 per ton on May 4, according to data from Mysteel monitored by CnEVPost.
Although the strong price increase in lithium carbonate is driving up the cost of cells, this will not be immediately reflected in lithium-ion battery prices in the short term, TrendForce said.
In addition, prices of other materials needed for lithium-ion batteries, such as cathode precursor materials, anode materials, diaphragms, electrolytes and PVDF, are still falling, so lithium-ion battery prices continued to be lower in May, the report said.
After a strong rebound in lithium prices in early mid-May, they have gradually stabilized in the second half of the month, TrendForce said, adding that the Chinese power battery market is still slowly recovering in May, with demand improving slightly.
Lithium prices rose rapidly on one hand because of the low willingness of suppliers to offer lower prices, and on the other hand because of increased demand from downstream battery makers to replenish their inventories in May, according to the report.
Lithium prices began a strong rebound in May, with a single-day gain of up to 10,000 yuan per ton, which is an irrational increase, TrendForce said.
Actual demand for lithium was not growing at a high rate, but was steadily recovering, TrendForce said, adding that the peak in demand is expected to come in June.
($1 = RMB 7.1190)
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The overall supply-demand pattern in China's lithium carbonate market has not changed much, and remains oversupplied, industry sources said.
Lithium carbonate prices in China have rebounded in the past month after a rare prolonged decline earlier in the year. However, the key raw material for power batteries is still seen as oversupplied.
The overall supply and demand pattern in China's lithium carbonate market hasn't changed much and remains oversupplied, according to a report today in the local media Securities Times, citing a source at data provider Shanghai Metals Market.
Upstream lithium producers' output has declined in recent months, but imports of the raw material have increased and overall supply has not decreased, the source said.
Downstream demand has only increased slightly, leaving the overall supply pattern unchanged, the source said.
On May 23, a 32-ton lithium carbonate auction from a supplier in northwest China's Qinghai province saw only one bidder, resulting in a sale at a starting price of RMB 295,000 yuan ($41,800) per ton, according to the report.
As a comparison, Lake Lithium's May 11 auction of 600 tons of lithium carbonate saw multiple bids and a final price significantly higher than the average lithium carbonate price that day, the report said.
On November 23, 2022, the price of battery-grade lithium carbonate in China rose to RMB 590,000 per ton, up about 14 times from RMB 41,000 per ton in June 2020.
However, factors including weak demand for electric vehicles have caused lithium carbonate prices to decline all the way after heading into 2023.
Lithium carbonate prices did not see a single day of gains in China this year until April 21, falling about 65 percent since the beginning of the year.
After that, lithium carbonate prices rebounded quickly, with battery-grade lithium carbonate returning to RMB 300,000 on May 18.
Since the rebound began late last month, the price of battery-grade lithium carbonate has risen 66.67 percent in China and industrial-grade lithium carbonate has risen 111.11 percent.
For this round of rise in battery-grade lithium carbonate prices, industry sources agree that it is due to factors including stockpiling by manufacturers and speculation by traders, according to the report in Securities Times.
Meanwhile, some downstream producers are in a position to restock their inventories, and their demand for inventory replenishment has also helped the price rise, the report said.
($1 = RMB 7.0566)
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The price of battery-grade lithium carbonate has risen 66.67 percent in China and 111.11 percent for industrial-grade lithium carbonate since the rally began late last month.
Lithium carbonate -- a key raw material for electric vehicle batteries -- has seen prices rise for half a month in China.
The price of battery-grade lithium carbonate reached RMB 300,000 ($42,740) per ton in China today, up RMB 15,000 per ton, or 5.26 percent, from yesterday, the 14th consecutive day of gains, according to Mysteel.
Industrial grade lithium carbonate price today reached RMB 285,000 per ton, up RMB 15,000 per ton, or 5.56 percent, from yesterday, the 17th consecutive day of increases.
This is a rebound in lithium carbonate prices after seeing months of declines, with the Chinese new energy vehicle (NEV) industry suddenly falling into weak growth early in the year.
The price of battery-grade lithium carbonate rose to RMB 590,000 per ton in China on November 23, 2022, up about 14 times from RMB 41,000 per ton in June 2020.
However, factors including weak demand for electric vehicles have caused lithium carbonate prices to decline all the way after heading into 2023.
Prior to April 21, lithium carbonate prices had not seen a single day of gains in China this year, falling about 65 percent since the beginning of the year.
Since the rebound began at the end of last month, battery-grade lithium carbonate prices have risen 66.67 percent in China, and industrial-grade lithium carbonate has risen 111.11 percent.
The rebound in lithium carbonate prices is mainly due to tight supplies, while there has still not been a more significant recovery in demand for NEVs downstream, local media Yicai cited an unnamed industry source as saying in a May 15 report.
China's new energy passenger car retail sales in April were 527,000 units, up 85.6 percent year-on-year but 3.6 percent lower than in March, according to data released by the China Passenger Car Association (CPCA) on May 9.
In some analysts' view, despite the rebound in lithium prices this month, there is still downward pressure in the long run.
Overseas customers will not purchase lithium at prices significantly higher than the Chinese market in the long term, and profit levels for lithium smelters will eventually return to a reasonable range, CICC analyst Feng Tingshuai 's team said in a May 16 research note.
If the rebound in Chinese lithium prices is not strong enough to fully reverse the situation, lithium prices will likely continue to face some downward pressure, the team said.
The accelerating downward trend in lithium carbonate prices is difficult to sustain, and lithium prices are expected to gradually stabilize and possibly even rebound, CICC analyst Zhang Jiaming's team said in an April 20 research note.
However, the team believes the downward trend in lithium prices may not end soon, as the global lithium supply is still in surplus.
($1 = RMB 7.0191)
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Half of the four major lithium producers in Yichun, Jiangxi province, nicknamed the "lithium capital of Asia," have opted to shut down production, according to local media.
Some producers in a Chinese lithium-producing hub are shutting down production as lithium prices have seen a rare streak of several months of declines this year.
With lithium carbonate prices falling by about RMB 10,000 ($1,450) per ton per day in recent days, half of the four major lithium producers in Yichun, Jiangxi province in eastern China, have opted to shut down production, local media The Paper said today, citing a source from a major producer.
Yichun, nicknamed the "lithium capital of Asia," is one of the world's largest sources of lithium. Notably, the city's lithium production was disrupted in late February by regulators investigating noncompliance.
However, these disruptions did not stop lithium carbonate prices from falling, even though many expected so.
Lithium producers in Yichun, who were forced to shut down production some time ago because of government environmental actions, are now voluntarily choosing to do so in the face of the current market, The Paper cited the source as saying.
There are four main companies with mature production lines and lithium mica mines in Yichun, namely Yongxing New Energy, Jiangxi Special Electric Motor, Feiyu New Energy and Nanshi Lithium, which have a total annual capacity of 105,000 tons, according to the report, which does not mention which two lithium producers have stopped production.
Zhicun Lithium, which was founded in 2021 and also has lithium capacity in Yichun, currently has nearly half of its lithium carbonate production line shut down, the report said, citing a person familiar with the matter.
In 2021, Yichun produced 81,000 tons of lithium carbonate, more than a quarter of China's total lithium carbonate production.
As of July 2022, Yichun's lithium carbonate capacity of 180,000 tons represents 40 percent of China's entire lithium carbonate capacity of 450,000 tons, the report noted.
The RMB 250,000 per ton price of lithium carbonate is seen as break-even point for much of Yichun's production of lithium extracted from mica, according to the report.
At one point in late November last year, battery-grade lithium carbonate was quoted at RMB 590,000 per ton in China, about 14 times the average price of RMB 41,000 per ton in June 2020.
Since then, lithium carbonate prices have continued their downward spiral, and have not seen a single day of gains this year.
Yesterday, battery-grade lithium carbonate prices in China fell RMB 8,500 per ton to an average price of RMB 224,000 per ton, according to Mysteel.
Industrial-grade lithium carbonate fell RMB 6,000 per ton yesterday to an average price of RMB 189,000 per ton.
Today is Tomb Sweeping Day in China and lithium carbonate quotes are not available.
On February 26, Yicai reported that lithium ore processing companies in Yichun have shut down production industry-wide to rectify mining violations.
Yichun produces between 10,000 and 12,000 tons of lithium carbonate each month, and a one-month shutdown would affect about 10 percent of global supply, the report said, citing a lithium battery industry analyst who declined to be named.
That was seen at the time as something that would stop the price of lithium carbonate -- then at about 400,000 yuan per ton -- from falling, but that expectation did not materialize.
The intensity of lithium carbonate's decline did decrease in early March, with daily declines of less than 1 percent from March 3 to March 8, according to data monitored by CnEVPost.
After that, lithium carbonate continued to fall sharply, with the price of battery-grade lithium carbonate and industrial-grade lithium carbonate falling 5.10 percent and 4.88 percent, respectively, on April 3, both the largest single-day declines of the year.
In 2022, the supply and demand for lithium carbonate and lithium hydroxide were actually in balance, and there was a lot of hype behind the price surges, said Wang Yu, chairman of battery maker Farasis Energy, in an interview during the China EV 100 Forum held on April 2.
Based on this situation this year, lithium carbonate prices are expected to fall rapidly, Wang said.
Lithium carbonate prices have already fallen to RMB 250,000 per ton and are expected to fall further, with a drop to below RMB 100,000 very likely, he said.
($1 = RMB 6.8798)
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