Category: Raw Materials

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.

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Lithium carbonate prices flat for 2nd straight day

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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.

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Battery-grade lithium carbonate up RMB 15,000 per ton

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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.

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Panic selling of lithium carbonate just won't stop

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