The price of lithium carbonate continues to fall and has reached the 200,000 RMB/ton mark. From the point of view of the decline, according to market data, compared with the market at the end of March, battery-grade lithium carbonate showed an accelerated decline in early April. As of April 7, the average price of battery-grade lithium carbonate has reached about 210,000 RMB/ton. As the lithium carbonate market continued to fall, confusing information came from the market.
Facing the confusing information in the market, what is the real supply and demand situation of lithium carbonate? Under the rapid change of market expectations in the middle and lower reaches, how much room is there for the price of lithium carbonate to fall? What is the logic behind the price of lithium carbonate?
1. What is the real supply and demand of lithium carbonate
Recently, some of the Chinese top 10 battery-grade lithium carbonate companies, including Tianqi Lithium, Ganfeng Lithium, Salt Lake Stock, and ZANGGE MINING, have disclosed their 2022 annual reports. It can be seen that in 2022, the production and sales of lithium carbonate in the upstream will be booming, the turnover speed will be fast, and the inventory level will remain low while there will be a slight surplus. The overall supply of lithium carbonate in 2022 will meet the market demand.
However, in the second half of 2022, midstream and downstream customers will rush to buy and stock up regardless of cost, resulting in a substantial increase in upstream bargaining power, overdrafting the future growth space of lithium carbonate prices in disguise, and making midstream material and battery manufacturers inventory high. Relevant data show that in 2022, China's entire industrial chain power battery inventory has reached 164.8GWh, a record high.
Under the expectation of the concentrated release of lithium mining capacity in 2023, the price of lithium carbonate has fallen rapidly. Regarding the supply and demand of the current lithium carbonate market, upstream lithium mine suppliers mentioned that the wait-and-see sentiment in the market is too strong.
According to feedback from the upstream market, although the price of lithium carbonate continues to fall, it is not an oversupply. In the case of spot goods, customers still continue to inquire, but in the case of falling market expectations, downstream customers prefer to get goods at low prices through inquiries. In addition to the release of upstream lithium mines, the speed of inventory clearance in the midstream will be an important variable for the future exploration of lithium carbonate prices.
2. What will be the future price of lithium carbonate
In 2023, the new production capacity of lithium mines will be released clearly. Based on the balance between cost and profit, it is the general trend that the price of lithium carbonate will continue to decline. According to the caliber of many industry insiders, it has become a general consensus that the price of lithium carbonate fell to 200,000 RMB/ton or below in April.
From the perspective of battery recycling, the soaring price of lithium carbonate has sparked the development of the battery recycling industry, and the corresponding recycled materials have also become one of the sources of materials for the top 10 lithium battery companies in the world. However, the impact of falling lithium carbonate prices has a huge impact on battery recycling.
Some people related to battery recycling mentioned that the market was not very good in March, but it will be even more difficult in April. Now the recycling of battery materials has broken through the inversion of the price coefficient of nickel and cobalt. Coupled with the expected drop in the price of lithium carbonate, some battery manufacturers continue to lower the price of recycled battery materials, and the profits of the battery recycling industry are not as good as before.
As for how much the price of lithium carbonate will fall, some insiders say bluntly that the price of lithium carbonate will most likely fall below 180,000 in April. The upstream lithium ore supplier also stated that the price of lithium carbonate should fall to around 170,000 RMB following market conditions. The relevant person in the battery factory also mentioned that it should fall to around 200,000 RMB.
However, based on the price trend in the market outlook, industry insiders say that the price of lithium carbonate will stabilize or even recover in stages, mainly due to the restoration of the supply-demand relationship and the callback of market expectations.
Industry insiders said that after the end of inventory digestion at the end of April, the production line will gradually resume production, which will drive the demand for lithium carbonate orders. At the same time, considering the expected release of new lithium mines and its own inventory, it is difficult for the battery factory to repeat the grand occasion of scrambling for lithium regardless of cost in 2022. At that time, the price of lithium carbonate will remain relatively stable.
3. What is the price support point of lithium carbonate
From the perspective of cost, the extraction cost of lithium carbonate is about 70,000 RMB/ton, and the cost of lithium extraction from salt lake can be as low as 20,000-30,000 RMB/ton. In the future, with the release of lithium extraction capacity from salt lakes, the improvement of lithium extraction technology, and the successive expansion of production in overseas high-grade salt lakes, there will be room for further reduction in the cost of lithium carbonate.
However, in the short term, high-quality lithium carbonate from upstream lithium salt manufacturers is still scarce, which may further support the price of lithium carbonate. At present, the drop in the price of lithium carbonate has led to a gap in the prices of different grades of lithium carbonate, and the price gap between industrial grade lithium carbonate and battery grade lithium carbonate has widened by about 40,000 RMB/ton.
As the core raw material of the cathode material, the quality of lithium carbonate directly affects the performance of the lithium batteries, including lifepo4 battery, ternary lithium battery. Even if it is the same battery-grade lithium carbonate, different manufacturers ship different prices due to different quality.
Industry insiders mentioned that there is a big gap between the actual transaction price of lithium carbonate and the market quotation. In terms of the price of battery-grade lithium carbonate with brand effect and high quality in the market, it is higher than the highest quotation on the market, but there are still people vying for it. However, for some relatively low-quality battery-grade lithium carbonate, there may be some people waiting to see the lowest quotation in the market.
The tearing of the price difference of lithium carbonate also confirms that high quality battery-grade lithium carbonate is still relatively scarce, which has become a support point for the price of lithium carbonate.
Battery manufacturers also hope to get as much high-quality and cheap lithium carbonate as possible, but considering the upstream profits and production capacity, the price of lithium carbonate will not drop too much. Industry insiders also mentioned that a large part of the reason for the rapid decline in the price of lithium carbonate this time is that too much low-end production capacity has been flooded in the process of industry expansion.
From the perspective of upstream lithium ore supply, there is indeed an element of artificial speculation in the price of lithium carbonate. Lithium carbonate prices are falling, and similar industry chaos is being cleared. From the perspective of different links in the lithium battery industry, the market's market expectations for lithium carbonate are constantly being revised. At that time, the price stability and gradual return of lithium carbonate will be more conducive to the long-term development of the industry.