The main contract for lithium carbonate futures, known as the “white petroleum,” fell below 100,000 yuan per ton, hitting a new low since its listing. On December 4th, all lithium carbonate futures contracts hit their limit down, with the main contract LC2401 plunging 6.95% to close at 96,350 yuan per ton, continuing to establish new lows since its listing.
Lithium carbonate, as one of the main lithium salts, serves as a critical raw material for lithium batteries, primarily used in power batteries, energy storage, and the 3C sector, hence its moniker “white petroleum.”
The futures market saw an astonishing climb last November when battery-grade lithium carbonate soared to about 600,000 yuan per ton. Within a year, it has tumbled to the current 120,000 yuan per ton, marking a staggering 80% decline. As of December 4th, the main contract LC2401 for lithium carbonate futures has slashed to below 100,000 yuan per ton, reaching new lows since its inception.
Has lithium carbonate hit rock bottom in terms of prices?
Some institutions suggest that next year’s global supply and demand for lithium carbonate could exceed by nearly 200,000 tons, potentially causing lithium carbonate futures to plummet below the 100,000 yuan mark, maybe even reaching 80,000 yuan per ton before showing signs of recovery.
According to analysis from Zhengxin Futures, next year is anticipated to witness a significant surge in lithium mining and salt lake production, with several lithium projects, including those in Argentina and Zimbabwe, contributing substantial increments to the market. The robust profits from mines and salt lakes, especially those with lower costs, provide ample impetus for expansion. The rapid increase in lithium resource supply might result in an oversupply of lithium carbonate in the following years, exerting prolonged pressure on its prices.
Simultaneously, short-term demand seems bleak. Middle-tier lithium battery production enters a slow season, with battery manufacturers holding relatively high inventories. November and December witness subdued production among major battery and cathode manufacturers. Energy storage, too, faces a lackluster season, witnessing intense price competition among downstream battery manufacturers. Looking towards the medium to long term, with the penetration rate of the new energy vehicle industry surpassing 30%, the incremental pull on lithium carbonate demand seems to be diminishing. With the high sales volume of new energy vehicles this year, maintaining the same growth rate next year presents considerable challenges.
Amidst the significant drop in lithium carbonate prices, the costs of power batteries are poised to decrease noticeably, creating greater room for price reductions in new energy vehicles.
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Post time: Dec-08-2023
