The short-term macro atmosphere is improving, driving a general increase in commodity prices,lithium carbonatePrice or strong operation, as the market macro sentiment fades, lithium prices or fall again. In view of the above reasons, it is expected that the price of lithium carbonate in November will be volatile, and the rhythm of the fluctuation will be first up and then down.

1, Market Review

The trading range of the lithium carbonate main contract in October has shifted upward. Demand for lithium carbonate in October has maintained a moderate growth, with lithium extraction from spodumene facing a capacity bottleneck, only slightly increasing production. Although a large amount of new capacity has been put into operation in salt lakes, it still needs time to climb. The fundamentals continue the tight balance state in September, with the decline in inventory further expanding. In the first half of the month, lithium prices maintained an oscillating operation. Starting from the middle of the month, due to the shutdown of Jiangxi's 414 mine and the warm macro atmosphere, market optimism spread, and lithium prices entered an upward channel.

2, the perturbation of the resource end has ended.

2.1 Overseas mines maintain production increase

Domestic mines that had previously suspended production have not yet resumed, increasing the reliance on imported lithium ore. Recently, the pricing of imported lithium ore has mainly been based on the lithium salt price minus the processing fee, with lithium mine prices following the fluctuations in lithium salt prices. As of October 27, the average CIF price of spodumene was $906/ton, an increase of 7.47% from the beginning of the month.

In terms of imports, with the increase in domestic lithium production from spodumene, the demand for overseas mineral stones increased, and the import volume of lithium spodumene increased by 14.75% month-on-month in September.

Overall, the recent volume of Australian ore shipments has not yet reflected the overall increase in Australian ore production for the fiscal year. Subsequent shipments may increase somewhat, and combined with the potential for a significant increase in shipments from African mines, it is expected that spodumene arrivals in November will increase compared to the previous month, and the price of spodumene will be adjusted according to the price of lithium carbonate.

2.2 Resource-end perturbations have ended, and domestic mine production has stabilized.

In September, with the consumption of the previous period's closed-down mines' ore inventory, the domestic lithium mica mine stone production decreased by about 6% month-on-month; on the other hand, the domestic spodumene mine continued to climb its production, with the production increasing by about 2% month-on-month.

Overall, domestic lithium-mica mines are producing steadily, and lithiumapatite mines are slightly reducing production.

3, lithium carbonate supply maintains growth.

3.1 Domestic lithium carbonate production or month-on-month growth

With the strong performance of lithium prices in October, lithium salt plants are highly motivated to produce, and the increase in lithium carbonate production has further expanded, which is in line with expectations. During the first three weeks of October, lithium carbonate production increased by 5.46% (or 3,264 tons) compared to the previous month. Specifically, the lithium production line from spodumene reached its capacity bottleneck in September, and with the addition of new production capacity in October, production maintained an increasing trend, but the growth rate slowed down. During the first three weeks of October, the lithium production from spodumene increased by 3.72% (or 1,415 tons) compared to the previous month; lithium production from mica was affected by disruptions in the resource end, and the production during the first three weeks of October was basically flat compared to the previous month; in terms of lithium production from salt lakes, the total new production capacity of Wumian Salt Lake in the third quarter was 60,000 tons, and combined with the recent addition of 12,000 tons of production capacity from Zabuye Salt Lake and the resumption of 12,000 tons of salt lake production line from Zangge Mining, the new production capacity has driven the increase in salt lake production, which is against the season. During the first three weeks of October, the lithium production from salt lakes increased by 15.66% (or 1,252 tons) compared to the previous month; in terms of lithium production from recycling, the increase in lithium salt prices has led to an improvement in the profitability of the wet method end, but due to the fact that power batteries have not yet entered a concentrated scrapping period, and in the context of strong raw material constraints, the lithium production from recycling increased by 7.35% (or 410 tons) during the first three weeks of October.

Overall, with the expansion of pyrite lithium production capacity and the ramp-up of lithium production lines in salt lakes, domestic lithium salt factories maintained an increasing trend in November, and the production volume may be the same as in October.

3.2 Overseas salt lake production increase, and shipment recovery

On the import side, domestic lithium carbonate imports mainly come from Argentina and Chilean salt lakes, which have a clear advantage in cost compared to lithium extraction from ore, but lithium extraction from salt lakes is easily affected by weather factors, resulting in large fluctuations in production. In Chile, ALB's lithium salt production from the Atacama salt lake project is about 70,000 tons LCE (13,000 tons of lithium metal equivalent) in 2024. Considering the uncertainty of local policies, ALB's production increase plan has been delayed. SQM has 210,000 tons of lithium carbonate capacity and 40,000 tons of lithium hydroxide capacity in the Atacama salt lake, and plans to increase lithium hydroxide capacity to 100,000 tons in 2025. It is expected that the amount of lithium salt imported from Chile in November will increase.

On the other hand, in Argentina's salt lakes, the first phase of Tres Quebradas salt lake under the ownership of Zijin Mining has been in production since September, with a planned capacity of 20,000 tons/year. Taking into account the factors of shipping schedule, the increase in imports from Argentina in November has become more clear.

Overall, the increase in imports from Argentina in November is clear, and the import volume from Chile is expected to increase, and the import of lithium chemicals in China may increase significantly month-on-month.

4, Lack of power growth, slowdown in positive electrode growth

4.1 Differentiated Terminal Demand

In October, with the cancellation of the "trade-in" policy for new energy vehicles in many places, the year-on-year and month-on-month growth rates of new energy vehicle sales narrowed. According to the data from the China Automobile Sales Association, from October 1st to 19th, domestic new energy vehicle sales increased by 5% year-on-year and by 2% month-on-month. In terms of energy storage, the total capacity of domestic energy storage projects awarded in September decreased by 12.39% month-on-month, which is in line with expectations.

For Overseas power, the sales of vehicles in the European Union have entered the peak season, and the sales of plug-in new energy vehicles have seen seasonal growth. In September, the sales of plug-in new energy vehicles increased by 35.65% month-on-month and 33.35% year-on-year.
In addition, the demand for domestic low-priced new energy vehicles has increased in some regions of Southeast Asia and North America, driving the year-on-year growth of domestic new energy vehicle exports to 100% and the month-on-month growth to remain basically flat.

In addition, for the US side, the tax reduction and subsidy for new energy vehicles were locked in advance before the cancellation, which drew down some of the subsequent demand for new energy vehicles.

Overall, the demand for power terminals at home and abroad in November was lackluster, but the demand for energy storage installations is still positive.

4.2 The positive electrode production scheduling growth rate has slowed down compared to the previous month.

From the perspective of cell production, the demand for power terminals in October seasonally rebounded, led by the inventory build-up of the original equipment manufacturers (OEMs). As a result, the production of lithium iron phosphate (LFP) power cells increased by 9.1% month-on-month (MoM) in October, while the production of nickel-cobalt-aluminum (NCA) power cells remained flat. The production of energy storage cells hit a capacity bottleneck, and the production of energy storage cells was flat MoM in October. In terms of exports, the demand for power terminals in the EU seasonally rebounded in September, and before the US subsidy policy phased out, terminal pre-orders needed to be produced and delivered. As a result, the export of power cells increased by 17.1% MoM in September. The export of energy storage cells increased by 21.33% MoM in September against the backdrop of the high global energy storage installation demand. It is expected that the production of positive electrode materials in November will likely see a significant narrowing of the MoM growth rate compared to the previous period, and the demand-side support for lithium prices has shown signs of relaxation..

5, Inventory reduction progress slowed down

Seasonal inventory drawdown of lithium carbonate in September and October, as of October 23, lithium carbonate inventory decreased by 10,800 tons compared to the end of August, a decrease of 27.07% compared to the same period last year, the drawdown speed was not as expected, and the actual support for lithium prices was limited.

Overall, the supply and demand of lithium carbonate both increased in November, but as the demand side's growth narrows, the rate of lithium carbonate inventory reduction slowed down compared to October.

6, Outlook

The short-term macro atmosphere is improving, driving a general increase in commodity prices, and the price of lithium carbonate may be stronger. As the macro sentiment in the market fades, lithium prices may fall again. Taking all these factors into account, it is expected that the price of lithium carbonate in November will show an oscillating trend, with the rhythm of the oscillation being a rise followed by a fall.

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