SunSirs: The Mine Stopped Production and the Price of Lithium Carbonate Soared

Price trend

According to the commodity market analysis system of SunSirs, the price of lithium carbonate has soared since the 11th. As of August 12, the SunSirs benchmark price of domestic battery-grade lithium carbonate was 75,733 RMB/ton, up 20.28% from the previous month and down 13.58% from the same period last year; the SunSirs benchmark price of industrial-grade lithium carbonate was 74,166 RMB/ton, up 19.95% from the previous month and down 12.75% from the same period last year.

Ningwang mining area halted production, lithium carbonate futures hit daily limit

On July 7, the Yichun Municipal Natural Resources Bureau issued a notice requiring eight lithium mining companies to complete reserve verification reports for changes in mineral types by September 30. On August 9, CATL's Jianxiawo mining area in Jiangxi Province suspended operations due to the expiration of its mining license, a halt that could last for more than three months. The news sparked a sharp market reaction, with the main lithium carbonate futures contract, LC2511, hitting its upper limit on August 11, reaching 81,000 RMB/ton, an 8% increase. As of August 11, with the exception of the china clay mine at CATL's Jianxiawo mining area, the mining licenses of the remaining seven mines are all due to expire after 2027. The probability of a complete mine shutdown during the mining license renewal period is low.

In the short term, the suspension of production at CATL's mines will have an impact on the domestic supply of lepidolite, but from the perspective of the supply structure, production at the salt lake end has not been directly affected, and overseas imports also provided incremental supply.

Demand side: New energy vehicle sales were not slow during the off-season, and energy storage demand was growing structurally

Resilience of demand for new energy vehicles:

Domestic wholesale sales of new energy passenger vehicles reached 1.18 million units in July, a 25% year-on-year increase and a 4% month-on-month decrease, in line with seasonal trends. Policy-based policies, such as purchase tax exemptions and trade-in programs for new energy vehicles, will continue into next year, leading to steady demand growth in the second half of the year. However, there is a risk of a weak peak season. If production schedules fall short of expectations in August and September, upward price growth could be suppressed.

Demand in the energy storage sector was diverging:

In the short term, bidding for large-scale energy storage projects is strongly driven by policies, but the growth of household energy storage is slowing due to insufficient economic viability. In the long term, the penetration of sodium batteries in the energy storage sector may divert some demand for lithium. However, the current cost of sodium batteries is still higher than that of lithium batteries (0.5 yuan/Wh vs. 0.32 yuan/Wh), so large-scale replacement will take time.

Market outlook

SunSirs’lithium carbonate data analysts believe that in the near future, lithium carbonate prices will be stronger due to supply disturbances, but in the medium term, attention should be paid to the release of overseas growth and demand verification.

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