SunSirs:The Oversupply of Lithium Carbonate Had Not Improved, and the Price Was Fluctuating

Price trend

According to the commodity market analysis system of SunSirs, after the price of lithium carbonate soared due to the suspension of production at the CATL’s mine, it returned to a volatile trend. As of August 19, the SunSirs benchmark price of battery-grade lithium carbonate was 82,733 RMB/ton, up 16% from the beginning of the month, up 28.27% from the previous month, and down 3.57% from the previous year; the SunSirs benchmark price of industrial-grade lithium carbonate was 81,166 RMB/ton, up 15.46% from the beginning of the month, up 28.5% from the previous month, and down 2.21% from the previous year.

Supply-side disturbances caused lithium carbonate prices to rise sharply

Last week, news that CATL's mining license at its Jianxiawo mine in Jiangxi Province had expired and it would halt production completely sparked concerns about tight market supply, sending lithium carbonate prices sharply higher. Also that week, global lithium giant Albemarle temporarily halted some production lines at its La Negra lithium processing plant in Antofagasta, Chile, due to an acid pipeline burst, further fueling price increases.

The fundamental oversupply situation remained unchanged

Production remained high: Domestic newly commissioned capacity continued to increase, coupled with improved capacity utilization at contract manufacturers. Rising prices may stimulate the resumption of voluntary production line shutdowns. The actual impact of Ningde's temporary production suspension on the supply side was minimal.

Inventories declined slightly but remained high: Although domestic inventories have been declining since July, as of mid-August, domestic lithium carbonate inventories remained elevated at approximately 145,000 tons. Globally, production cuts at Australian mines and a weakening supply of lithium from Africa have left global lithium inventories low, leading traders to stockpile and be reluctant to sell.

The demand growth trend remained unchanged, but the rate of increase had slowed: New energy vehicle production and sales continued to grow. In July, production and sales reached 1.243 million and 1.262 million, respectively, representing year-on-year increases of 26.3% and 27.4%, respectively. However, with the penetration rate of new energy companies reaching 48.7%, demand for lithium carbonate in power batteries had slowed. Energy storage demand remained strong, with strong demand for photovoltaic and wind power storage. Coupled with policy support from European and American markets, domestic energy storage capacity awards surged 88% year-on-year.

Market outlook

Analysts of lithium carbonate data from SunSirs believe that in the short term, lithium carbonate prices may fluctuate sharply due to news disturbances on the supply side, but in the long run, the fundamental oversupply situation has not changed, and there is no further upward momentum for lithium carbonate prices. Specific attention still needs to be paid to changes in market supply and demand.

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