SunSirs: Supply and Demand Contradictions Intertwined, and Lithium Carbonate Prices Fluctuated Downward

Price trend

According to the commodity market analysis system of SunSirs, the price of lithium carbonate has been fluctuating downward recently. As of September 16, the SunSirs benchmark price of domestic battery-grade lithium carbonate was 71,683 RMB/ton, down 3.07% from last week (September 9), down 11.94% from the previous month, and down 8.33% from the same period last year; the SunSirs benchmark price of industrial-grade lithium carbonate was 70,016 RMB/ton, down 2.57% from last week (September 9), down 11.56% from the previous month, and down 7.63% from the same period last year.

Supply-side pressure continued to release 

Oversupply was the core factor suppressing prices. The second phase of the Katherine lithium mine expansion project in Australia has reached full capacity, increasing annual production capacity from 400,000 tons to 650,000 tons of lithium concentrate, and adding approximately 30,000 tons of lithium carbonate raw material annually. Domestically, after completing equipment maintenance at Jiangte Electric's Yichun lithium mine base, daily lithium carbonate production has stabilized at over 30 tons. Previously suspended small and medium-sized lithium salt plants in Sichuan and Jiangxi have also gradually resumed operations, resulting in an 18% increase in domestic daily lithium carbonate production compared to the end of the second quarter.

What is particularly crucial is that there are strong expectations for the resumption of production at CATL's Lianxiawo mining area. Market news shows that the approval of its mining rights and mining licenses was progressing smoothly, and it is expected to resume work and production soon.

The demand side showed structural differentiation

The demand side showed mixed results. Traditional main demand sectors were under significant pressure, with sales of mid- and low-end new energy vehicles declining year-on-year. Power battery companies were primarily focused on destocking. Although production schedules at leading battery manufacturers increased month-on-month, actual purchasing intentions were weak.

At the same time, energy storage demand became the only bright spot in the market, with the proportion of energy storage cell production climbing to 38.5%, a record high, becoming a major force supporting demand. Low prices also stimulated some demand for inventory replenishment, and with the National Day stocking period approaching, downstream willingness to replenish inventory increased.

There was a game between policy and cost factors

At the policy level, the "Industry Self-Discipline Convention" signed by the Ministry of Industry and Information Technology in July slowed the pace of price decline to a certain extent by requiring "sales at no less than cost price" and guiding leading companies to reduce production in stages.

Cost disparities have led to significant market differentiation: Lithium extraction from Qinghai's Saltlake maintained a high operating rate despite a cash cost of 40,000 RMB/ton; spodumene extraction, at 50,000 RMB/ton, still offered marginal profits; while Jiangxi's lepidolite extraction costs soared to 80,000-120,000 RMB/ton, forcing companies into deep losses and forcing some production capacity to exit the market. Although prices were close to the cash cost line for some companies (approximately 68,000 RMB/ton), substantial capacity reduction had yet to occur.

Future outlook:

Analysts of lithium carbonate data from SunSirs believe that the lithium carbonate market was still in an adjustment cycle of "capacity expansion-price drop-loss", and the supply and demand rebalancing process has not yet been completed. The low-level price fluctuation pattern is unlikely to change fundamentally in the short term, and it is expected that the price of lithium carbonate will continue to fluctuate and bottom out in the short term.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.