SunSirs: The Lithium Carbonate Market Entered a Tight Supply-Demand Phase, and Prices Were Steadily Rising

Price trend

According to the commodity price analysis system of SunSirs, due to tightening supply and demand, the price of lithium carbonate was steadily rising recently. As of December 2nd, the benchmark price of battery-grade lithium carbonate in China, according to SunSirs, was 94,366 RMB/ton, a 2.28% increase compared to the same period two weeks prior (November 25th), a 17.66% increase month-on-month, and a 16.22% increase year-on-year. The benchmark price of industrial-grade lithium carbonate was 92,533 RMB/ton, a 2.32% increase compared to the same period two weeks prior, a 17.98% increase month-on-month, and a 17.73% increase year-on-year.

Demand side: High growth driven by both new energy vehicles and energy storage

The demand side was showing a significant "two-pronged" trend: the production and sales of new energy vehicles continued to climb, leading to a surge in demand for power batteries; at the same time, the number of energy storage projects tendered domestically and internationally had doubled, and leading battery companies were operating at full capacity for energy storage cells, driving a significant increase in lithium carbonate consumption. However, the first quarter was typically a low season for end-user consumption in the power sector, and power battery cell production may experience a certain degree of decline in December.

Supply side: Multiple factors led to continued contraction

Australian mines reduced production, and new projects at South American Saltlake had been delayed. Domestically, lithium extraction companies in Jiangxi had suspended operations due to environmental inspections, and Saltlake in Qinghai had entered their seasonal low production period, leading to a further tightening of supply in the fourth quarter. However, due to rising lithium prices, the profit margin for lithium recycling increased, which may drive a recovery in lithium production.

Inventory side: The rate of inventory reduction may slow down

Weekly total lithium carbonate inventories continued their downward trend. As of November 27th, the latest data showed that total lithium carbonate inventories had decreased by 109,000 tons, which was only one-quarter of the inventory peak in 2023. The monthly inventory reduction reached 20,000 tons, indicating a significant acceleration in the destocking pace. However, subsequent demand may decline, potentially slowing down the destocking trend.

Market Forecast:

According to analysts at SunSirs, a commodity data provider, the lithium carbonate market was experiencing a tight supply-demand balance. While inventory reduction is expected to continue, the pace may slow down. We anticipate that prices will fluctuate upwards in the short term, but the specific trajectory will depend on market developments.

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