Will the price of battery-grade lithium carbonate keep decreasing?
After the sharp drop before the Spring Festival, recently, battery-grade lithium carbonate has a tendency to accelerate its decline. On February 16, the quotation of battery-grade lithium carbonate was 445,000/ton. Judging from the current situation, there is still room for decline.
On February 17, Mr Ou yang, an academician of the Chinese Academy of Sciences, said that the tight demand for lithium carbonate will be eased, and it will return to about 350,000 to 400,000 rmb/ton in the second half of the year.
Mr Ou yang believes that the growth rate of new energy vehicles is declining, and it includes a large number of plug-in hybrid and range-extending models, and the average battery load of a single vehicle will also decrease. The demand is super big, however growth rate had been decreased quickly, for as much it’ll be better to alleviate critical situation.
At present, foreign countries are stepping up production of lithium resources, and domestic resource mining is also increasing rapidly. The global lithium resources are sufficient, and there is no problem in the medium and long term. Mr Ou yang estimates that the lithium carbonate price would go back to about 400,000 rmb/ton in the second half of 2023, and a more reasonable price will be around 300,000 rmb/ton in the future. There may be a surplus in the industry next year.
This price war has continued until now, and the upstream mentality of holding up prices is obviously a little bit overwhelmed. This is why, let’s talk about the following 4 phenomena and everyone will understand.
Phenomenon 1: Downstream customers hold together to postpone the purchase plan as agreed, more because they see that the price will continue to decline, and they will not purchase if it is not necessary for production. Factory price.
Phenomenon 2: Lithium salt factories are still struggling with long-term production and supply, and the inventory is low. However, since the market is not like last year’s price rise period, capital has entered to speculate on prices, and ex-factory prices have risen with bulk cargo prices. 2023 is the opposite. The bulk cargo price in the market is lower than that of the lithium salt factory. The psychological purchasing price of the material factory takes the bulk cargo price as the wind vane and continues to fall.
Phenomenon 3: The cost of lithium ore has a strong support for lithium prices. The purchase price of 6-degree lithium concentrate is 8000 rmb/ton degree, and 8 tons of 6-degree lithium concentrate produces one ton of battery-grade lithium carbonate, plus labor costs and processing Fees, etc., the cost is about 410,000. At present, the price of electricity carbon bulk cargo in the market has reached a price of about 42-43, and the profit of the lithium salt factory has been severely squeezed. At present, the mine can only follow the continuous decline of lithium salt price. When the lithium price was the highest in November last year, the price of spodumene with 2 degrees can be sold at 6000/rmb/ton degree, but now the market can only be lower than 4000/rmb/ton Tonnage, the price of salt mines has been linked to a downward trend.
Phenomenon 4: Not only the material factory is destocking, but the lithium salt factory is also destocking. A large factory in Jiangxi has stopped purchasing lithium ore around the Spring Festival unless it encounters a suitable selling price. Lithium salt plants’ external purchase prices fluctuate frequently, and some flotation plants cannot control their profit margins, and now they dare not accept external goods, and mine owners have no choice but to sell them.
Now the upstream and downstream are paying attention to the turning point of demand in March. If there is no recovery in March, the market mentality will collapse, and there is a possibility that it will fall below 400,000/ton.
In 2022, affected by the soaring price of lithium carbonate, after the second quarter, many lithium iron phosphate and lithium manganese oxide enterprises will face significantly increased operating pressure, and even be forced to limit production and stop production due to losses.
Since November 2022, with the sharp drop in the price of lithium carbonate, the price center of gravity of cathode materials has also fallen rapidly. Lithium prices have fallen by around 20%. Many lithium iron phosphate companies have gradually turned losses into profits.
In fact, since the beginning of February 2023, there have been signs of a significant increase in inquiries from downstream users for lithium carbonate, and some lithium manganate enterprises have also begun to resume production.
However, due to the fact that the current downstream orders have not yet resumed, coupled with the psychology of buying up and not buying down, the actual trading volume in the market is relatively limited, and most of them are tentative inquiries.
In 2022, the domestic production of lithium carbonate will reach about 395,000 tons, but the capacity utilization rate is only about 60%. The main problem is that the growth rate of lithium ore resources cannot keep up with the growth rate of demand for lithium battery materials. This gap is not half a year or a year , but at least 2-3 years.
Although it is basically a foregone conclusion that global lithium resources will shift from undersupply to slightly oversupply in 2023, most of the new resources will be released in the second half of the year. The main increase in the first half of the year is still some lithium mines that resumed production last year and For a small number of African mines, the overall supply and demand of the market is temporarily in a relatively balanced state, and there will be no flash crash.
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