Since May this year, lithium carbonate has continued to decline from around 110000/ton. According to the commodity analysis system of Shengyi Society, as of August 15th, the average price of domestic battery grade lithium carbonate was 86000/ton, a decrease of 24% compared to the same period in May, and the average price of industrial grade lithium carbonate was 83000/ton, a decrease of 21% compared to the same period in May.
Since 2021, with the hot sales of electric vehicles and the rise of the energy storage market, the demand for lithium carbonate as a key material for lithium batteries has been continuously increasing. In a short period of time, prices keep rising again and again, resulting in a shortage of supply. From 40000 tons per ton in 2020 to 600000 tons per ton in 2022. The performance of lithium mining enterprises has shown explosive growth, causing a trend of following the trend, expanding production capacity within the industry, and also investing in the production of lithium carbonate outside the industry, aiming to catch up with the upward cycle.
According to data from the Ministry of Industry and Information Technology, China’s lithium carbonate production in 2021 was 240000 tons, a year-on-year increase of 40.4%. By 2023, China’s lithium carbonate production capacity will soar to 1.1 million tons, with a production of 517900 tons, a year-on-year increase of 31.1%. In two years, the production capacity of lithium carbonate has increased by about 3.6 times. Such a large expansion of production capacity exceeded market expectations, ultimately leading to overcapacity and causing the price of lithium carbonate to continue to decline, dropping from 600000/ton to the current 80000/ton.
Although the actual cost of lithium carbonate varies depending on different mineral deposits, mining processes, and regions, 80000 yuan/ton is the recognized cost line in the industry. This means that the current price is sufficient to prevent companies from making profits or even incurring losses. Recently, more than ten lithium mining companies have released performance reports showing a decline in performance, with the two major domestic lithium industry giants experiencing losses.
In this situation, lithium mining companies have announced production shutdowns and reductions. But it has not boosted the market, and overcapacity still exists. The downward trend of lithium carbonate continues, and high cost production capacity may face elimination.
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