Supply Exceeds Demand for Lithium Carbonate in China, Prices Fluctuate

August 19, News

According to the commodity market analysis system: After the price of lithium carbonate surged due to the shutdown of mines by CATL, it has returned to a fluctuating trend. As of August 19, the benchmark price of battery-grade lithium carbonate is 82,733 CNY/ton, up 16% from the beginning of the month, up 28.27% month-over-month, and down 3.57% year-over-year; the benchmark price of industrial-grade lithium carbonate is 81,166 CNY/ton, up 15.46% from the beginning of the month, up 28.5% month-over-month, and down 2.21% year-over-year.

Supply disruptions have caused a significant increase in the price of lithium carbonate in China.

Last week, due to the news of the comprehensive shutdown of Ningde Era's Jiangxi Jianxiawo mining area as a result of the expiration of its mining license, concerns about market supply tightening led to a significant increase in lithium carbonate prices. During the week, a pipeline rupture incident involving an acid-containing line at Albemarle's La Negra lithium processing plant in Antofagasta, Chile, caused a temporary shutdown of some production lines, further stimulating price increases.

The fundamental supply-demand imbalance has not changed.

Production remains at a high level: As new commissioning capacities in China continue to ramp up and the capacity utilization rate of contract manufacturers increases, a price rebound may stimulate the resumption of production on voluntarily halted lines. The shutdown of CATL has had no significant impact on the supply side.

Inventory slightly decreased but remains high: Although there has been a trend of inventory reduction in China since July, as of mid-August, the lithium carbonate inventory in China is about 145,000 tons, still remaining at a high level. Globally, with the reduction in Australian mine production and the decrease in the stability of African lithium mine supply, global lithium mine inventory is at a low level, and traders' sentiment of stockpiling and withholding from selling is increasing.

Demand growth trend remains unchanged, but the growth rate slows down: The production and sales of new energy vehicles (NEVs) continue to grow. In July, the production and sales of NEVs reached 1.243 million and 1.262 million units, respectively, with year-on-year increases of 26.3% and 27.4%. However, as the penetration rate of NEV companies reaches 48.7%, the demand for lithium carbonate from power batteries has slowed down. The demand for energy storage remains strong, with rigid demand for energy storage paired with photovoltaic and wind power. Coupled with policy support in the European and American markets, the capacity of energy storage projects won in China surged by 88% year-on-year.

Lithium carbonate data analysts believe that in the short term, lithium carbonate prices may experience significant fluctuations due to disturbances in the supply side news. However, in the long run, the fundamental pattern of supply exceeding demand has not changed, and there is no further momentum for lithium carbonate prices to rise. The specific situation still needs to be monitored based on the changes in market supply and demand.