Supply-side Disruptions Cause Dramatic Fluctuations in Lithium Carbonate Prices

September 2nd, according to news,

According to the commodity market analysis system: Recently, the price of lithium carbonate has fluctuated dramatically. As of September 2, the benchmark price for battery-grade lithium carbonate is 77,233 CNY/ton, a decrease of 7.76% from last week, an increase of 8.27% month-over-month, and a decrease of 6.72% year-over-year; the benchmark price for industrial-grade lithium carbonate is 75,500 CNY/ton, a decrease of 8.11% from last week, an increase of 7.4% month-over-month, and a decrease of 6.09% year-over-year.

Supply-side disruptions become the dominant factor in short-term prices.

In early August, the Jiaxiawo mining area of CATL in Yichun, Jiangxi (one of China's largest lepidolite mines) was shut down on August 9 due to the expiration of its mining license. The resumption of production will take at least 3 months, and this news became an important trigger for the price rebound.

Meanwhile, the compliance rectification of lithium mines in Yichun (eight mining companies were given a deadline for rectification), the suspension of production due to illegal mining by Zangge Mining, and the reduction in production due to maintenance at Jiangte Motor, along with the Ministry of Industry and Information Technology's "anti-rat race" policy to eliminate low-cost and disorderly capacity, have all contributed to a strong market expectation of supply contraction, driving a rapid increase in prices. The price of battery-grade lithium carbonate once rebounded from 60,000 CNY/ton to 80,000 CNY/ton.

But the resumption of production at Yichun Silver Lithium, a subsidiary of Jiangte Motor in China, has disrupted this expectation. As a key player in the lithium extraction from lepidolite sector, its resumption of production means that market supply will increase again, causing the price of lithium carbonate to drop from 80,000 CNY/ton to 70,000 CNY/ton. This frequent change on the supply side has led to significant price fluctuations recently.

Demand is steadily increasing but not as fast as supply in China.

In August, the production of downstream cathode factories in China increased by 4% to 5% month-over-month, with demand slightly better than market expectations, especially strong in the energy storage sector. In terms of the end market, new energy vehicle sales continued to perform impressively. However, according to recent months' data, the year-over-year growth rate of sales has been declining slightly month-over-month.

In August, China's monthly total production of lithium carbonate reached a new high, exceeding 85,000 tons, with a month-on-month increase of 5% and a year-on-year increase of 39%. The current market is still in a phase of structural supply-demand mismatch.

Lithium carbonate data analysts believe: The impact of the current mine shutdowns has not yet fully transmitted to the supply and demand side. The key points for subsequent price fluctuations lie in whether the relevant mines can successfully complete the reserve verification reports by September 30th and the subsequent changes in the types of minerals. In the short term, lithium carbonate is expected to fluctuate, and specific developments still need to be monitored based on market changes.