Supply-demand contradiction of lithium carbonate intertwined, prices fluctuate downward

September 16, News

According to the commodity market analysis system: Recently, the price of lithium carbonate has shown a downward trend. As of September 16, the benchmark price of battery-grade lithium carbonate in China was 71,683 CNY/ton, a decrease of 3.07% from last week (September 9), a 11.94% decrease month-over-month, and an 8.33% decrease year-over-year; the benchmark price of industrial-grade lithium carbonate was 70,016 CNY/ton, a decrease of 2.57% from last week (September 9), a 11.56% decrease month-over-month, and a 7.63% decrease year-over-year.

Supply-side pressure continues to be released

Overproduction is the key factor suppressing prices. Australia's Catherine Lithium Mine Phase II expansion project has fully reached its target capacity, increasing annual production from 400,000 tons to 650,000 tons of lithium concentrate—enabling an additional supply of approximately 30,000 tons of lithium carbonate feedstock each year. Meanwhile, in China, Jiangte Motor’s Yichun Lithium Mine Base has stabilized daily lithium carbonate output above 30 tons following equipment maintenance. Additionally, smaller and medium-sized lithium salt plants in Sichuan, Jiangxi, and other regions that had previously suspended operations are gradually resuming production, leading to a 18% increase in China’s daily lithium carbonate output compared to the end of the second quarter.

Most notably, expectations are strong for the resumption of production at CATL's Jianxiawo mining area. Market sources indicate that the approval process for its mining rights certificate and mining license is progressing smoothly, with a reopening expected to occur very soon.

Demand shows structural differentiation in China.

Demand-side performance has been mixed. Traditional key demand sectors are under significant pressure, with sales of mid-to-low-end new-energy vehicles declining year-on-year. Meanwhile, power battery companies are primarily focused on clearing inventory. Although leading battery manufacturers have seen a month-over-month increase in production schedules, their actual purchasing intentions remain weak.

Meanwhile, energy storage demand has emerged as the market's sole bright spot, with the production allocation for energy storage battery cells climbing to 38.5%, reaching a new all-time high and becoming a key driver supporting overall demand. Additionally, persistently low prices have spurred some restocking activities, and as the National Day holiday approaches—a period typically marked by increased downstream inventory preparation—buyers’ willingness to replenish stocks has grown noticeably.

Policy and Cost Factors in Play

At the policy level, the "Industry Self-discipline Convention" led by the Ministry of Industry and Information Technology in July slowed down the pace of price declines to some extent by requiring and guiding leading companies to sell "not below cost" and to reduce and control production in stages.

Cost differences have led to a clear market segmentation: Lithium extraction from salt lakes in Qinghai, with a cash cost of 40,000 CNY per ton, still maintains a high operating rate; lithium extraction from spodumene, with a cost of 50,000 CNY per ton, still has marginal profits; while the cost of lithium extraction from lepidolite in Jiangxi is as high as 80,000 to 120,000 CNY per ton, leading to deep losses for enterprises, and some capacities have been forced to exit the market. Although the current price is close to the cash cost line for some companies (around 68,000 CNY per ton), there has not yet been a substantial reduction in capacity.

Lithium carbonate data analysts believe: The lithium carbonate market is still in the adjustment cycle of "expansion-production-price drop-losses," and the process of rebalancing supply and demand has not yet been completed. The pattern of low prices fluctuating is unlikely to fundamentally change in the short term, and it is expected that prices will continue to fluctuate and seek a bottom in the near future.