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Lithium Carbonate Prices Have Recently Dipped Below RMB 300,000; Its Prices May Continue to Decrease Faster During Q3

published: 2023-07-26 17:43

Focusing on lithium batteries and materials, China witnessed significant growth in power battery production in June. The total production reached 60.2GWh, marking a noteworthy 45.70% increase compared to the same period last year, and a 6.3% increase from the previous month. The installed volume of power batteries also saw a rise, reaching 32.9GWh, which represents a substantial 36% year-on-year growth and a 16.7% month-on-month increase. The ratio of production to installation stood at 1.83, registering a 0.3 increase year-on-year but a 0.18 decrease from the previous month. Breaking down the production capacity further, ternary batteries accounted for 17.7GWh, making up 29.4% of the total output. It is a decline of 3.4% compared to the previous year and 4.9% from the previous month. The installation volume reached 10.1GWh, ringse by 12% from the previous month despite a 13% year-on-year decrease. Consequently, the ratio of production to installation for ternary batteries was 1.76. On the other hand, LiFePO4 batteries showed remarkable performance in production, reaching 42.2GWh, accounting for 70.2% of the total output. This indicates a substantial 84.2% increase year-on-year and an 11.8% increase from the previous month. The installed capacity of lithium iron phosphate batteries also demonstrated a positive trend, reaching 22.7GWh, making up 69.1% of the total. This showcases a remarkable 47.5% year-on-year increase and an 18.4% month-on-month increase. For lithium iron phosphate batteries, the ratio of production to installation was recorded at 1.86.

In the short term, battery prices have experienced stability, largely attributed to support from the cost side. However, we anticipate that in the second half of the year, battery prices will start to decrease in line with the declining trend of lithium carbonate prices. According to SMM data, the current price of battery-grade lithium carbonate stands at 29.19 million yuan per ton, which reflects a decline of 3.74% from the previous week. The recent rapid rebound in prices can be attributed to two primary factors. Firstly, there has been a reduction or cancellation of domestic ore production, which has impacted the supply side of the market. Additionally, lithium salt manufacturers have been hesitant to sell at low prices during this period of price rebound, contributing to the support of battery-grade lithium carbonate prices.

Secondly, there are positive indicators on the customer demand front, as it is gradually picking up, leading to improved activation rate of the midstream manufacturing chain compared to the previous year. However, the supply side continues to face challenges, particularly with a shortage of minerals in the market, which is evident in the high auction prices of lithium mica and lithium pyroxene. Furthermore, the production of foreign lithium mines is increasing, but transportation part causes a time lag in the availability of these resources. Nonetheless, the resumption of production at lithium mica mines and the expansion of salt lake mines during the summer are expected to provide a guarantee for lithium carbonate production capacity. On the demand side, there is a positive trend in the energy storage market, and customer demand for power batteries is gradually increasing. Overall, customer demand is showing a slow but steady improvement. An important development impacting the market is the listing of lithium carbonate futures this week, which has resulted in the price of lithium carbonate finally falling below 300,000 yuan per ton. Based on these observations, we predict that with hedging transactions and speculative capital entering the lithium carbonate futures market, the price of lithium carbonate is likely to decrease at a faster rate during Q3, leading to an oversupply situation in the second half of the year. By the end of the year, we anticipate that the price will stabilize within the range of 200,000 to 300,000 yuan per ton.

The weaker bargaining power in the upstream industry chain and the efforts of downstream new energy vehicle enterprises to reduce profits for consumers are expected to stimulate a rebound in customer demand and drive growth in the industry. According to SMM data, this week, the prices of 523 square ternary and LiFePO4 batteries, excluding tax, remain unchanged at 0.646 and 0.575 yuan per Wh, respectively, compared to the previous week. Our calculations indicate that the cost of 523 ternary and LiFePO4 batteries, excluding tax, is approximately 0.637 and 0.492 yuan per Wh, respectively, representing a decrease of 0.012 and 0.005 yuan per Wh compared to the previous week. Moreover, the corresponding ex-tax gross profit for these batteries is 0.009 and 0.083 yuan per Wh, showing an increase of 0.012 yuan per Wh for ternary batteries and a decrease of 0.005 yuan per Wh for LiFePO4 batteries compared to the previous week. Remarkably, the gross profit of ternary batteries has turned positive for the first time in two months. In the short term, the battery prices are likely to receive support from their cost structure. However, in the medium and long term, as lithium carbonate prices continue to decline, the battery prices are also expected to fall accordingly.

The excluding tax price of 523 square ternary anode is RMB 206,600 per ton, reflecting a decrease of 2.71% compared to the previous week.
The excluding tax price of LiFe anode is RMB 85,000 per ton, showing a decrease of 1.54% compared to last week.
The excluding tax price of PVDF remains unchanged at RMB 170,400 per ton, as observed in the previous week.
The excluding tax price of aluminum foil (A00) plus processing fee is RMB 321,000 per ton, indicating a decline of 0.55% compared to the previous week.
The excluding tax price of copper foil (Electrolytic copper) plus processing fee is 80,700 yuan per ton, experiencing a decrease of 2.3% month-on-month.
The excluding tax price of negative electrode (artificial graphite) is 32,300 yuan per ton, down 2% compared to last week.
The excluding tax price of diaphragm (wet-coating film) remains stable at 1.81 yuan per square meter, similar to the previous week.
The excluding tax price of ternary electrolyte remains stable at 47,600 yuan per ton, unchanged from last week.
The excluding tax price of lithium iron with electrolyte remains stable at 31,200 yuan per ton, with no change from the previous week.

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