Lithium carbonate futures fell below the 150000/ton mark! What is the future trend?

Lithium carbonate futures fell below the 150000/ton mark! What is the future trend?

On November 8th, the main contract for lithium carbonate futures closed at 145350 yuan/ton, falling below the 150000 yuan/ton mark.

Since its listing, lithium carbonate futures have attracted attention from all parties, and their downstream is closely related to the new energy vehicle manufacturing industry. Within about three months of listing, the highest price of lithium carbonate futures has dropped from around 21000 yuan/ton to around 14000 yuan, a decrease of 33%.

From the recent third quarter financial reports of listed companies, it can be seen that the net profits of leading companies in the industries such as Tianqi Lithium and Ganfeng Lithium have significantly decreased year-on-year in the first three quarters. Among them, Tianqi Lithium decreased by 49.33% year-on-year and Ganfeng Lithium decreased by 59.38% year-on-year.

In addition, some relatively small companies have started to experience losses, with Jiangte Electric having a net profit loss of 96 million yuan in the first three quarters and a single net profit loss of 43 million yuan in the third quarter.

From a fundamental perspective, the main reason for the continuous decline in lithium carbonate prices is still the imbalance between supply and demand.

Xu Ying, a senior lithium analyst at the New Energy Business Unit of Shanghai Nonferrous Metals Industry Research Institute, said that in terms of supply, the entire supply side has shown a gradual recovery trend since mid October. The actual production reduction of the upstream lithium salt factory is lower than the announced amount, and the large factories are gradually resuming production. With the new equipment technology improvement and certain shipment volume index requirements of the Salt Lake this year, the winter production reduction is smaller than in previous years. In addition, imported mines are a potential increase in supply. Non mining and Australian mines will arrive in Hong Kong in the next 1-2 months, and the export volume to China will steadily increase, forming an effective supply for the supply side.

However, the growth rate of new energy vehicle sales is limited. Due to the high initial inventory of the car factory, it is still in consumption inventory this month, and the overall sales growth rate has limited impact on the upstream transmission. Since September, there has been a situation where the demand side is not thriving during the peak season, "Xu Ying said.

Domestic supply continues, while overseas imports continue to grow

In addition to sufficient domestic supply, the import volume of lithium carbonate is also increasing.

According to customs data, the import volume of lithium carbonate in China in September 2023 was 13700 tons, an increase of 26% month on month and 9% year on year. The cumulative import volume of lithium carbonate in China from January to September 2023 was 110000 tons, an increase of 5.6% year-on-year.

Chen Xuesen, member of the Standing Committee of the Party Committee, Vice President and spokesperson of the China Nonferrous Metals Industry Association, stated that with the release of new upstream raw material production capacity at home and abroad and the slowdown in downstream demand growth, the price of lithium carbonate is declining, which is the trend.

As early as a few years ago, with the booming demand for new energy vehicles and lithium batteries, the price of lithium carbonate once reached a high of 500000 yuan/ton. However, with the rapid increase in production capacity, demand has shown insufficient improvement.

The founder of Zhenli Research, Moko, told the media that the current supply demand for lithium carbonate in the market is mainly for new energy vehicle manufacturers in three months to prepare during the Spring Festival, and this period happens to be the weakest production period for downstream manufacturers in a year. Therefore, the current demand for lithium carbonate in the market is weak.

Tao Wenmei, a senior analyst at Wanchuang Investment Bank Research Institute, analyzed to the media that when the price of lithium carbonate surged in 2022, various links in the industrial chain began to join the upstream, leading to rapid expansion of upstream production capacity. However, the downstream demand side was unable to absorb the sudden increase in production capacity in a short period of time, resulting in a sharp drop in prices.

The growth rate of demand has slowed down, and 150000 yuan/ton is a psychological price point

The downstream terminal consumption of lithium carbonate is new energy vehicles. But the data shows that car sales have slowed down in the fourth quarter.

According to the data from the China Passenger Transport Association, the retail sales of new energy vehicles in October were around 750000, an increase of 0.9% month on month and 34.6% year-on-year, with a penetration rate of about 37.1%, indicating a slowdown in the month on month growth rate.

Huatai Futures analysis shows that overall, the cycle of price decline has led to suppressed inventory of battery factory products, resulting in a decrease in subsequent production schedules. Currently, downstream positive electrode materials and battery production in the fourth quarter mainly correspond to terminal consumption in the first quarter, while new energy vehicles and energy storage consumption in the first quarter are both in the off-season, thus weakening consumer support.

At present, the competition for new energy vehicles is fierce, and the behavior of reducing costs and prices continues. Coupled with long-term loose supply, there is greater pressure on the supply side, and industry competition pressure is increasing. For self owned mining production enterprises and mining trading enterprises, they can choose to sell hedging on the market. For speculators, from a short-term trading perspective, futures prices continue to decline, but the market may be affected by funds and macroeconomic sentiment, which may cause significant fluctuations. It is recommended to focus on range operations.