What are the reasons for the continuous decline in analysis? Lithium carbonate has fallen for 14 consecutive days, hitting a new two-year low. Lithium carbonate (battery grade): 156500 yuan/ton, down by 2000 yuan/ton

What are the reasons for the continuous decline in analysis? Lithium carbonate has fallen for 14 consecutive days, hitting a new two-year low. Lithium carbonate (battery grade): 156500 yuan/ton, down by 2000 yuan/ton

The last time battery grade lithium carbonate was 153000 yuan, it was September 17, 2021.

Generally speaking, the long-term price of lithium ore is based on the lithium salt price in the previous quarter. When the lithium salt price drops, the price change of lithium ore should lag behind the change of lithium salt. Therefore, for enterprises that have not yet achieved complete self-sufficiency in lithium mines, price lag often leads to the inversion of lithium salt prices and the cost of purchased ores, exacerbating losses.

Entering the fourth quarter, the 6% CIF price of spodumene concentrate has rapidly declined. It can be seen that after negotiations in October, Australian mines have started to adopt the M+1 long-term pricing method. After the pricing mechanism is gradually adjusted, it is beneficial to alleviate the operational pressure of outsourcing lithium ore enterprises, and will further open up imports and increase supply.

The lithium salt market has sufficient supply while the terminal power market continues to be sluggish, further exacerbating the imbalance between supply and demand of lithium carbonate. With the release of lithium salt project production capacity, market prices will be in a downward channel. In 2022, the global lithium resources have reached 89 million tons of metallic lithium equivalent, equivalent to approximately 520 million tons of lithium carbonate equivalent. The global lithium resource reserves are relatively abundant, and there is still huge potential for exploration in many regions. Due to limited production capacity and rapid demand growth, the price of lithium carbonate experienced a bull market in the first two years. During the high lithium price, the industry chain inevitably hoarded a large amount of goods. However, during the off-season of demand combined with high inventory, prices quickly plummeted. When demand rebounded and inventory gradually disappeared, the market sentiment warmed up and supported the price rebound, resulting in significant fluctuations in lithium prices within the year.

From a perspective of the next two to three years, although the global penetration rate of electric vehicles will continue to increase, the gradual production of supply side projects will gradually reduce lithium prices to even single digits. This low point must be lower than the production cost of low-grade resources and the expansion cost of lithium salt projects, in order for the market to enter the stage of clearing from shallow to deep. Only after the market is fully cleared can a new round of upward cycle be initiated.

(The above views are for reference only and do not constitute investment advice)

According to the latest quotation from Shanghai Nonferrous Metals Network, on November 8th, lithium carbonate (99.5% battery grade/domestic) fell by 2000 yuan to 156500 yuan/ton, hitting a new low in over 2 years. It has been down for 14 consecutive days and has accumulated a total drop of 6500.0 yuan in the past 5 days; Lithium hydroxide (56.5% battery grade coarse particles/domestically produced) fell by 2000.0 yuan to 145500 yuan/ton, hitting a new low in over 2 years, falling for 13 consecutive days, with a cumulative drop of 6000.0 yuan in the past 5 days.