International market factors: The price of lithium carbonate in China is also affected by fluctuations in international market prices, especially in major producing countries such as Australia and Chile.



International market factors: The price of lithium carbonate in China is also affected by fluctuations in international market prices, especially in major producing countries such as Australia and Chile.

Environmental regulations: Environmental regulations for mining and production processes may increase production costs, thereby affecting the supply and price of lithium carbonate.

Currency exchange rate: As lithium carbonate is an international commodity, the fluctuation of the RMB to USD exchange rate may also have a certain impact on its price.

The interaction between these factors affects the price of lithium carbonate futures from multiple aspects, and investors need to consider these factors comprehensively when trading lithium carbonate futures.

The main fundamental indicators affecting the price of lithium carbonate and this week's data (source: Zijin Tianfeng Futures Research Institute)

Spot price: The spot price of empty battery grade lithium carbonate has dropped by 14000 yuan/ton to 104500 yuan/ton.

Basis: The basis for biased lithium carbonate has narrowed from 18200 yuan/ton in the previous week to 1900 yuan/ton.

Weekly production of lithium carbonate: Excessive. Last week, the weekly production of domestic lithium carbonate enterprises decreased by 188 tons to 8757 tons compared to the previous week.

Imported lithium ore price: The price of imported Australian ore fell by $145/ton to $1470/ton due to a bearish outlook.

domestic lithium ore prices: The domestic mica ore price (low grade) fell by 200 yuan/ton to 1725 yuan/ton due to bearish sentiment.

Smelting profit (external purchase of pyroxene): The profit level increased from -201 thousand yuan/ton to -24500 yuan/ton.

Smelting profit (mica): The profit level has dropped from 4710 yuan/ton to -328 yuan/ton due to being too high.

Triple profit * *: The profit level increased by 1425 yuan/ton to 16100 yuan/ton due to being too high.

Triple operating rate: The weekly operating rate of ternary material companies fell by 2 points to 44.59%.

Upstream weekly inventory: Shorted. Last week, the smelter's inventory increased by 660 tons to 38225 tons.

Downstream weekly inventory: Short Last week, downstream enterprise inventory increased by 440 tons to 12959 tons.

**The definition of ternary: In the upstream and downstream industries of lithium carbonate (Li ₂ CO æ), "ternary" usually refers to lithium iron phosphate (LiFePO ₄) batteries. This is a lithium-ion battery, where the ternary refers to the use of lithium, iron, and phosphoric acid as the positive electrode materials of the battery. This type of battery is favored for its relatively high safety, stability, and lifespan.

Supply of lithium carbonate

The supply of lithium carbonate is influenced by various factors, covering all aspects from mining and extraction to production and market demand. The following are some key factors that affect the supply of lithium carbonate:

Lithium ore production: Lithium ore is the main raw material for lithium carbonate, and hard rock ore and salt lake ore are the two main types. The lithium content of the ore in the production area, the scale of the deposit, and the quality of the ore directly affect the production of lithium carbonate.

Technology and Mining Costs: The level of technology and related costs for mining and extracting lithium have a significant impact on the supply of lithium carbonate. Technological innovation and efficiency improvement can affect production costs, thereby affecting the supply of lithium carbonate.

Environmental regulations: The mining and production of lithium may involve environmental impacts. The improvement of environmental regulations and social responsibility requirements may lead to stricter environmental standards, which may increase the environmental costs of production and affect supply.

Political and Geopolitical Risks: The political stability and geopolitical factors in mining areas have an impact on the supply of lithium carbonate. Political turmoil, trade disputes, and international relations tensions may lead to production interruptions or market uncertainty.

The development of new projects: The development of new lithium mining projects and lithium carbonate production facilities plays a crucial role in supply. The initiation, construction, and production cycle of the project is relatively long, and the investment of new production capacity takes time, directly affecting the supply volume.

Global market demand: The demand for lithium carbonate in fields such as electric vehicles and renewable energy directly affects the supply. An increase in market demand may lead to an expansion of production, while a decrease in market demand may lead to oversupply.

Technological progress and alternatives: New extraction technologies, more efficient production processes, or materials that replace lithium may all have an impact on the supply of lithium carbonate. Technological progress may increase production capacity and reduce production costs.

Global market prices: The price of lithium carbonate has a direct impact on the profitability of producers. Higher market prices may stimulate production, but they may also trigger the development of new projects, thereby affecting supply.

International trade policy: Trade policies and tariffs have a direct impact on the international trade of lithium carbonate. Policies such as import tariffs and export quotas may change the supply chain and market landscape.

Epidemic and natural disasters: Global epidemics, natural disasters (such as earthquakes, floods) and other emergencies may affect the normal operation of production bases, leading to supply interruptions or reductions.

These factors are intertwined and have a complex impact on the supply of lithium carbonate. In the lithium carbonate market, producers, investors, and policymakers need to closely monitor these factors to develop effective strategies and policies to address potential risks and opportunities. The following are the recent supplies specific to the region:

Australian lithium mines

The expected annual growth rate of lithium concentrate production in Australia in 2023 is 23.9%. The main increase in Australian lithium concentrate in 2023 compared to 2022 came from the full operation of two production lines in Wodgina, the increase in production brought about by the recovery of Mt Cattlin taste, and the expansion of Mt Marion production capacity, with a total increase of 475000 tons of lithium concentrate, a year-on-year increase of 23.9%.

Looking ahead to 2024, the annual lithium concentrate production in Australia is expected to grow at a rate of 27.52%, mainly due to the addition of two new mines, namely the Mt Holland project of SQM and the Kathleen Valley project of Liantown, as well as the ramp up of production capacity in Marion and Wodgina. The Mt Holland project has completed the construction of the mine and beneficiation plant, and produced the first batch of lithium concentrate in Q4 of this year. Kathleen will start production for the first time in mid-2024; The mines of the Finniss project have also seen significant growth, with Q3 lithium concentrate production exceeding 20000 tons. In addition, the Bald mine was not previously considered in the total supply and was acquired by Mineral Resources in November 2023. Driven by abundant profits, the probability of resuming production in 2024 is high. The mine is expected to contribute 155000 tons of 5.5% grade lithium concentrate production capacity in 2024.

African lithium mines

In 2024, Africa's production increased by 139000 tons of LCE, with a growth rate of 482.6%; The African region has officially become one of the core resource areas for China's lithium industry layout. Previously, the market's concerns about local political turmoil and incomplete infrastructure did not occur in Q4 2023. Most projects were not put on hold due to these factors, but rather accelerated.

As of Q3, according to the announcement from China Mining Resources, the Bikita 2 million ton/year (diorite) renovation and expansion project and the 2 million ton/year (hammerstone) construction project have announced production on November 9th; On November 8th, Shengxin Lithium announced the reality that the Sabixing project entered trial production in May 2023, with a production scale of 900000 tons/year of raw ore, equivalent to about 200000 tons/year of concentrate. Currently, the production capacity is climbing well and approaching full capacity. However, considering the shipping time and processing time for lithium carbonate for these two projects, it is expected that the time node for large-scale imports to China will be December 2023.

The first phase of Kamativ lithium mine under Yahua Group has undergone single machine no-load commissioning and feeding trial, and is expected to be completed and put into operation this year. The second phase of mine construction will be completed in 2024. The Zulu project in Zimbabwe is currently in trial production and is scheduled to start production in early February 2024. Marula Mining's Blesberg lithium mine in South Africa plans to invest in early 2024, with a monthly output of 5000 tons.

South American lithium mines

The expected production in 2024 will reach 375000 tons, a year-on-year increase of 40%. The South American expansion cycle is divided into two stages:

Phase 1: From 2021 to 2023, the production of existing projects, such as ALB, SQM, Ganfeng Lithium, Liventt, Alkem, etc., has not yet started, and the expansion pace of old projects is slow

The second stage: from 2024, new production expansion projects driven by the upward cycle of lithium price will enter the market, including Alkem, Xizang Everest, Eramet, POSCO, Zijin Mining, Rio Tinto, etc. Due to the catfish effect brought by the participation of mining giants, the industry competition will become more intense in 2024, and the price war will be inevitable.

2024 is a major year for salt lake expansion, with intensive production of South American salt lake projects. It is expected that overseas salt lakes will add 107000 tons of LCE production in 2024, of which only 20000 tons of new SOM will come from the Acatama project, and the remaining 87000 tons will come from Argentina. The players of the Argentine project are mostly strong resource giants. Based on the current tracking situation, the project progress is basically in line with expectations.

Domestic lithium mines

Domestic mica is growing rapidly, with an expected growth rate of 106.85% in 2024. The increment mainly comes from the Shixiawo mining area in Ningde. Zhenkouli Fengxin County Shixiawo Mining Area in Yifeng County, Jiangxi Province: A 30 million ton/year mineral processing project will be constructed and put into operation in stages. According to the summary of investor research conducted by Ningde Times on October 19th, the key links of procurement, selection and treatment for the Yichun project have been gradually put into operation and ramped up. The production will significantly increase in 2024. Porcelain clay (including clay) mine in Shuinan section of Jieshili mining area, Jiangxi: According to a Q&A with investors from Guoxuan High tech on June 16th, the Shuinan section mine obtained a mining license of 3 million tons/year at the end of last year. From the perspective of better safety management and mining efficiency, the mining scale has been reduced to 1.8 million tons/year, and safety facility design approval is planned to be obtained before the end of June 223. On August 17th, it was announced on the investor interaction platform that the Shuinan section of the mine is undergoing intensive and orderly infrastructure construction work.

The production of Qinghai salt lake industry after technological transformation is also worth looking forward to. The domestic salt lake production is expected to increase by 26000 tons in 2024, a year-on-year increase of 22.8%. At present, lithium extraction enterprises in Qinghai Salt Lake are trying to improve the yield of the lithium extraction process by using technologies such as brine extraction and lithium mother liquor recovery, as well as measures to keep the adsorption tower warm in winter. The future production will steadily increase.

The pace of promoting domestic spodumene has always been slow and the quantity has been relatively small, mainly due to limitations in environmental protection and approval processes. It is expected that the domestic production of spodumene will increase by 21200 tons of LCE in 2024, a year-on-year increase of 113.33%. Lijiagou Mine: According to the company's investor Q&A on November 8th, the mining project of Lijiagou Mine has started trial production. Some workshops and pipeline systems of the surface mining and selection project are carrying out material linkage testing, equipment debugging, and defect elimination work. The construction of tailings pond, production auxiliary facilities, and living facilities is progressing as planned.

The demand for lithium carbonate

The demand for lithium carbonate is influenced by various factors, covering various aspects from the demand for electric vehicles and energy storage markets to technological development and policy regulations. The following are some key influencing factors of lithium carbonate demand:

Electric vehicle sales: Electric vehicles are one of the main application areas of lithium carbonate. Therefore, the growth of electric vehicle sales directly affects the demand for lithium carbonate. The government's encouragement of the promotion of electric vehicles and the increase in market acceptance may lead to an increase in demand for lithium carbonate.

Energy storage system demand: With the increase of renewable energy, the demand for energy storage systems is also on the rise. Lithium carbonate, as one of the battery materials, is used in the production of energy storage equipment, and its demand is closely related to the development of the energy storage market.

The development of new energy technologies: The development of new energy technologies and battery technologies has a significant impact on the demand for lithium carbonate. Technological advancements may alter battery composition and performance, thereby affecting the demand for lithium carbonate.

Government policies and regulations: The government's energy policies and environmental regulations directly affect the demand for lithium carbonate. Policies supporting renewable energy and promoting the electric vehicle industry may increase demand for lithium carbonate.

Battery performance requirements: Battery performance has a direct impact on the demand for lithium carbonate. The constantly improving battery performance requirements may prompt manufacturers to use more lithium carbonate to meet their demands for high energy density and long lifespan.

Global economic situation: The state of the global economy and trade relations between countries may affect the demand for lithium carbonate. Economic growth may drive the expansion of electric vehicle sales and the new energy market, thereby increasing the demand for lithium carbonate.

Alternative technologies and materials: The emergence of new battery technologies and other alternative materials may have an impact on the demand for lithium carbonate. For example, if more advanced battery technology emerges, it may affect the market share of lithium carbonate.

Social consumption trends: Society's focus on sustainable energy and green technologies may drive demand for lithium carbonate. Consumer preferences for environmental protection and clean energy may accelerate the development of the lithium carbonate market.

Investment in the battery industry: The investment and capital inflow of investors in the battery industry also affect the demand for lithium carbonate. The increase in investment usually promotes the expansion of industries and technological innovation.

Raw material prices: The price fluctuations of lithium ore and other production raw materials may have an impact on the production cost of lithium carbonate, thereby affecting the market supply and demand relationship.

The combined effect of the above factors determines the market demand for lithium carbonate. Industry participants need to closely monitor changes in these factors in order to better predict market trends and formulate business strategies.

Current demand for lithium carbonate

Downstream production of lithium carbonate is pessimistic, and the penetration rate of new energy vehicles will enter a "slow growth zone".

The first sector to suffer from demand backlash is the midstream, with a significant decline in the growth rate of material factories

Power batteries are one of the core drivers of future demand, with the penetration rate of new energy vehicles in China exceeding 30% in 2023. According to data from the China Association of Automobile Manufacturers, in November 2023, the production and sales of new energy vehicles in China continued to maintain rapid growth, with sales reaching 1.026 million units, a month on month increase of 7.32% and a year-on-year increase of 30%.

The sales growth rate of new energy vehicles remains in double digits, but it is expected that the penetration rate will enter a "slow growth zone".

The subsidy policy for new energy vehicles in 2024 has been disrupted, and the marginal growth rate may weaken.

Power generation measurement: Under the carbon neutrality target, the average installed capacity per wind and light year is 222.5GW.

The rational recovery of installed wind and solar power growth rate in Europe and America

The export growth rate of inverters has sharply declined

Energy storage returns to rationality, with an optimistic forecast of 20.61wt of energy storage demand in 2024

The growth rate of consumer electronics and traditional industries remains stable, with a weak impact on the demand for lithium carbonate

Inventory of lithium carbonate

The inventory level of lithium carbonate is influenced by various factors, which directly affect the balance of market supply and demand. The following are some key influencing factors of lithium carbonate inventory levels:

Market demand: The market demand in the fields of electric vehicles, energy storage equipment, and renewable energy directly determines the consumption level of lithium carbonate. Strong market demand often leads to manufacturers and end users maintaining low inventory levels.

Production capacity: The production capacity and supply capacity of a manufacturer are important factors in inventory levels. The ability of manufacturers to meet market demand and adjust production in a short period of time directly affects changes in inventory.

Delay in the industrial chain: Due to the potential involvement of multiple links in the production process of lithium carbonate, such as lithium mining, extraction, and production of lithium carbonate, delays in the industrial chain can have an impact on inventory levels. Industry links with longer production cycles may lead to lagging inventory adjustments.

Global market price: The global market price of lithium carbonate will affect production