The spot price of lithium carbonate and the futures price are highly consistent

Since the Guangzhou Futures Exchange officially set the upper limit of lithium carbonate varieties in July 2023, it has played an important guiding role in guiding the benign correction of lithium prices in futures prices. Now the spot price of lithium carbonate is highly synchronized with the futures price, which has more and more obvious hedging effect on the subsequent inventory adjustment of lithium battery companies. 

At the beginning, the trading mechanism of lithium carbonate of Guangzhou Futures Exchange was not fully recognized by the industry. Due to past trading habits and concerns about the quality of products delivered by Guangzhou Futures Exchange, most lithium battery manufacturers have adopted a wait-and-see attitude, while some lithium salt manufacturers have not participate in the futures trading of Guangzhou Futures Exchange. But after more than a year of market turmoil, coupled with the industry's familiarity with futures trading. Trading of lithium carbonate in Guangqi Exchange has become an important way for major lithium battery manufacturers to obtain raw materials. In addition, it can be seen that the price of lithium carbonate fluctuated in the past year, but the range of price fluctuations was obviously reduced compared to 2022-2023. During this process, the trading of lithium carbonate in Guangqi Exchange has played an important role. 

On the one hand, in the downward trend of lithium carbonate prices, battery and material manufacturers in the middle and lower reaches can reserve low-priced lithium carbonate and transfer the inventory from the upper reaches to middle and lower reaches to ensure stable and orderly production when lithium prices rebounds sharply. On the other hand, the launch of Guangqi lithium carbonate market provides a new shipping platform for lithium salt manufacturers, which virtually promotes the release of lithium salt supply in the upstream.

At present, the manufacturers involved in futures trading are mainly materials and battery manufacturers, and some lithium salt manufacturers mainly deal in spodumene and lepidolite. In contrast, the enthusiasm of lithium extraction manufacturers in salt lakes is low, which is also related to the cost advantage of lithium extraction in salt lakes. In addition, the capacity of extracting lithium from salt lakes is relatively small, and the freedom of shipping is high.

Looking back at the price trend of lithium carbonate in the second half of this year, the demand for gold, silver and silver exceeded expectations, and the reduction in production in Australian mines was the main factor driving the price increase of lithium. Therefore, in October, the mid-term futures contract for lithium carbonate once exceeded the price of 90000 yuan/ton, causing a sharp rise in the stock prices of lithium salt companies in the secondary market.

Returning to the level of supply and demand, short-term market sentiment affects the trend of lithium prices, but in the long run, the basic downward trend of lithium prices has not changed.

First of all, the increase in the release of lithium carbonate may reach a temporary peak in 2025. The Chilean Copper Commission predicts that 22 new lithium mining projects will be put into operation by 2025, adding 500000 tons of lithium carbonate equivalent, or causing an excess supply of 191000 tons of lithium carbonate by 2025, further increasing the magnitude of the excess supply.

It is relatively unlikely that the demand will increase significantly. The penetration rate of new energy vehicles in China has exceeded 50%, and it is experiencing a slowdown. In the foreign market, the growth of the electric vehicle market in North America will also slow down due to Trump's strategy of "returning to gasoline vehicles". Some markets segments, such as commercial vehicles and ships, grew rapidly, but the overall base is relatively small.

From the point of view of reducing cost and increasing efficiency, recent news that BYD and SAIC Maxus require suppliers to reduce prices further shows that the fierce competition in the terminal market has not changed, and downstream manufacturers continue to put pressure on upstream prices.

What's more noteworthy is that December is approaching, and the Spring Festival in 2025 is ahead of previous years. The lithium battery industry is facing a transition from peak season to off-season, and the price of lithium will also enter the downward stage. In addition, the supply negotiations are concentrated at the end of the year, and the inventory and stocking of lithium battery companies at the end of the year become the primary goal.