The bottom range of lithium carbonate prices may form or return to over 100000 yuan!

In 2024, the price of lithium will continue to "bottom out" and remain at a "low level". Despite the ups and downs of lithium carbonate, it once hit a new low, even exceeded the cost line of supply and demand balance of the lithium carbonate industry by 80,000 yuan/ton.

For example, in September, both futures and spot prices fell below 80000 yuan, and futures fell below the 70000 yuan/ton mark several times during trading process. In the industry's view, the price of lithium carbonate has remained at around 80000 yuan for a long time, and there is not much downside. And with the arrival of the peak season in the third and fourth quarters, as well as the strengthening of the maintenance of lithium carbonate industry chain enterprises, it is expected that the price of lithium carbonate will stabilize and pick up.

The latest data shows that the price of lithium carbonate did rise on October 8th, the first day after the National Day holiday. In terms of futures, the main contracts of lithium carbonate rose collectively. The main lithium carbonate futures contract (lc 2411) rose rapidly during the trading hours, reaching a maximum of 84800 yuan; In terms of spot, the average price of lithium carbonate was 77,500 yuan/ton, up 3.5% from the average price in the last week of September. 

1) Low price development is unsustainable, leading companies take action to 'protect prices'

In fact, this upward trend began before the national day holiday. Since the beginning of this year, the price of lithium carbonate has continued to change, showing a downward trend in general. In the first half of this year, the price of tons once exceeded 120,000 yuan. However, due to weak terminal demand and excessive inventory accumulation, the price dropped to 100000 yuan, and then fell below 80000 yuan.

The lithium salt companies were the first hit by the trend of "low price". From the performance of representative companies, it can be seen that the operating performance of listed companies in the lithium carbonate industry chain was generally under pressure in the first half of the year, and the loss and decline of performance pointed to "the decline in the sales price of lithium product and a decrease in gross profit". According to industry insiders, lithium salt is mainly produced at high costs, and the production capacity of low-cost lithium salt has not been released. Therefore, the downward trend of the price of lithium carbonate will cause many companies to be unable to cover production costs. Under the continuous "clearance" of enterprises, the reduction of production capacity will accelerate, and the situation of supply exceeding demand will change rapidly in the short term.

On the other hand, in the face of weak prices, industrial chain companies are taking active measures, such as hedging lithium carbonate futures, reducing production under the guise of maintenance to boost prices, and even some companies directly give up relevant expansion plans, including industry leaders. Among them, the news that attracts the most attention from the industry is the "shutdown" of Ningde. Regarding the rumors of production shutdown, Ningde stated that "based on the recent market situation of lithium carbonate, the company plans to adjust the production arrangement of lithium carbonate in Yichun, Jiangxi." This kind of response indirectly shows that the "shutdown" is really true. According to related reports, the total cost of lithium carbonate in Yichun Ningde exceeds 80000 yuan/ton, which is not enough to support its production according to the fluctuation of lithium carbonate prices of 70000 yuan. Behind this series of corporate behaviors is closely related to the continuous decline in the price of lithium carbonate. According to reports, if CATL suspends its lithium business in Yichun, Jiangxi, the monthly output of lithium carbonate in China will be reduced by 8%, which is equivalent to a reduction of 5000 to 6000 tons of lithium carbonate equivalent (LCE) per month. Combined with the reduction of production of other enterprises, it can be seen that the domestic supply of lithium carbonate will be further reduced. Stimulated by this news, the price of lithium carbonate was "loose", and it continued to rise slightly in the middle and late September, returning to the level of about 80000 yuan from 70,000 yuan. 

2) 5 major factors highlighted, lithium carbonate will return to over 100000 yuan

Continuing the upward trend in September, Lithium Battery believes that the price of lithium carbonate is expected to return to around RMB 100000. There are five factors behind this price reversal.

First, the output of lithium carbonate is declining, and the mismatch between supply and demand is gradually being repaired. In the domestic market, as mentioned above, leading enterprises reduce production and raise prices, and the supply of lithium carbonate capacity weakens, which is conducive to boosting prices. In addition, with the coming of winter, the capacity of salt lakes in Qinghai and Tibet is limited, which provides some support for the price of lithium to stop falling; In the international market, the high import costs of lithium carbonate, an unstable international environment and restrictions on the export of lithium ore by national policies will also affect the supply of lithium carbonate.

Secondly, there is a significant de stocking of lithium carbonate, resulting in a noticeable reduction in supply and demand and an increase in efficiency. On the one hand, with the vigorous promotion of national policies such as trade-in, the peak consumption season for new energy vehicles and other markets has arrived, driving demand for materials such as lithium carbonate. On the other hand, lithium carbonate has been destocking for five weeks in a row. Data shows that as of the week of September 27th, the weekly inventory of lithium carbonate was 124600 tons, a decrease of 2095 tons from last month.

Third, the US dollar interest rate cut combined with China's unprecedented monetary and fiscal policy stimulus will drive the economy to bottom out, benefiting the downstream consumer market of new energy, drive the demand growth of lithium batteries and improving the capacity utilization rate of lithium battery.

Fourth, the spillover of the Israeli-Palestinian conflict and the imminent sixth Middle East war may affect oil supply and benefit the development of new energy sources. Relevant analysis shows that if Israel attacks Iranian oil facilities, global crude oil supply may face a 4% reduction risk, and the price of Brent crude oil may soar to $ 85 per barrel, which is about 16% higher than the current level.

Fifth, in recent years, the continuous daily limit of oil futures prices has led to the skyrocketing prices of other commodity, and the futures prices of lithium carbonate have also skyrocketed, which has reversed the price trend and forming a bottom range.