Lithium Carbonate Market Inventory 2024

In 2024, the logic that the global lithium salt production capacity exceeds demand continued to dominate the market direction, and the domestic lithium carbonate market continued to fluctuate downward. The annual average price drops to about 91,000 yuan/ton, which is about 65% lower than the average price in 2023!

In stage, the supply and demand are weak in the off-season from January to February, and the lithium prices runs at a low level; March-May short supply-demand mismatch, the price reached a high point in the year; June-September new production capacity release, the market continues to be weak, the futures once fell below 70,000; 10-12 months of foreign mines to reduce production superimposed on the downstream demand exceeded expectations, the lithium price appeared to be a weak rebound.

From the demand point of view, with the gradual implementation of trade-in policies and the pull of superimposed export markets, the domestic production and sales of new energy vehicles increased beyond expectations in 2024. From January to November, the output of new energy passenger vehicles increased by 38.1% year-on-year, and the penetration rate was higher than 50% for five consecutive months; In the early stage of 2024, the energy storage orders were concentrated in cash, and the demand for lithium carbonate increased by more than 25; 3C digital demand is also compared to the 2023 also had a significant rebound, the increase of computers, mobile phones, etc. Reached about 10%; The potential of new energy heavy trucks, electric loaders, electric boats was accelerated, and the low-altitude economy gradually attracted the attention of the market.

Worldwide, the demand for lithium resources will increase by about 30% year-on-year in 2024, which is at the forefront of industrial products. 

However, despite such strong demand, the lithium carbonate market remains weak. This is not only due to the logic that the supply of lithium resources exceeds the demand, but also due to the continuous high suppression of futures warehouse receipts, which has had a great impact on the market.

In order to prevent the price of lithium carbonate from retaliating after a sharp drop, the range of deliverable products in futures is constantly expanding. From the introduction of recycling to the addition of salt lake delivery warehouses by the end of 2024, the price of lithium carbonate is effectively prevented from fluctuating greatly.

Perhaps, since the concept of "new three types" was put forward in early 2023, lithium carbonate also bears the fate of "sacrifice" for the new energy industry. 

Compared with the mentality of many domestic lithium salt companies and cathode material companies, overseas mining companies are obviously unwilling to sink. Since the demand can not be relied on, it can only rely on the raw material side of 'supply-side reform'.

In the first half of 2024, the market for Australia's low-grade mines Finniss and Mt Cattlin announced the news of production cuts, but in the third quarter of Mt Marion and Wodgina lithium output fell significantly, and in the fourth quarter of Pilbara Minerals and Bald Hill and other lithium mines have announced a downward revision of the 2024-2025 fiscal year lithium production capacity. There seems to be some changes in the atmosphere of guiding and unanimously bearish market.

At the same time, a number of lithium mine projects in Argentina and Canada have been delayed or suspended due to cost or capital problems. With the increase of domestic and foreign lithium mining enterprises stopping production and reducing production, resulting in the final production of global lithium resources in 2024 being less than expected. After the second half of 2024, lithium carbonate supply and demand relationships began to slowly repair.

According to ICC statistics, China's lithium carbonate production in 2024 will be about 635,000 tonnes, a year-on-year growth of about 22.6%, an increase of nearly 8 percentage points lower than in 2023. 

In addition, in 2024, the concentration of overseas lithium mines showed signs of improvement, SQM was nationalized by the Chilean government, and a higher capacity expansion goal was given; Rio Tinto, one of the four largest mining industries in the world, has also started to acquire Arcadium, one of the three major lithium industries; Pilbara Mining successfully acquired the Salinas lithium mines in Brazil, and began to penetrate into the downstream industrial chain.

Starting from 2025, the penetration rate of new energy vehicle in China is expected to continue to rise, and the demand for lithium batteries in the energy storage industry will also maintain high growth. Measured by the overall growth rate of 20%, the global demand for lithium resources in 2025 is about 1.40-1.43 million tonnes.

On the supply side, there is a big controversy in the market at present. The main contradiction lies in that if all the lithium mine projects under construction are completed on time and produced normally, the global lithium resource production capacity will reach more than 1.9 million tons in 2025, with obvious overcapacity.

However, due to the continuous low price of lithium carbonate and the continuous dilution of upstream profits, there is a high probability that more foreign mines will start to reduce production or slow down the promotion of new projects in the later period, and the output of some low-grade mines in China will also be suppressed. It is estimated that the actual output of lithium resources in the world will be about 1.52-1.55 million tons in 2025, and the ratio of supply to demand will continue to decline.

At the same time, thanks to the overall improvement of downstream performance, in the fourth quarter of 2024, the top of the domestic lithium carbonate inventory declined, the available days of inventory also gradually decline, and the slope of the price decline slowed down obviously. Many lithium salt enterprises began to play a supporting role in the "life and death line" of 70,000 yuan. Although the bear market does not talk lightly about cost support, when many investors at home and abroad one after another, due to low profits, take the initiative to leave the market to wait and see, the supply and demand balance sheet it is necessary to re-correct a little.

In summary, the global lithium salt market in 2025 will continue to maintain strong demand, the supply side is still facing some pressure in the short term, the centre of gravity of lithium carbonate prices will continue to move down, and is expected to run mainly in the space between 65,000 and 90,000 yuan. With the continuous low price operation, the enthusiasm of lithium mine enterprises to increase production will be further weakened, and the speed of clearing capacity will continue to accelerate. At the same time, some overseas mining giants step in at a low level, promoting lithium resources integration intensified, will gradually enhance the bargaining power of the raw material side.

It is estimated that the domestic lithium salt market will be dominated by weak oscillation in the first half of 2025. After the second half of the year, the market supply and demand will gradually tend to be balanced, and the market is expected to usher in a real stable market after the fourth quarter.