Where will lithium carbonate prices go in 2025?

Where will lithium carbonate prices go in 2025?

2024 lithium carbonate main contract was suppressed by overcapacity and fell sharply. Specifically, at the beginning of 2024 due to the Chinese New Year shutdown, lithium carbonate prices were weak and shocking, followed by the Australian mine production cuts and Jiangxi environmental inspections triggered the market's concern about ore shortages, and the emotional side of the lithium price rushed to the year's high of 125,000 yuan/tonne. Into the second quarter, the downstream long-term agreement and the high proportion of customer supply problems highlighted, that supply is a surplus trend, with the accumulation of inventory, lithium prices accelerated down to 72050 yuan/tonne stage low. Until September downstream scheduling increased, and lithium prices only stopped falling stabilization. However, overall, lithium prices fell more than 40% during the year.

Looking forward to 2025, the main overseas producing countries, Australia, Africa, and Brazil have some increment. Specifically, the main reduction in Australian mines comes from the high-cost Finniss, Mt Cattlin mine, the main increase comes from the low-cost Greenbushes mine and the new production of Kathleen Valley, Mt Holland mine, after offsetting the increase and decrease, the overall increase in production; African mines increase comes from Kamativi, Goulamina and Bougouni mines. Bougouni mine, last year, the higher cost of African mines is mainly restricted by local infrastructure, is expected to improve in 2025; Brazilian mines with high grade and low mining costs, the main local developers Atlas Lithium, Sigma Lithium, and Brazilian lithium industry are all planning to expand production in 2025.

Comprehensive view, in 2025, overseas lithium concentrate supply growth, average cost downward. In addition, the domestic turn to develop the Sichuan lithium pyroxene mine, the main increment from the Lijiagou mine. However, the domestic lithium pyroxene increment is more difficult to make up for the large-scale production reduction of lithium mica mines and is expected to reduce the overall production of domestic mines, and import dependence.

Domestic lithium salt production is mainly three ways, respectively, ore smelting, salt lake lithium extraction, and recycled material lithium extraction. Ore lithium due to the process is mature, the largest proportion of production, and the cost of lithium between the salt lake lithium and recycling lithium. Among them, lithium ore lithium is divided into lithium pyroxene and lithium mica lithium, lithium mica ore grade is low, and the average cost per tonne is high, therefore, the salt plant to pyroxene lithium production line transfer, taking into account the lithium pyroxene supply increment, is expected to continue to increase the production of pyroxene lithium this year, and further squeezed out of the share of mica lithium.

Salt Lake lithium, salt lake lithium cost is the lowest, but Salt Lake is distributed in Qinghai, Tibet, arid mountainous areas, and transport and facilities construction restrictions are greater, resulting in the slow expansion of the lithium production capacity of salt lake lithium, salt lake lithium production is expected to maintain the increase in production this year, but the rate of increase in production is limited.

Recycling of lithium, recycling of lithium facing the main problem is the lack of scrap volume brought about by the high price of waste, resulting in the recycling of lithium remaining high, taking into account the lithium battery end-of-life cycle, is expected to be recycled this year, lithium is still facing the problem of high costs, the output is difficult to have a significant increase.

Imports, China mainly imports lithium products from salt lakes, overseas salt lakes are mainly distributed in Bolivia, Argentina, and Chile. Influenced by the local infrastructure, the development of Bolivia's salt lake is slow, salt lake projects are mainly concentrated in Chile and Argentina. 2025, the main developers in Chile, SQM, and Yabao are expected to increase production; Argentina's Centenario Ratones, Tres Quebradas, and other salt lakes will contribute to a certain amount of incremental; Bolivia's YLB is expected to have a new production capacity to be put.

Combined with the above, in 2025, the domestic lithium carbonate will maintain the increase in production, the main driver of the increase in production is still pyroxene and salt lake lithium, while mica and recycled lithium are expected to decline in proportion. In addition, if the South American salt lake expands as planned, 2025 domestic lithium salt imports will have a significant increase. In this context, the average cost of lithium carbonate production will decline year-on-year.

In the field of power terminals, with the improvement of domestic new energy vehicle supporting facilities and the increase of financial subsidies, the demand for new energy vehicles has seen explosive growth since 2021. 2024, with the increase of the old-for-new policy, the sales of domestic new energy vehicles increased by 34.89% year-on-year from January to October. With the end of the domestic trade-in policy, the market more than expected this year's subsidies weakened, superimposed on the European Union on China's new energy vehicle anti-subsidy policy came into effect as well as the local new energy vehicle subsidies regression, new energy vehicle demand growth is expected to slow down.

Energy storage terminal field, last year 1-10 months in the policy boost, the domestic energy storage year-on-year growth rate reached 88.49%. 2025 in the domestic policy support, the energy storage field is still in the high-speed growth stage. solarPower Europe report shows that Europe's large storage-based energy storage demand is also expected to grow, but in the United States due to the presidential change of the policy Changes, the installed energy storage growth rate may slow down.

Considering the growth rate of both, the proportion of power and energy storage terminal demand, the overall growth rate of terminal demand is expected to decline.

Driven by the terminal demand, the production of anode materials has been significantly differentiated, and China's lithium iron phosphate anode production reached 2,057,700 physical tonnes in January-October 2024; ternary materials reached 624,400 physical tonnes. From a long-term perspective, power battery demand for high-density still exists, and high-nickel and medium-high nickel ternary materials are the future directions of development. However, in the last two years, in the lithium industry chain, cathode materials, batteries, and terminal links are in the stage of low-priced competition, and at this stage, low-cost, high-security, and high-cycle life of lithium iron phosphate cathode is more suitable for the survival and development of enterprises.

From the production side, this year, the domestic lithium battery and anode material production will follow the terminal demand growth, but due to the lithium battery export tax rebate from 13% down to 9%, coupled with the negative impact of the U.S. trade policy, is expected to 2025 lithium battery exports will be some ‘cooling’.

In 2025, under the combined impact of terminal demand and trade policy, the growth rate of anode demand will slow down, while lithium iron phosphate anode capacity to accelerate the expansion of lithium iron phosphate is expected to further aggravate the oversupply of lithium iron phosphate, the industry is still facing the situation of low-priced competition, and the acceptance of the high price of lithium carbonate is low.

2024 lithium carbonate showed a significant trend of inventory accumulation, as of November 21, the total lithium carbonate inventory reached 108,300 tonnes, an increase of 57.98% over the beginning of the year. The main inventory increment is mostly in the traders and anode plant segment, respectively, increased by 216.62% and 107.62% compared with the beginning of the year. Due to the significant expansion of overall lithium carbonate production capacity in 2025 and the slowdown in demand growth, it is expected that lithium carbonate will continue the trend of inventory accumulation, and the magnitude of inventory accumulation may expand.

From a fundamental point of view, lithium prices in 2025 still have downward space.

First of all, the supply side, the global low-cost lithium pyroxene mines, and salt lake capacity focused on the release of lithium carbonate production with the average cost of lithium production downward, the lithium price is more difficult to give to the recovery of lithium and non-integrated mica lithium profit margins, so the mica lithium and recycling lithium may be to maintain the trend of production cuts, then the lithium carbonate supply structure will speed up the low-cost to the high cost of the replacement. Considering that part of the integrated mica lithium extraction will still have a certain amount of supply, therefore, it is expected that the supply of lithium carbonate in 2025 is a trend of volume increase and price reduction.

Secondly, demand, power terminal-led, the terminal demand growth rate may slow down, but the anode material is in the scale expansion stage, its overcapacity will be further aggravated, and for the same in the expansion cycle of lithium salt plant, the compression of the cost of the anode link of the low-price competition will be upwardly transmitted.

Again, from the perspective of inventory analysis, lithium carbonate supply increase and demand growth slowdown under the combined effect of lithium carbonate may be in the background of high inventory, the continuation of the trend of accumulating inventory.

Finally, combined with the above factors, in 2025, the raw material side of the volume increase and price reduction driven by the lithium carbonate supply increase, a cost downward trend. And downstream from the end of the car, energy storage to lithium iron phosphate anode materials are in the overcapacity stage, and downstream profit margins continue to be compressed, resulting in lithium prices running under pressure. Considering the overall cost of lithium salt is a downward trend, the overall lithium price is expected to run in 2025, compared with last year's downward shift.