Lithium prices have fallen below 70000, and the industry's cold winter is still ongoing

         Recently, lithium prices have experienced a new round of decline.

 On April 25th, the main contract LC2507 for lithium carbonate futures closed at 68180 yuan/ton. As early as April 21st, lithium carbonate futures fell below the 70000 yuan/ton mark and closed at 69000 yuan/ton. Since then, they have been unable to effectively recover from this mark for four consecutive trading days and have continuously hit new lows for the year. Since the beginning of this year, the cumulative decline in lithium carbonate futures prices has exceeded 12%.

 Market changes are often reflected first in expectations. Recently, with the introduction of new regulatory regulations in China prohibiting the ignition of new energy vehicle batteries, the industry's outlook for lithium demand has begun to shift towards caution.

 This new regulation means that before solid-state batteries are widely adopted, car companies may significantly reduce their use of lithium. For example, CATL's recently released sodium ion battery is designed to address this regulatory trend. From this perspective, the new regulatory regulations are likely to significantly reduce the overall demand for lithium resources in the new energy vehicle industry in the near future.

 From the market reaction, the introduction of new regulations has had a significant impact on futures prices. During the 14 trading days from April 8th to April 25th, lithium carbonate futures closed with a bullish candlestick on only one day, while the rest of the trading days closed with a bearish candlestick. This round of decline not only caused the price of lithium carbonate to fall below the important threshold of 70000 yuan/ton, breaking a new low in the current period, but also confirmed the trend of further weakening.

 Another main reason for the decline in lithium prices is the inverse relationship between costs and selling prices, which means selling at a loss.

 According to Mysteel data, on April 23rd, the 6% forward spot (CIF average price) quotation for spodumene concentrate was $790 per ton. Based on the actual operating costs of the enterprise, the cost of lithium carbonate corresponding to this price ranges from 70000 yuan to 71000 yuan per ton. However, the average market price of battery grade lithium carbonate during the same period was only 69600 yuan/ton, resulting in an inversion between cost and selling price.

 In response, Guotai Junan stated that the oversupply of lithium salts in the market is the fundamental reason for the severe squeeze on profits in the smelting process. During the period of March to April, the inventory of lithium carbonate industry continued to rise, increasing from 108000 tons to 132000 tons, and the excess supply also expanded to 11731 tons. At the same time, the profit margin of the processing stage has been further compressed - the processing cost of converting spodumene concentrate into lithium carbonate has decreased from 25000 yuan/ton to 22000 yuan/ton.

 In fact, since the beginning of 2025, the lithium industry has been trapped in the dilemma of cost and price inversion. The price of lithium carbonate has been continuously declining, dropping from a high of 78000 yuan/ton this year to less than 70000 yuan/ton, with a cumulative decline of 12%; During the same period, the price of spodumene concentrate only slightly fell from $845/ton to $807/ton, a decrease of less than 4%. The divergence of the two trends has intensified the operational pressure on midstream smelting enterprises.

 Institutions believe that this price mismatch is not accidental, but rather stems from significant differences in the development cycles within the industry chain. Lithium mines often take more than five years from exploration to production, and in some areas, it can even take up to ten years; In contrast, the expansion cycle of midstream lithium salt smelting capacity usually only takes one to two years. This time difference leads to a slow adjustment of lithium ore prices when the industry enters a downward cycle, a rapid bottoming out of lithium carbonate prices, and a squeeze on smelting profits.

 However, the downward trend of lithium ore prices has significantly accelerated recently, and the synchronicity between ore prices and lithium salt prices has also improved. Data shows that since April, the price of lithium ore has decreased by 5.8%, while the average price of battery grade lithium carbonate has dropped by 5.4%. This synchronous downward trend reflects, on the one hand, the increasing fundamental pressure on the lithium salt industry and the accelerating bottoming out of lithium carbonate; On the other hand, it also indicates that market sentiment is gradually spreading from the midstream to the upstream, and supply pressure from the mining end is beginning to emerge.

 The performance of listed companies also reflects the current situation to a certain extent. On the evening of April 23rd, Tianqi Lithium released its first quarter performance forecast, expecting a profit of 82 million to 123 million yuan, reversing the loss of 3.897 billion yuan in the same period last year. Tianqi Lithium stated that the pricing cycle of lithium mines by mining companies has been shortened, and the cost inversion problem caused by the mismatch between lithium ore and lithium salt prices has been greatly alleviated. The cost of newly purchased lithium concentrate is closer to the purchase price.

 Overall, lithium mining companies are still struggling, but due to the continuous reduction of industry chain costs, the current losses have narrowed to a certain extent compared to last year.

 On the one hand, with the penetration rate of new energy vehicles exceeding 50%, the growth rate of lithium mine demand has significantly slowed down; On the other hand, with "no fire" becoming a mandatory standard for new energy vehicles, the market generally expects that the demand for lithium from car companies will further shrink, and lithium prices will face new suppression. At the same time, the supply from the mining sector remains sufficient. Under the mismatch of supply and demand, lithium prices may still hover at a low level in the short term, and there is even a risk of further bottoming out.