Summary of 2024 Half Year | Lithium Carbonate: 'After half a life, it's still 90000 yuan to come back!'!

Summary of 2024 Half Year | Lithium Carbonate: 'After half a life, it's still 90000 yuan to come back!'!

According to research, the total domestic production of lithium carbonate in the first half of 2024 was 298000 tons, a year-on-year increase of 46.8%; The total import volume was 108000 tons, a year-on-year increase of 47.9%. The main driving force for the increase in total domestic lithium carbonate production in the first half of this year was the demand from end-users and the expansion of lithium salt production enterprises. According to SMM statistics, the total demand for lithium carbonate in the first half of this year was approximately 344000 tons of LCE, an increase of 31.3% year-on-year. During the past six months, the price of lithium carbonate has experienced significant fluctuations. The lowest price point is 91000 yuan/ton, and the highest price point is 113000 yuan/ton. The turning points of the two fluctuations in the price of lithium carbonate are both due to the mismatch between supply and demand. The current situation of oversupply of lithium carbonate is difficult to reverse, and the price of lithium carbonate still has a downward trend.

one

Price Review

The following chart shows the trend of SMM battery grade lithium carbonate index prices in the first half of 2024.

During the past six months, the price of lithium carbonate has experienced significant fluctuations. The lowest price point is 91000 yuan/ton, and the highest price point is 113000 yuan/ton. The turning points of the two fluctuations in the price of lithium carbonate are both due to the mismatch between supply and demand.

In late February this year, lithium carbonate welcomed its long-awaited "spring" in the cold winter. The price war among new energy vehicle companies has begun, and various car companies have started to release emerging models one after another. The demand for new energy vehicles in the market has significantly increased, while the demand for lithium carbonate from material factories has also seen a significant rise. The demand market is optimistic, while the supply side is slightly sluggish. After the end of the Spring Festival, environmental inspections began in Jiangxi region, which had a certain impact on the production of lithium salt factories in the area. The operating rate of lithium salt plants is relatively low, and some lithium salt plants are unable to resume production. At the same time, a leading lithium salt factory in Sichuan was also undergoing maintenance. Coupled with the fact that temperatures have not yet warmed up after the Spring Festival, lithium extraction work cannot be carried out in the Qinghai Salt Lake area, which has had a significant impact on the total domestic production of lithium carbonate. In the context of weak supply and strong demand, the price of lithium carbonate has risen rapidly, with an increase of nearly 20000 yuan/ton. And lithium salt factories have a strong reluctance to sell due to this price trend, while material factories are eager to stock up, providing strong support for the continuous rise in lithium carbonate prices.

In the blink of an eye, lithium carbonate, which had not gone far uphill, encountered a downhill road again. The price war among new energy vehicle companies and the concentrated release of new models have consumed the sales in May and June ahead of schedule, causing the demand for material factories in the terminal power market to gradually weaken from May onwards. On the supply side, the end of environmental inspections in Jiangxi and the warming weather have led to a rise in salt lake production, resulting in a strong supply and weak demand for lithium carbonate in China. The increase in total production has also increased the customer supply of battery factories to material factories. Therefore, under the dual factors of reduced downstream orders and increased customer supply, the demand for spot purchase of lithium carbonate from material factories continues to weaken. The supply side, which continues to increase production, and the demand side, which has weakened demand, can be described as two extremes. The price of lithium carbonate has fallen repeatedly, reaching the lowest point in the first half of the year.

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Supply side

(1) Domestic total production:

According to SMM research, the total domestic production of lithium carbonate in the first half of 2024 was 298000 tons, a year-on-year increase of 46.8%. The main driving force for the increase in total domestic lithium carbonate production in the first half of this year was the demand from end-users and the expansion of lithium salt production enterprises.

From the perspective of raw materials, spodumene supplies approximately 130000 tons of lithium carbonate production, accounting for 43.6%; Lithium mica contributes approximately 80000 tons of lithium carbonate production, accounting for 26.8%; Salt lakes contribute approximately 57000 tons of production, accounting for 19.1%; The recycling end contributes approximately 32000 tons of production, accounting for 10.7%. In terms of operating rate, the lithium salt plant at the salt lake end has the highest operating rate, reaching over 60%; Next is spodumene, with a production rate of over 55%. Due to the impact of previous environmental inspections and the subsequent decline in lithium carbonate prices, the operating rate of lithium salt factories in Jiangxi, where cost inversion is a serious problem, has continued to decline, only around 30%.

The significant surge in lithium carbonate prices has led many companies to enter the lithium carbonate industry downstream. Although the overall operating rate is not high at present, the domestic lithium carbonate production capacity is still in the stage of improvement. Many lithium salt factories have lithium salt projects under construction or expected expansion. It is expected that the total domestic lithium carbonate production will still have significant room for increase in the future, and the total production in the second half of the year may exceed the 400000 mark.

(2) Import volume:

According to data from the General Administration of Customs, the total import volume of domestic lithium carbonate in the first half of 2024 was about 108000 tons, a year-on-year increase of 47.9%. In the first half of the year, China imported approximately 84000 tons of lithium carbonate from Chile, accounting for 77.8% of the total imports, making it the main source country for China's lithium carbonate imports. According to market news, Argentina's four major lithium mines are gradually expanding production, which is expected to provide strong support for China's lithium carbonate imports in the future. The unique cost advantage of its salt lake may also to some extent squeeze out the market for spodumene.

three

Demand side

The production capacity on the supply side is rapidly expanding, but the impressive performance on the demand side has not lasted long, and the growth rate is showing a slowing trend.

In the first half of 2024, the demand for lithium carbonate is approximately 344000 tons of LCE, a year-on-year increase of 31.3%. The demand for lithium iron phosphate is approximately 211000 tons of LCE, a year-on-year increase of 56.3%; The demand for three yuan is about 52000 tons of LCE, a year-on-year increase of 15.6%. For the current trend of lithium carbonate prices, material factories generally have strict inventory management to avoid losses from inventory price drops. The growth rate of market demand shows a marginal weakening trend. And iron lithium has squeezed a part of the ternary material market with its advantages of high safety and low price. One of the reasons for the weakened demand from material factories is that lithium iron consumes less lithium carbonate per unit. Overall, in the second half of the year, the total demand for lithium carbonate from material factories remained stable with a slight increase.

Under the current situation of oversupply of lithium carbonate, the production capacity of lithium carbonate is still expanding. Where will lithium carbonate prices settle in the future? This is a question.