Lithium carbonate prices loosened at high levels

The lithium carbonate market, which is at an all-time high, has recently
declined.
In mid-November, the market price of battery-grade lithium carbonate exceeded 600,000 yuan (ton price, the same below), reaching 609,000 yuan, and the high was revised downward after about a week
.
According to data released by the business agency on December 6, the benchmark price of battery-grade lithium carbonate was 584,000 yuan, down 4.
1%
from the previous high.

Whether the pullback of the lithium carbonate market is a phased "fake fall" or an "inflection point" to end the rally, there are different voices in the industry, but the more consistent view is that the tension between supply and demand in the lithium carbonate market will be eased, and it is expected that the high price of 600,000 yuan may be difficult to reappear
.

The "high fever" market has loosened

The "high fever" market of lithium carbonate lasted for two years
.
According to data from business agencies, in November 2020, the lithium carbonate market began a four-year process of stopping decline and recovering from a low level
.
At that time, the average price of battery-grade lithium carbonate was 43,900 yuan, and the average price of industrial-grade lithium carbonate was 38,900 yuan
.
As of early November this year, the highest quotation of battery-grade lithium carbonate of some domestic manufacturers reached 617,000 yuan, more than
14 times the low quotation two years ago.

Industry insiders believe that the core logic of this round of soaring lithium carbonate prices is tight
supply and demand.
Although China's lithium resources are abundant, they mainly exist in the form of salt lakes, and the refining process is complex
.
With the sharp rise in lithium concentrate quotations at home and abroad, strong cost support, strong demand for terminal new energy vehicles, and mismatch between supply and demand have driven the price of lithium carbonate to rise strongly
.

However, as the price of lithium carbonate continues to refresh historical highs, it has increased the cost of power batteries, eroded the profits of downstream car companies, and terminal demand has become resistant
.
The business agency believes that in early November, the news that the battery factory planned to reduce production and reduce the purchase of lithium salt led to pessimism in the lithium carbonate market
.
Coupled with the increase in the amount of stockpiling enterprises in the early stage, and the recent arrival of large quantities of lithium carbonate imported from South America, the market supply gap has been replenished in time, making the price show signs
of loosening and downward exploration.

Han Minhua, an analyst at Zhuochuang Chemical, said that from January 1, 2023, new energy vehicles will no longer enjoy subsidies, and the growth rate of the end consumer market is expected
to slow down in the first quarter of next year.
As the terminal replenishment is nearing the end of the previous year, there is a possibility that the growth rate of lithium carbonate demand will slow down, which will restrict
the future market of lithium carbonate.

Next year or the current market inflection point

In the face of the continuous "high fever" of the lithium carbonate market, industry insiders pointed out that this phenomenon has deviated
from the market's own supply and demand logic.

Lin Boqiang, director of the China Energy Policy Research Institute at Xiamen University, suggested that it is necessary to pay attention to the speculative factors
in the process of rising lithium prices.
"Once the supply and demand relationship changes, the market has the risk of a rapid correction, and we must beware of overheating investment to avoid harm
to the sustainable development of the industrial chain.
" Lin Boqiang said
.

In fact, the Ministry of Industry and Information Technology and the State Administration for Market Regulation jointly issued the "Notice of the Two Departments on Doing a Good Job in the Coordinated and Stable Development of the Lithium-ion Battery Industry Chain and Supply Chain" recently, which clearly requires that local market supervision departments should increase supervision and strictly investigate and deal with upstream and downstream hoarding, price gouging, unfair competition and other behaviors in the lithium battery industry to maintain market order
.

At present, the supply and demand relationship of lithium carbonate has changed
.
For example, Zijin Mining has successively won lithium resource projects such as Argentina's 3Q Salt Lake, Tibet's Lagoco Salt Lake and Houdao Mining since the second half of 2021, and it is expected that the lithium carbonate equivalent resources will exceed 10 million tons
.
In addition, Yahua Group also said on the investor interactive platform that it has accelerated the layout of upstream lithium resources
.

In the medium and long term, with the capital layout of upstream resources, the tight supply and demand of lithium carbonate will be alleviated, and once the speculative factors retreat, the price of lithium carbonate may appear to be sharply corrected
.

Some insiders judge that the downward inflection point of lithium salt prices may appear as early as the second half of
2023.
Zhang Xiaofei, chairman of Gaogong Lithium Battery, expects that the tight supply and demand of lithium carbonate will begin to ease in the second half of 2023, and by 2024, the price of lithium carbonate is expected to fall below
400,000 yuan.
Wang Ronggang, deputy general manager of Tianhua Chaojing, also believes that the turning point of lithium carbonate prices will occur from the second half of 2023 to the first half of
2024.

Substitute "running in"

Due to the continued high price of lithium, sodium-ion batteries are considered to replace lithium batteries in some application fields, and are expected to achieve seamless docking
with lithium iron phosphate batteries after gradual mass production.

East Asia Qianhai Securities pointed out in the research report that the discharge time, efficiency and cycle life of sodium-ion batteries are similar to lithium batteries, and have lower manufacturing costs, and in the future, with the continuous maturity of technology and industrialization, sodium-ion batteries will benefit from new energy storage development opportunities
.

In fact, the pace of mass production of cathode materials for sodium-ion batteries is accelerating
.
Rongbai Technology recently said that the company's sodium-ion battery cathode materials currently sell about 10 tons per month, and will accelerate shipments in the future, and it is expected that monthly sales can reach 100 tons at the beginning of next year and 1,000 tons
per month at the end of next year.
Zhenhua New Materials also recently said that the company has achieved the mass production
of cathode materials for sodium-ion batteries.

Although the production technology of sodium-ion battery materials is difficult, only a few manufacturers have made technological breakthroughs
.
However, in view of the fact that sodium batteries have more prominent cost advantages than lithium batteries, after large-scale production and supply chain maturity, the cost of sodium-ion batteries is expected to be reduced to 0.
3~0.
4 yuan / Wh, even if the price of lithium carbonate falls to a low level of about 100,000 yuan in the future, sodium-ion batteries still have certain cost advantages over lithium batteries, so the development prospects are very broad
.

Industry insiders believe that although benefiting from the heat of the new energy field and the difficulty of large-scale mass production of substitutes in the short term, the tight supply situation of the lithium battery industry chain will remain for a long time, but the lithium carbonate market has the constraints of easing supply and demand tension, and then there are terminal alternatives catching up, and the probability of prices continuing to rise is not large
.