Recently, lithium carbonate has continued its weak downward trend. As of November 3rd, the benchmark price of battery grade lithium carbonate was 93000 yuan/ton, a decrease of 22% from the same period last month’s 120000 yuan/ton, and a drop of nearly 55% from the high point of 200000 yuan this year. The roller coaster market is still continuing.
Supply side: Long term easing expectations continue to be suppressed
The supply side is the dominant factor in this round of decline. Domestic salt lake lithium extraction has entered a seasonal high production period, with production in September increasing by over 80% year-on-year, and monthly production climbing to around 22000 tons; The monthly average production of lithium extracted from spodumene remained stable at 63000 tons, a significant increase from 42000 tons in the same period last year. In terms of imports, South American salt lake lithium salt exports remain high, and Zimbabwean lithium concentrate continues to increase in volume upon arrival at ports after the lifting of export restrictions, further consolidating the market’s judgment on future supply easing.
It is worth noting that although Jiangxi lithium mica is constrained by mining rights rectification and its resumption of production has not yet been realized in terms of output, the lingering expectation of resumption itself constitutes suppression – after the environmental impact assessment announcement of Jianxiawo Mine expired on October 28th, the market’s expectation of resumption after December continues to rise.
Demand side: Weak production scheduling, insufficient color during peak season
There is a marginal weakening signal on the demand side. According to industry data, battery production in November decreased by about 5% month on month, marking the first month on month decline of the year; There are also signs of weakening in energy storage production, with a month on month increase of only about 5.3% in October and the possibility of a downward revision. The narrowing of domestic peak valley price differences and the incomplete implementation of policies such as capacity electricity prices have put pressure on the economy of energy storage, resulting in a slowdown in customer delivery speed.
However, the urgent need for power batteries still exists. In September, the installed capacity of power batteries reached a new high of 87.2 GWh, and the penetration rate of new energy vehicles has approached 50%. The continuous increase in single vehicle charging capacity has formed a certain resilience support for demand.
Inventory and Cost: Low inventory provides cushioning pads
Continuous destocking throughout the entire process is the main support for the current fundamentals. The social inventory of lithium carbonate has decreased from about 110000 tons at the beginning of the year to around 51000 tons, with a cumulative reduction of over 50%; The inventory of upstream smelters has dropped to 7500 tons, the lowest level in the region with available data. After the price approaches 90000 yuan, the non integrated production capacity of lithium pyroxene from external mining is facing cost inversion, and some marginal production capacity is under pressure to reduce production. However, salt lake lithium extraction and integrated enterprises still maintain profits, and cost support is not rigid.
Future trend: Lithium carbonate is currently in a game of “weak reality tight balance” and “weak expectations far loose”. In the short term, with the expectation of long-term easing not being falsified and bearish funds still dominating, prices are likely to maintain a weak and volatile pattern around the 90000 yuan mark. At the same time, the downward space for lithium prices has gradually narrowed, but the trend reversal still needs to wait for a clear turning point signal from the fundamentals or funding side.