Price trend

Since the price of lithium carbonate fell in April, there has been no rebound trend in the price of lithium carbonate. As of the end of July, the quoted price of battery grade lithium carbonate was 93,600 RMB/ton, a decrease of 19.3% from 116,000 RMB/ton on April 1 and a decrease of 68% from the same period last year; The quotation for industrial grade lithium carbonate was 91,000 RMB/ton, a decrease of 12% from 107,000 RMB/ton on April 1st and a decrease of 67% from the same period last year.

Analysis review

On the supply side: In the first half of the year, the supply of lithium resources was loose, overseas supply continued to increase, domestic lithium mining accelerated, and at the same time, the layout of lithium recycling and reuse was also accelerating, which was a negative impact on the supply side. In this situation, lithium carbonate enterprises chose to stop production and maintain prices. According to statistics, seven domestic production enterprises stopped production for maintenance in July, which is expected to reduce supply by 1,400 tons. However, the price increase effect was not significant, and there was no significant improvement in the situation of oversupply on site.

Demand side: The new energy vehicle market fell short of expectations, with pure electric vehicle sales increasing by 11% year-on-year in the first half of the year, far behind the growth rate of plug-in hybrid vehicle sales (88%). Therefore, the actual growth rate of lithium carbonate consumption was much lower than the growth rate of new energy vehicle sales.

In terms of inventory: As of the end of July, the inventory of lithium carbonate exceeded 110,000 tons, reaching a new high. The high inventory has triggered a wait-and-see attitude in the downstream market. Due to price uncertainty, downstream enterprises generally chose to operate with low inventory and purchased on demand to reduce risks.

Positive policies: On July 25th, the National Development and Reform Commission and the Ministry of Finance issued a notice on "Several Measures to Strengthen Support for Large scale Equipment Renewal and Consumer Goods Trade in". The document proposed that "an overall arrangement of about 300 billion RMB of ultra long term special treasury bond funds will be made to strengthen support for large-scale equipment renewal and consumer goods trade in", which is expected to drive the installation of 100GWH lithium batteries, but the actual impact still needs continued attention.

Market outlook

SunSirs' lithium carbonate analyst believes that the market surplus still exists, and there are no favorable factors in the short term. The price of lithium carbonate still has downward space, and it is expected to continue to fluctuate weakly in the short term.

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