Lithium carbonate prices slide 40.77% in H1 2023, to drop in H2

Looking back on the first half of 2023, the prices of industrial-grade and battery-grade lithium carbonate tumbled 39.69% and 40.77% respectively, and closed the first half at Yuan 293,000-295,000/t and Yuan 298,000-315,000/t.

Over January-February, the prices of lithium carbonate slid apparently due to declining cost and sufficient supply. During the Chinese New Year, lithium carbonate manufactures saw rising inventory amid lackluster downstream demand and sluggish transactions in the market, greatly weighing on the prices.

In March, the prices of lithium carbonate declined further amid increasingly imbalanced supply and demand. Downstream manufactures purchased cautiously owing to lackluster end-market demand, and some lithium salts manufactures and traders gave up certain profits to the promote sales.

In April, the spot prices of lithium carbonate rebounded trailing the surge of futures prices, which boosted the market sentiment and encouraged the sellers to hike the prices.

In May, the prices of lithium carbonate first rose and then stabilized. In the first half, the transactions ramped up as downstream players were eager to replenish the inventory and lithium salts manufactures were reluctant to sell under climbing costs and bullish market sentiment. In the second half, the upstream and downstream of lithium carbonate was in a tug-of-war considering that the downstream purchased on rigid demand with market returning to rationality.

In June, the prices of lithium carbonate were tied to a mild downward track given that some traders lowered the retail prices affected by volatile market sentiment, though mainstream lithium salts manufacturers tended to hold the prices firm. Besides, the downstream still purchased on rigid demand, weighing on the prices.  

Looking ahead, the lithium carbonate prices will gain support from the expanding supply deficit in July on the backdrop of improving downstream demand in the third quarter as the new energy vehicle market will kick off the traditional peak seasonal, while the manufacturers are relatively conservative and keep the July production basically unchanged at the level in June, per Mysteel survey.

However, the lithium carbonate prices are still above the acceptable prices of downstream players, especially when the profits remain considerable. Therefore, there is high possibility that the buyers will force down lithium carbonate prices. In addition, the lithium carbonate futures contracts hitting limit down extensively on the first trading day after debut added up to the bears in the long run.

Taken together, lithium carbonate prices are projected to fall slightly to Yuan 290,000-310,000/t through July, and further price declines can be expected especially approaching year-end.

source: Mysteel

Written by Alex Xie, xiehan@mysteel.com
Edited by Aggie Hu, huchenying@mysteel.com