Falling endlessly, the price of lithium carbonate fell below the 400,000 / ton mark! On March 1, Shanghai Steel Union released data that battery-grade lithium carbonate fell by 7,500 yuan / ton, with an average price of 395,000 yuan / ton, and industrial-grade lithium carbonate fell by 6,500 yuan / ton, with an average price of 365,000 yuan / ton.
Since last November, the price of lithium carbonate has gradually declined. Wind data shows that domestic battery-grade lithium carbonate prices have fallen by 30% from their high in November last year. With the weakness of supply and demand, some institutions pointed out that the decline in lithium prices may continue. From the demand side, power batteries account for about 40%-60% of the cost of new energy vehicles, and the decline in lithium carbonate prices is expected to ease the cost pressure of car companies.
Lithium salt prices accelerated to fall 30% in three months
In the past, lithium carbonate, whose price rose continuously due to the "tightness" of the market, has recently come to a 180-degree reversal, and the price cannot stop falling.
According to the recent data feedback from many platforms, the price of lithium carbonate ushered in a new round of decline at the end of February. According to the data just released by Shanghai Steel Union, battery-grade lithium carbonate fell by 7,500 yuan / ton, and the current average price was 395,000 yuan / ton, and industrial-grade lithium carbonate fell by 6,500 yuan / ton, with an average price of 365,000 yuan / ton.
According to Wind data, the price of battery-grade lithium carbonate fell from 570,000 yuan / ton in mid-November last year to 395,000 yuan / ton in February this year, a decline of 30%; The price of industrial-grade lithium carbonate fell from 545,000 yuan / ton in mid-November last year to 365,000 yuan / ton in February this year, a drop of 33%.
Compared with industrial grade, battery grade lithium carbonate has high purity, less impurities and good performance. Therefore, the price of corresponding battery-grade lithium carbonate is much more expensive than that of industrial grade. In recent years, with the rapid development of new energy vehicles, biomedicine and new materials, lithium products have grown rapidly. However, as the shipment of new energy vehicles is under pressure, the price of upstream lithium carbonate has also forced a successive decline.
Dongguan Securities pointed out that the accelerated decline in lithium salt prices is due to weak upstream demand. According to the China Association of Automobile Manufacturers, NEV production and sales in January reached 425,000 units and 408,000 units, down 46.6% m/m and 49.9% m/m, and down 6.9% y/y and 6.3% y/y, respectively.
In addition, according to data from the China Automotive Power Battery Industry Innovation Alliance, in January, the installed volume of mainland power batteries was 16.1GWh, down 0.3% year-on-year and 55.4% month-on-month. Among them, ternary battery installations were 5.4GWh, accounting for 33.7% of the total installed volume, down 25.6% year-on-year and 52.4% month-on-month; The installed volume of lithium iron phosphate batteries was 10.7GWh, accounting for 66.2% of the total installed volume, an increase of 20.4% year-on-year and a decrease of 56.7% month-on-month.
Comprehensive January new energy vehicle sales and battery installation, Dongguan Securities analysis believes that new energy vehicles are the lithium industry downstream demand accounted for the highest proportion of the field, into 2023, due to the decline of new energy vehicle policy subsidies, investors have a wait-and-see attitude to the new policy, coupled with the impact of the Spring Festival holiday, the overall new energy vehicle consumption data in January slowed down, accelerating the decline in lithium prices.
Lithium mine supply tends to be loose, lithium prices decline may continue
From the perspective of the global lithium mining market, the current supply side remains weak. According to the 2022Q4 quarterly report released by major Australian mining manufacturers, Allkem (the world's leading lithium resource developer) expects MtCattlin concentrate production to remain low at 140,000-150,000 tons; The MtHolland project of SQM (Chilean Mining and Chemicals) is still scheduled to start production in 2023Q4, but its 50,000-ton lithium hydroxide plant project has been postponed to the first half of 2025; Livent expects the first lithium concentrate sales in the first half of 2025; Yabao 50,000 tons of lithium hydroxide project has completed the capping of the plant, and other projects are advancing as planned.
Although the construction process of some Australian mine projects has been delayed, under the general trend of global lithium salt manufacturers expanding production and increasing production, it is expected that the supply of lithium mines will still tend to be loose in 2023. However, in February, the downstream demand of the lithium industry chain continued to be weak, manufacturers were more wait-and-see sentiment, the actual transaction of lithium salt products was less, and the accumulation of lithium salt finished products caused a certain negative impact, and the price of lithium salt continued to fall.
"Overall, the supply and demand of lithium salt products remain weak at both ends, and prices are expected to continue to fall in the future." Dongguan Securities believes that looking ahead, the decline in lithium salt prices will help battery and new energy vehicle manufacturers reduce costs, expand profit margins and increase sales. In the second half of the year, the demand for replenishment of downstream manufacturers will rise, and the price of lithium salt products will be expected to stop falling and rise.
Some insiders analyzed from the cost side that the current price of lithium carbonate has approached the cost line of smelters, so the subsequent decline is limited. It is reported that the current price of spodumene is about 5350 US dollars / ton (CFR, excluding tax), corresponding to the cost support price of spodumene lithium salt of 370,000 yuan / ton (including tax), smelters are close to breakeven, Australian mine price resilience will form a strong support for the current price of lithium salt.
However, many analysts said that there may still be room for further decline in the price of lithium salt, and the performance of the demand side will dominate the trend of lithium salt prices in the future.
Qu Yinfei, an analyst in the lithium battery department of Longzhong Information, pointed out that on the one hand, the terminal sales of new energy vehicles in the first two months of this year were light, the inventory of finished battery products was high, and the market procurement demand was weak. On the other hand, the finished product inventory of lithium salt manufacturers is also at a high level, coupled with the market mentality of buying up and not buying down, multiple factors have jointly led to the current weak price of lithium salt. As for the cost side, the current price of spodumene carbonate preparation is indeed close to the smelter cost line, but the product price linkage is strong, and under the influence of the weak price of lithium carbonate, the price of spodumene may also fall further.
Judging from the feedback from listed companies, the decline in the price of lithium carbonate has not yet had a substantial impact on the company. At present, there is still a large profit margin between the market price and cost of lithium carbonate. Taking Zanger Mining as an example, the company's main business is the production of potassium cyanide and lithium carbonate, and the current annual production capacity of lithium carbonate is about 10,000 tons. In an interview, Zanger Mining said frankly, "The company's lithium carbonate production cost is low, the production cost per ton is about 30,000 yuan, after removing the production cost, the profit margin is still OK." ”
In addition, many listed companies are not afraid of falling lithium carbonate prices, but have expanded lithium carbonate production capacity. Jinyuan's annual production line of 2,000 tons has been built, followed by two production lines with an annual output of 4,000 tons. "The company's current shipments of lithium carbonate are small, but it will focus on this aspect in the future." Regarding the next price trend of lithium carbonate, Jinyuan shares said that it is not easy to predict.
Corun also said in a recent survey that the company will have 10,000 tons of lithium carbonate production capacity by June this year and 30,000 tons by the end of this year. Regarding the recent decline in lithium carbonate prices, Corun said that the company had a comprehensive assessment before entering the lithium battery industry.
In its outlook for the future new energy market, Corun believes that from the current market divided into two parts, the international market and some parts of the country have begun to gradually implement the policy of banning the sale of fuel vehicles, as well as the new energy of new energy buses, new energy trucks and other means of transportation, which means that the future power battery market still has a large market space capacity.
Battery costs are falling, and new energy vehicle companies are expected to benefit
From the perspective of car manufacturing, the price of lithium carbonate continues to fall, but it may be able to ease the cost pressure this year and bring imagination to profits. Looking back at the previous soaring price of lithium carbonate, the bottom line is that the development momentum of new energy vehicles is strong, resulting in tight supply and demand of lithium batteries. In the past, we have also heard some car manufacturers complain that they are working for battery companies.
"Power batteries account for 40%-60% of the cost of the whole vehicle, and the price is still rising." Zeng Qinghong, chairman of GAC Group, complained at the company's meeting.
The proportion of battery costs is too high, and even forcing car companies to "buy" their own batteries to make batteries. In October last year, GAC Group announced that it had agreed to implement the construction plan of its subsidiary, Aion's self-developed battery trial production line, with a total planned investment of 336 million yuan. The project is scheduled to be completed at the end of 2022 and officially put into operation, and self-developed battery technology, including sponge silicon anode sheet batteries, will be independently produced in this trial production line.
In the face of battery cost problems, even Tesla, the most profitable new energy vehicle company, has suffered a lot. In an April 2022 Tesla earnings call, Musk said: "Now the profits of the lithium industry are equivalent to the profits of software. Lithium has become a fundamental limiting factor in the global adoption of electric vehicles. He believes that the electric vehicle industry needs to be helped on the lithium supply side to encourage entrepreneurs who are trying to enter the lithium business.
In July 2022, Musk once again said that he recommended entrepreneurs to enter the lithium industry. The profit margin of the lithium extraction business is very large, and entering this industry is like mastering the "printing license". Earlier, Musk also said that Tesla's Texas factory will become the world's largest battery factory in the future.
For domestic new energy vehicle companies, they will face multiple pressures in 2023, such as the withdrawal of national subsidies and the increasing number of market players. The rapid decline in lithium carbonate prices is expected to promote the price correction of power batteries, in the industry's view, the decline in battery prices will free up more space for car companies to price, and will also make new energy vehicle companies usher in a long-lost profit repair period.
WRITTEN BY JUNTAO