I speculated on lithium carbonate futures and lost 300,000 yuan in 3 days
In the eyes of investors, lithium mines, known as "white oil", once had the potential to make a fortune no less than gold mines.
In the past two years, around the changes in the supply and demand of lithium ore, battery-grade lithium carbonate, as a key raw material for the production of cathode materials for lithium-ion batteries for new energy vehicles, has staged a huge "roller coaster market". Everyone watched it soar and watched it plunge all the way.
According to the data released by Shanghai Ganglian, as of December 29, 2023, the price of battery-grade lithium carbonate was 101,000 yuan/ton, compared with the price of 511,500 yuan/ton at the beginning of the year, it has fallen by more than 80%, and has returned to the level before August 2021.
"I used to think of lithium as a treasure, but now it's not as good as grass. Netizens ridiculed.
Back in early 2021, the price of battery-grade lithium carbonate was only 50,000 yuan/ton, and by the end of 2022, the price once climbed to 600,000 yuan/ton, an increase of 12 times. At that time, even CATL could only make ends meet and work for upstream miners.
The pendulum will swing. At the beginning of 2023, the price of lithium carbonate fell off a cliff, falling to 180,000 yuan/ton at the end of April. Although it rebounded back to 300,000 yuan/ton after more than a month, the market still went downhill in the repeated shocks.
In the face of huge fluctuations in spot prices, downstream enterprises have a strong demand for lithium carbonate price risk management and expect to avoid risks with the help of financial instruments.
On July 21, 2023, lithium carbonate futures and options were listed on the Guangzhou Futures Exchange. At that time, the spot price of battery-grade lithium carbonate fell back to below 300,000 yuan/ton after a wave of rebound.
After the listing and trading, soon after, the main lithium carbonate futures contract LC2401 hit a price of "listing is the peak" - 240,500 yuan/ton. Some retail investors rushed in before the suspension and earned 7,000 yuan in 3 minutes, shouting "The speed of making money is really scary". Since then, lithium carbonate futures have become one of the most popular investment varieties in the financial market.
However, in the follow-up development, the highly anticipated lithium carbonate futures did not escape the curse of the fall. On December 6, 2023, the price of the main contract LC2401 fell to the lowest point of 85,700 yuan/ton. As of December 29, the latest price of the main contract LC2401 was 101,100 yuan/ton, a decrease of more than 50% compared with the highest price.
lost 300,000 in 3 days
"The speed of losing money is much more frightening than the speed of making money. "Liu Ren, a 96-year-old self-entrepreneur, made a little money by speculating in lithium carbonate-related companies in the A-share market, so he started to speculate on lithium carbonate futures in 2023, but he didn't expect to fall short.
The biggest difference between the futures market and the stock trading market is that the logic of making money in the stock market is bullish and not bearish, but as long as the futures market guesses the trend, bearish and bullish can make money. Essentially, it's a "buy the size" game.
At the table, participants can bet on "big" or "small", buy and leave, and wait for the dice to be revealed.
Liu Ren is the one who bought the big one.
In September 2023, he earned more than 100,000 yuan when the price of lithium carbonate futures rose to around 170,000 yuan. But later, as the points of the "dice" became lower and lower, he did not dare to gamble, and left the game after losing 190,000 yuan.
On the other hand, in order to curb excessive speculation and slow down the ultra-long-term trend decline, the regulatory authorities have begun to take intensive action.
Three months later, on December 7 (Thursday) and December 8 (Friday), lithium carbonate futures rose for two consecutive trading days and regained the 100,000 yuan/ton mark.
It's a pity that Liu Ren couldn't wait for this wave of small market, but he also accepted the result calmly. "A friend suggested that as long as I don't take it out, I won't lose. But I told them that the futures would blow up and expire, and if they didn't take them out, maybe one day the exchange would take them out for me and smash me in the face. ”
According to Liu Ren, in those two days, retail investors who were good at short-term investment bought lithium carbonate futures in the morning and cleared their positions the next day. With a principal of 2,000 yuan, the interest was doubled by 10 times, and he earned 20,000 yuan in a single day.
"One side of heaven, the other side of purgatory", looking back on the experience of speculating in lithium carbonate futures in the past six months, Wang Ming is glad that he finally withdrew.
Unlike Liu Ren, Wang Ming is not optimistic about the lithium carbonate market, he is a typical bear, belonging to the "buy small" one. When the price of futures falls, he can make money.
In July 2023, Wang Ming, who was injured by the stock market, planned to change positions and join the army of futures speculation. At first, he only "speculated" on varieties such as corn, sugar, soybean meal, and methanol with low volatility, but soon became bold and began to look at varieties with high volatility - soda ash and lithium carbonate.
In July, he invested 200,000 yuan in the principal, and relied on these two varieties to make a lot of money in a short period of time: he earned more than 20,000 yuan when soda ash fell, and he earned more than 70,000 yuan when lithium carbonate fell. So far, his principal has also swelled to 300,000 yuan.
However, from December 7th to 8th, the short-term limit of lithium carbonate made Wang Ming dumbfounded.
He told the "City Boundary" that since the end of November, the Guangzhou Futures Exchange has adjusted the trading policy of lithium carbonate futures six times in a row, directly raising the margin standard from the previous 12% to 20%, and said that it will seriously deal with abnormal trading behaviors and illegal trading behaviors.
During this period, the risk control manager asked him to add money, otherwise the futures exchange would have to liquidate part of the funds and forcibly close the holder's position.
In other words, if the limit continues, Wang Ming, who is short, will face the risk of "wearing out his position", not only will he lose all the margin, but he will also owe money to the futures company.
"Do you know the feeling of having a continuous limit in futures, but not being able to close your position? It's not that you don't want to cut the meat, but that no one takes over. This feeling is even worse than the previous stock market crash, at least the stock will not fall to 0, but futures can make you indebted, and even owe money to the exchange. Wang Ming was helpless.
In these days of ups and downs in lithium carbonate futures prices, he has been wondering why he is putting himself in such a dangerous crater.
After spending the weekend uncomfortably, Wang Ming did not sleep steadily, for fear that when the market opened next Monday, the lithium carbonate futures market would continue to rise and fall, and he would be worn out.
On December 11, the main lithium carbonate futures contract fell rapidly, and the closing price of the main lithium carbonate futures contract was 96,800 yuan/ton, down 4.82%. Wang Ming was afraid that the situation would be reversed, so he decisively chose to close the position and close the futures transaction. But the principal of 300,000 yuan was lost.
In December, the story that happened to Liu Ren and Wang Ming is just a microcosm of the daily joys and sorrows of lithium carbonate futures investors in the past six months. In this market, stories of overnight whiteheads are not uncommon, and they continue to happen now.
Why did lithium carbonate dive?
Why do lithium carbonate futures make most retail investors so exhausted?
According to financial sources, the fluctuation of futures prices is largely caused by market sentiment, and fundamentally is an imbalance between supply and demand.
Industry insiders who study the lithium industry told City Boundary that the price fluctuations in the futures market are due to speculation by investors, "Researchers and traders are the most happy, they are making money." But in the spot market, demand is a mess. ”
Since 2023, the spot market price of lithium carbonate has been declining, from about 300,000 yuan/ton at the beginning of the year to 100,000 yuan/ton.
According to the analysis of Zheshang Securities, in the second half of 2023, lithium resources will be oversupplied and oversupplied.
▲ (On July 21, 2023, Guangzhou, Futures Exchange, the bell ringing ceremony for the listing of lithium carbonate futures is underway.) Photo/Visual China)
Looking at the demand side first, the growth rate of power battery loading has slowed down. According to the data of the Passenger Association, the installed capacity of production batteries for power batteries in 2020 reached 76%, and since then, the data has decreased year by year, from 2021 to 2023, 70%, 54%, and 49% respectively.
Looking at the supply side, Changjiang Securities pointed out that the production and inventory of lithium carbonate in 2023 will be at a high level, especially the inventory is much higher than the level of the previous three years. There is further overcapacity, and inventories are further expanded.
According to SMM statistics, as of December 14, 2023, the domestic weekly inventory of lithium carbonate increased by 692 tons from the previous week to 62,500 tons. At the end of the year, it is in the off-season of downstream demand, and the battery link is mainly based on dealers destocking, and the new demand is very limited.
Cinda Futures has pointed out that only when the spot price falls below 120,000 yuan, downstream enterprises will have a small action to receive goods.
Therefore, Wang Ming made a lot of money after initially entering lithium carbonate futures. In the past six months, the lithium carbonate surplus has been certain for the market, and what is uncertain is "how much is left". This is also the biggest confidence for bears like Wang Ming to speculate on lithium carbonate futures.
Since 2023, it has been difficult for lithium carbonate prices to recover last year's trend, and although the price has risen slightly from May to July, it is still mainly falling. In the eyes of industry insiders, the imbalance between supply and demand has forced lithium carbonate prices to return to rationality.
The effects are cascading
Now, retail investors who have lost money speculating in lithium carbonate futures have fled, but the changes around lithium carbonate prices are not only upstream miners, midstream battery manufacturers, but also downstream car companies, and the entire chain has been affected to varying degrees.
In August 2023, when the price of lithium carbonate dropped to 180,000 yuan/ton, a "battle" for the prospecting rights of the Gada lithium mine in Malkang City, Sichuan Province was staged for four days.
The starting price of the auction project is 3.19 million yuan. But what is amazing is that at the time of the downward trend of the industry, Dazhong Mining finally won the prospecting right with 4.206 billion yuan after 11,307 robs, with a premium of 1,317 times.
The Lijiagou North Lithium Mine in Jinchuan County, Sichuan, which is only 150 kilometers away from the Gada Lithium Mine, was finally won by Sichuan Energy Investment at a price of 1.01 billion yuan after 3,412 bids, an increase of 1,771 times from the initial starting price of 570,000 yuan.
According to market analysts, the main reason for the industrial chain companies to grab ore is to control resources and reduce costs, the more resources they get, and the more they have to worry about the soaring lithium prices in the early stage, the contrarian layout is also the company's confidence and confidence in the future development.
As for whether it is worth "grabbing ore at a high price", Tiger Sniff quoted a power battery practitioner as saying that the yield of lithium ore depends not only on the actual reserves and mining volume, but also on how much money can be made once the price of lithium falls to 100,000 yuan/ton in the future.
Mo Ke, chief analyst of True Lithium Research, told "City Boundary" that under the trend of falling prices, some projects with high mining costs will have to close their doors due to cost inversion, resulting in the disappearance of actual supply and a decrease in supply. "But only when the total supply is significantly less than the total demand will the price trend of lithium carbonate reverse. ”
The continued low lithium price in the second half of 2023 has also made the performance of many lithium companies much worse than before. In the first three quarters, Ganfeng Lithium's revenue declined, and its net profit decreased by nearly 60% year-on-year; although Tianqi Lithium's revenue increased, its net profit decreased by nearly 50% year-on-year; Salt Lake's revenue fell by 32.93% year-on-year, and its net profit was almost halved to only 5.6 billion yuan.
The power battery manufacturers in the midstream are not having an easy time.
In February 2023, when lithium carbonate was still operating at a high price of 400,000 yuan/ton, CATL proposed a "lithium mine rebate" plan to reduce the cost of power batteries. At that time, the industry believed that 200,000 yuan/ton was the benchmark for corporate profitability.
Since then, the price of lithium carbonate has fallen below the 200,000 yuan/mt mark, and CATL's strategy seems to have been unable to meet the needs of automakers. In the third quarter of 2023, CATL's net profit fell by 4.28% quarter-on-quarter, which is also the first quarter-on-quarter decline in net profit since its listing.
In the third quarter of 2023, the net profits of EVE, Guoxuan Hi-Tech, and China Innovation Airlines all declined to varying degrees, with declines of 2.53%, 2.82%, and 12.12% respectively.
Looking at downstream car companies, there are two main impacts of the decline in lithium carbonate prices: one is to reduce the cost of new energy vehicles, which provides a "bullet" for the price war in the automotive industry, so that car companies have more confidence when they launch limited-time discounts at the end of the year.
Second, the profitability of the vehicle industry has improved. According to the research report data of Soochow Securities, in the first three quarters of 2023, the gross profit margin of the new energy vehicle industry will be 14.28%, an increase of 1.69 percentage points year-on-year, and the net profit margin attributable to the parent company will be 3.52%, an increase of 0.17 percentage points year-on-year.
Now, the ultra-long cycle of lithium carbonate is not over.
On December 6, 2023, Tianci Materials, a leading electrolyte listed company in the upstream of the industrial chain, chose to deploy lithium carbonate production capacity against the trend, and announced that it plans to use self-raised funds to invest in the construction of a "lithium carbonate project with an annual output of 30,000 tons" through its subsidiary, with a project construction period of 14 months and a total investment of no more than RMB 1.07 billion.
Pacific Securities believes that this move may be to prepare for the production of electrolytes in 2025 and 2026. According to the judgment of Tianci Materials, the price of lithium ore will reach a reasonable position in 2024 and realize profits in 2025. After the project is completed and put into operation, it is expected to achieve an average annual revenue of 2.528 billion yuan and an average annual net profit of 168 million yuan.
However, some industry insiders believe that the downward trend in lithium carbonate prices may continue into 2024. Moke predicts that the price of lithium carbonate is likely to fluctuate between 8-100,000 yuan in 2024, and the price of lithium carbonate may fall to 5-60,000 yuan by 2025. Earlier, Wang Yu, chairman of Funeng Technology (Ganzhou) Co., Ltd., also said that the actual cost of lithium carbonate should be about 30,000 yuan.
Huatai Futures said that if the spot price is difficult to stop falling, futures will continue to bottom out.
▲ (Workers are packaging the produced lithium batteries)
Regardless of how the industry judges the trend of lithium carbonate in the next two years, Wang Ming has given up. He paid too much tuition in this futures guerrilla war, and he still does not dare to tell his family that he lost money. He plans to honestly change positions first, buy a bond base with a profit of 3 points, and then buy bank stocks to eat dividends after recovering from blood.
Liu Ren is also reflecting: "I will be happy when I earn it, I feel that I can do it, I am right, and my self-confidence has also increased." However, it cannot be ruled out that it may be a good bet and good luck, but if it loses, it will be very depressed, like a boulder pressing on the body, not wanting to move, and unable to move, like being stared at by a wild beast. ”
(Wang Ming and Liu Ren are pseudonyms in the article.) ）
Author | Yang Qiao
Edit | Tian Yanlin
Operations | Xie Yifan