New Concepts Returning to Fundamentals
Since the beginning of the year, lithium carbonate prices have continued their downward trend from the previous year: according to commodity data supplier "100PPI," the market price for battery-grade lithium carbonate was 93,400 yuan per ton on January 6, 2024, a decrease of 40.89% compared to three months earlier (158,000 yuan per ton).
Driven by strong demand for electric vehicles, the price of lithium carbonate—a key raw material used in battery production—began to rise rapidly in 2021. In the second half of 2021, its price continued to hit new highs; according to a previous report by Mioying Technology, its price was nearly 100,000 yuan per ton in June 2021. Related reports indicated that at its peak in November 2022, the price reached almost 600,000 yuan per ton, a more than fivefold increase. Now, the price of lithium carbonate has dropped back to the level of June 2021.
Analysts believe this phenomenon is due to both the proactive inventory reduction by downstream companies in the supply chain, improving supply-demand relations, and the slowdown in the growth of the electric vehicle market. Taking the share of new energy passenger vehicles in China's passenger car sales over the past 12 months as an indicator, the number for October 2023 was 32%, only a 5% increase from the beginning of the year. However, in the commercial vehicle market, the share of new energy vehicles is still rising rapidly, and China's overall penetration rate of new energy vehicles is expected to surpass 40% in 2023.
Due to the combined impact of changes on both the demand and supply sides, industry analysis indicates that the lithium carbonate market is likely to remain in surplus in 2024, and prices will continue to be under pressure.
Notably, on July 21, 2023, domestic lithium carbonate futures officially began trading on the Guangzhou Futures Exchange (unexpectedly hitting the limit down across the board within the first hour and a half of trading). With the introduction of standardized futures products, the pricing in the lithium carbonate market will become more efficient, which will also help reduce irrational price fluctuations caused by information delays.
However, the changes seen in the lithium carbonate market are just the tip of the iceberg. Over the past year, renewable energies like wind power and photovoltaics have continued to grow rapidly, yet they are also caught in the shadow of overcapacity. In overseas markets, high costs, high risks, and potential competition environments have kept more enterprises and investors in a wait-and-see mode.