Lithium carbonate market landscape in 2030

Oct 03, 2023

In November 2022, the spot price for battery-grade lithium carbonate hit a record high of RMB 600,000/MT, then declined as cell production decreased due to a weakened EV market. In the first quarter this year, demand for battery-grade lithium carbonate dropped by roughly 50%. In January, several lepidolite manufacturers resumed production, building up inventory level, whilst projects that had been suspended for inspection due to the thallium pollution incident in Yichun returned to production. By the end of March, all lepidolite production projects in Jiangxi Province were back online. Additionally, refineries in Jiangxi importing lithium materials were found purchasing lepidolite and spodumene from Hunan, Hebei, Xinjiang, Africa, etc. for production and had shipped the products.

This shows that lofty lithium prices last year attracted many manufacturers not included in statistics to join production. Therefore, supply is very likely to exceed expectations. The market remains cautious towards lithium prices, as the imbalance between supply and demand can trigger rapid declines in spot prices. Starting during the pandemic, the super-cycle of lithium carbonate gradually comes to an end.

Recently, Tesla raised the prices for its Model Y and Model 3 in China by RMB 2,000. This was the second price hike of Tesla in China since February, somewhat alleviating concerns about price cuts in the U.S. in April. The lead time of new EVs in China falls mostly within four weeks. A consistent lead time indicates stable order intake and steady sales in the automotive market.

CATL's inventory adjustment in the first quarter resulted in sales surpassing production, which started to increase in April. Dynanonic is expected to keep utilization rates higher than 80% in May, signaling an underpinning for the recently plummeting lithium carbonate spot prices.

As of May 5, the spot price for battery-grade lithium carbonate in China saw a week-on-week increase of 7.3% to RMB 177,500/MT after its plunge to RMB 165,500/MT at the end of April. The recovery of the automotive market during the end of the second quarter and the third quarter will boost lithium prices to RMB 150,000-200,000/MT in the second half of 2023.

For the mid and long-term, InfoLink expects lithium carbonate prices to continue correcting on increasing supply boosts. The super-cycle starting during the pandemic will come to an end around 2025. During 2025 and 2030, lithium prices will rebound, as mining companies tighten investments in lithium over those five years, considering localization requirements and major markets' required ratio of recycling in 2030. InfoLink estimates lithium carbonate spot price at RMB 75,000-80,000/MT in 2025 and RMB 100,000-105,000/MT in 2030. Factoring in subsidies for recycling and localized closed-loop production, spot prices may be decoupled from the end-user prices in different regions.

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