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Interface News reporter | Gao Jing

The price drop of lithium carbonate did not stop after falling below 90,000 yuan.

Data from Shanghai Steel Union shows that the price of battery-grade lithium carbonate has remained below 90,000 yuan per ton for nine consecutive working days, and is showing a continuous downward trend. On July 23, the average price of battery-grade lithium carbonate was 85,500 yuan per ton, down more than 70% from the same period last year.

Battery-grade lithium carbonate is an important raw material for manufacturing new energy lithium batteries, mainly used in positive electrode materials of lithium iron phosphate, lithium cobalt oxide and some ternary lithium types.

The imbalance between supply and demand remains the core reason for this round of decline in lithium carbonate prices.

"The continuous fulfillment on the supply side and the slowdown in the growth of terminal automobiles have led to the accumulation of lithium carbonate inventories, and the price has continued to fall." Liu Xiaomin, a lithium raw material analyst at Fubao New Energy, told Interface News.

On the demand side, domestic new energy vehicles have entered the off-season, and the growth rate of demand has slowed down. In addition, the overseas new energy vehicle market is sluggish, and countries such as Europe and the United States have imposed tariffs on Chinese electric vehicles, which will be unfavorable to China's electric vehicle exports.

On the supply side, Caixin Futures Research pointed out that most lithium salt plants are currently maintaining active production and supply is increasing.

According to data provided by Qian Yi, a lithium battery researcher at Xinlang Consulting, the current accumulated inventory of lithium carbonate in the market has exceeded 110,000 tons, and there is a clear wait-and-see sentiment downstream, with the market mainly operating at low inventory levels.

Qian Yi pointed out that July and August will be the peak production period of salt lakes, and the production capacity of new overseas projects will also be released in the third quarter. "In this atmosphere, industrial customers mainly sell short for hedging, and the warehouse receipts are as high as 34,000, which has become the main resistance to price rebound."

The drop in lithium carbonate prices has shifted profits from upstream to downstream. A lithium salt industry insider told Jiemian News that the first impact of the drop in lithium carbonate prices is on some high-cost upstream projects, which may face suspension of production.

According to Mysteel statistics, in July, 7 of the 42 lithium salt sample companies surveyed stopped production for maintenance. Overall, if the increase in production of other lithium salt companies is not taken into account, the shutdown and maintenance of the sample companies surveyed is expected to reduce the output in July by 1,400 tons month-on-month.

Qian Yi analyzed from the perspective of the lithium battery industry chain that the decline in lithium carbonate prices has led to the dilution of profits of upstream lithium mining companies, weakened the enthusiasm for high-cost mine production or expansion, and delayed new projects; lithium carbonate companies themselves are already on the verge of losses, and some companies are forced to take the initiative to limit production and only maintain long-term contracts; midstream positive electrode material factories are relatively difficult, and they will lose money regardless of whether lithium prices rise or fall, and can only use morefuturesHedging to avoid risks.

Affected by the decline in lithium carbonate prices, the performance of lithium companies generally declined in the first half of the year. According to incomplete statistics from Jiemian News, among the 14 upstream companies in the lithium battery industry chain that have disclosed their first-half performance forecasts, 12 have seen a decline in performance, and nine of them have seen a decline in net profit of more than 60%.

Among them, the two lithium kings, Tianqi Lithium (002466.SZ) and Ganfeng Lithium (002460.SZ), suffered the biggest losses. The former is expected to lose 4.88 billion to 5.53 billion yuan in the first half of the year, while the latter is expected to lose 760 million to 1.25 billion yuan. The combined maximum loss of the two companies is 6.78 billion yuan.

Liu Xiaomin predicts that the market still has expectations for the golden September and silver October in the third quarter, but due to the continuous release of supply, it is difficult for the lithium carbonate price to rebound beyond expectations. In the fourth quarter, the lithium price will face increasing pressure and will maintain a trend of fluctuating and bottoming out.

Qian Yi holds a similar view. He said, "In the second half of the year, the price of lithium carbonate will generally fluctuate and fall, bottoming out in July and August, rebounding in September and October, and weakening again at the end of the year as the off-season approaches. Both the high and low points in the second half of the year will be lower than those in the first half of the year."

In the long run, Qian Yi believes that the current price of lithium carbonate still has room to fall, and it will take time to clear production capacity. The turning point is expected to be after 2026.