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the price of lithium still fell below the 70,000 yuan/ton mark.

on september 6, the main contract of lithium carbonate futures fell below 70,000 yuan/ton during the trading session, hitting a new low since its listing. on the same day, the spot market of changjiang comprehensive battery grade lithium carbonate 99.5% was quoted at 63,900-75,500 yuan/ton, with an average price of 69,700 yuan/ton.

looking back, the price of lithium carbonate has been falling all the way from 500,000 yuan/ton at the beginning of 2023, and once fell to about 70,000 yuan/ton. the adverse effects of inventory impairment of related listed companies have gradually emerged.

taking the 19 sample companies included in the wind lithium mining sector as an example, with the disclosure of the 2024 semi-annual report, 14 companies in the sector are profitable and 5 are loss-making. overall, the 19 companies had a total revenue of 82.649 billion yuan in the first half of the year, a year-on-year decrease of 32.52%; the total net profit was 2.723 billion yuan, a year-on-year decrease of more than 90%.

lithium carbonate prices hit bottom, industry giants' performance plummeted

in the downward cycle of lithium prices, the operating performance of listed companies in the lithium carbonate industry chain was generally under pressure in the first half of the year.

in the first half of this year, the two giants in the lithium industry, tianqi lithium (002466.sz) and ganfeng lithium (002460.sz), both fell into losses.

according to the interim report, tianqi lithium's revenue and net profit both fell in the first half of the year. during the reporting period, the company achieved total operating revenue of 6.419 billion yuan, a year-on-year decrease of 74.14%; its net profit was a loss of 5.206 billion yuan, a year-on-year decrease of 180.68%. as for the reasons for the performance loss, tianqi lithium mentioned that the sales price of lithium products fell and the gross profit decreased.

ganfeng lithium (002460.sz) began to turn from profit to loss in the first half of the year. the semi-annual report shows that in the first half of 2024, the company achieved revenue of 9.589 billion yuan, a year-on-year decrease of 47.16%, and a net loss of 760 million yuan, a year-on-year decrease of 113%. this is the first loss-making semi-annual report of ganfeng lithium since its listing in 2010. the company's performance changes are also affected by the downward cycle of the lithium industry, and the prices of lithium salts and lithium battery products continue to fall.

this is also the dilemma faced by the entire industry. according to wind statistics, the net profits of 14 companies in the sector in the first half of 2024 decreased year-on-year, of which 9 companies saw a net profit decline of more than 50%. among them, tibet urban investment, tianqi lithium, and shengxin lithium energy ranked first, with net profit declines of 355.66%, 180.68%, and 130.58%, respectively.

image source: wind

there are also three companies in the sector with net profits exceeding 1 billion yuan, among which salt lake co., ltd., western mining, and zangge mining ranked at the top, with net profits of 2.212 billion yuan, 1.621 billion yuan, and 1.297 billion yuan in the first half of 2024, respectively.

the industry faces cost-line challenges

in the spot market, lithium salt production increased in the first half of the year, and prices continued to fall, breaking through the cost line of most companies.

in the first half of 2023, the average market price of domestic battery-grade lithium carbonate was 328,600 yuan/ton, but it fell to 103,700 yuan/ton in the first half of this year, a year-on-year decline of 68.4%.

as lithium carbonate prices fall sharply, the industry believes that the current situation where lithium carbonate supply exceeds demand is difficult to alleviate, and the downward trend is expected to continue in the short term.

the latest quotation from shanghai nonferrous network shows that on september 6, the price of lithium carbonate (99.5% battery grade/domestic) was 72,600 yuan/ton, the lowest in more than three years, with a cumulative drop of 2,080 yuan in the past five days and a cumulative drop of 12,180 yuan in the past 30 days; the price of lithium hydroxide (56.5% battery grade coarse particles/domestic) fell to 71,100 yuan/ton, the lowest in more than three years, with a cumulative drop of 800 yuan in the past five days and a cumulative drop of 7,980 yuan in the past 30 days.

on the supply side, according to statistics from the lithium branch of the china nonferrous metals industry association, from january to june 2024, domestic lithium carbonate production was approximately 298,000 tons, a year-on-year increase of 48.8%; during the same period, lithium hydroxide production was approximately 175,000 tons, a year-on-year increase of 21.4%.

changjiang nonferrous metals analyzed that the supply side of the lithium market is experiencing significant changes and adjustments recently. foreign mining companies are facing severe challenges of cost inversion, and the current market price is close to the cost bottom line of integrated companies, forcing some non-salt lake raw material lithium producers to cut production to cope with high cost pressure. in august, the domestic lithium resource supply may be reduced to a certain extent.

jianxin futures analyzed that although lithium salt plants are facing losses, the production reduction trend is not obvious and the oversupply situation has not been significantly alleviated. the price of lithium carbonate is expected to continue to fluctuate in the short term, and the market game is still ongoing.

industry insiders analyzed to the first financial reporter that the current industry has entered the bottoming out stage and lithium prices are likely to fall further, but with the concentrated release of integrated production capacity, the industry's average production cost is expected to decrease. production capacity that lacks its own mineral supply and has higher costs will face greater risks of liquidation, and the industry structure will be reshaped.