The price of lithium in China will continue to fall in 2024

Isbel Lázaro.

precio del litio en China

Inspenet, December 31, 2023.

According to experts, there is a possibility that the price of lithium in China , the main global consumer, will experience a decrease of more than 30% next year compared to current levels. This drop is attributed to excess supply from major producers, outweighing the increase in demand from battery manufacturers.

Prices of this chemical compound used in batteries in China, which is also the world’s leading producer, have seen a 77% reduction over the course of this year. This came after Beijing implemented significant cuts to subsidies for electric vehicles since January, impacting lithium ore prices and affecting the profit margins of mining companies globally.

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Recently, the spot price of lithium carbonate hit its lowest level in more than two years, standing at 115,500 yuan (equivalent to $16,185.54) per metric ton. It is anticipated that this figure could drop to 80,000 yuan next year as global supply continues to increase, according to analysis by four China-based experts.

One of them expects the price to reach 100,000 yuan by the end of the year.

Internationally, a similar trend is observed in lithium carbonate prices, with a reference value for China, Japan and South Korea of ​​$18.50 per kg last Thursday. This price represents a decrease of 77% compared to the maximum of $81 per kg reached in November 2022.

On the Guangzhou Futures Exchange, the most traded contract for January hit a new low of 106,200 yuan per tonne on Thursday, less than half its initial listing price in July.

The impact of this price drop will be reflected on high-cost lithium producers, although it will provide some support to the electric vehicle industry, which is in a slowing phase. Given that China is responsible for approximately 70% of global battery production and more than half of electric vehicles, this situation may provide some support to the sector.

According to CITIC Futures forecasts last month, domestic sales of electric vehicles are expected to see 25% growth, reaching 9.44 million units next year. This forecast indicates a slowdown compared to the 31% and 89% annual growth recorded in 2023 and 2022, respectively.

The energy storage sector, the second largest consumer of lithium, is anticipated to experience a more moderate growth rate due to declining demand both domestically and internationally, the brokerage said.

In a projection last week, UBS estimated that global lithium supply will increase significantly by 40% by 2024, exceeding 1.4 million tons of lithium carbonate equivalent. Production in major producers such as Australia and Latin America is expected to see an increase of 22% and 29% respectively, while production in Africa will double, driven by projects in Zimbabwe, the bank said.

Additionally, a 40% increase in Chinese production is projected over the next two years, driven by a major CATL project in the southern province of Jiangxi.

It is important to note that the increase in supply will generate a global lithium surplus estimated at 12%, compared to 4% this year, according to CITIC Futures forecasts. It is anticipated that lithium carbonate prices in China could decline to 80,000 yuan per ton in 2024, averaging approximately 100,000 yuan, which is similar to production costs in Jiangxi, the main lithium carbonate producing region in China. China.

In the Jiangxi region, where producers mainly focus on using lepidolite, a hard-rock lithium mineral, for manufacturing, costs for those with mining assets range between 80,000 and 120,000 yuan, according to information provided by two producers and two analysts. On the other hand, for producers who depend on external ore supplies, costs could reach 200,000 yuan per ton, analysts say.

Since September, some of Jiangxi’s major producers, which typically contribute about a third of national production, have reduced their production capacity, Mysteel, an information provider, reports. In contrast, producers in other locations, such as the lakes in the northwestern province of Qinghai, where costs are around 50,000 yuan per ton, are continuing with their expansion plans.

On the other hand, analysts estimate that the costs of large producers that use spodumene, another type of mineral imported from their own mines, are around 70,000 yuan.

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Source and photo: worldenergytrade.com

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