In November 7th, the main lithium carbonate futures contract 2401 closed down 4.33%, and the price hit a record low. The main reason for the decline is that the inventory of enterprises is cleared, the market demand is weak, and the competition in the international market is intensified. So when will lithium prices recover?
With the popularity of electric vehicle and the rise of energy storage market, the price of lithium carbonate, the key raw material for lithium batteries, has been rising for two years, but has recently begun to fall. According to SMM data, on November 7, the average price of battery-grade lithium carbonate was 158500 yuan/ton, which has fallen for 13 consecutive days and hit a new two-year low. Similarly, on November 7, the main lithium carbonate futures contract 2401 closed down 4.33%, and the price hit a record low. The continuous rise of
lithium price is closely related
to the growth of demand. Since 2021, with the rapid popularization of electric vehicle and the rise of energy storage market, the demand for lithium carbonate, the key raw material for lithium batteries, has increased dramatically, which has promoted the continuous rise of its price. The price of lithium carbonate, in particular, has reached an all-time high after a long rise of nearly two years.
However, the price of lithium carbonate has continued to fall recently, mainly due to the following reasons:
(1) Enterprise inventory clearance: Due to the high price in the early stage, many enterprises have accumulated a large amount of lithium carbonate inventory. In order to reduce costs and withdraw funds, enterprises began to gradually clear inventory, resulting in an increase in supply and a decline in prices.
(2) Weak demand: Although the electric vehicle market is still growing, the demand for lithium carbonate has fallen short of expectations due to the slowdown in growth and the fatigue in demand growth in the energy storage market, which further depressed the price.
(3) Intensified competition in the international market: With the gradual development of global lithium resources, the supply of lithium carbonate in the international market has increased, the competition has intensified, and the price has naturally dropped.
03. The impact
of falling lithium prices on the industrial chain (1) Frustration in lithium mining: The fall in lithium prices caused the auction of high-priced lithium mines, which had been fiercely contested, to "extinguish", and the profits of lithium mining were significantly reduced, which had a certain impact on lithium mining enterprises.
(2) Decrease in profits of lithium resource manufacturers: The drop in lithium price led to a sharp drop in profits of lithium resource manufacturers who had made a lot of money in the previous two years, and they were facing the pressure of declining profits.
(3) Benefit from electric vehicle and energy storage industry: The decrease in lithium price will reduce the cost of electric vehicle and energy storage industry, which will help promote the popularization of electric vehicle and the development of energy storage market.
04. Outlook
for the future trend of lithium price (1) Frustration in lithium mining: The fall in lithium price has caused the auction of high-priced lithium ore, which was once fiercely contested, to "extinguish", and the profit of lithium mining has been significantly reduced, which has caused a certain impact on lithium mining enterprises.
(2) Decrease in profits of lithium resource manufacturers: The drop in lithium price led to a sharp drop in profits of lithium resource manufacturers who had made a lot of money in the previous two years, and they were facing the pressure of declining profits.
(3) Benefit from electric vehicle and energy storage industry: The decrease in lithium price will reduce the cost of electric vehicle and energy storage industry, which will help promote the popularization of electric vehicle and the development of energy storage market. The continuous decline in the price of lithium carbonate, the key raw material for
lithium batteries, has had a certain impact on the industrial chain, but it has also brought some benefits to the electric vehicle and energy storage industries. Despite the current decline in lithium prices, we should see the long-term development potential of the lithium battery industry. With the progress of technology and the reduction of cost, electric vehicle will become the mainstream of future transportation, and the energy storage market will also usher in a broader space for development.
For the participants in the lithium battery industry chain, they should pay close attention to the market dynamics and flexibly respond to price fluctuations. At the same time, we should strengthen technological innovation, reduce production costs and improve product competitiveness in order to cope with the fierce market competition.
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