Lithium carbonate seeks support amidst decline while storage-cell price range expands

Lithium carbonate

The price of battery-grade lithium carbonate in China continued to decline in December. As of December 29, spot prices dropped to RMB 93,000-99,000/MT, averaging RMB 96,000/W at the month's end, a 26.2% month-on-month decrease. For Chinese lithium spodumene concentrate (SC6), CIF prices dropped to USD 950-1,150/MT, averaging USD 1,050/MT at the month's end, a 31.4% month-on-month decrease.

The industry holds a passive outlook towards the first quarter of 2024, given the aims of inventory depletion and the phase-out of subsidies. Downstream buyers are less inclined to stockpile, with apparent attempts for cost reduction, sealing orders at lowered prices. Due to lackluster demand, the supply of lithium compounds continues to outpace cell production. In addition, China’s imports of spodumene concentrate from Australia and Zimbabwe have increased 60% year-on-year, sustaining the lithium oversupply. As a result, lithium carbonate prices dropped by 26.2% month-on-month to an average of RMB 96,000/MT while remaining 33% higher than the comprehensive cost curve. 

Due to the faster-than-expected drop in prices for Chinese lithium spodumene concentrate, currency exchange is based on the average price of  USD 1,050/MT CIF as of the end of November. Most manufacturers strive to operate with low inventory, given that production cost has reached RMB 76,000/MT LCE before tax and that the market will see a 13.4-MT lithium oversupply (11.3% of global demand) in 2024. As a result, lithium spot prices will not increase significantly, approaching the comprehensive cost curve for a supply-demand equilibrium. InfoLink pegged the average battery-grade lithium carbonate price to RMB 78,000/MT (value-added tax excluded). 

Energy-storage cell

LFP energy-storage cell prices in China keep falling in December. As of December 29, prices for 280 Ah LFP energy-storage cells have fallen to RMB 0.36-0.50/Wh, averaging RMB 0.43/Wh at the month's end, a 6.5% month-on-month decrease. For 100 Ah LFP energy-storage cells, prices dropped to RMB 0.37-0.51/Wh, averaging RMB 0.44/Wh at the month's end, a 6.4% month-on-month decrease. 

Based on statistics from the Global Lithium-lon Battery Supply Chain Database of InfoLink, the direct material cost of 280 Ah LFP energy-storage cells currently comes in at around RMB 0.30/Wh due to the constantly diminishing material prices. The total production cost (including personnel cost, factory depreciation, and management and sales expenses) is RMB 0.39-0.47/Wh, varying among manufacturers. With slim, even negative profit margins, and thus less room for further price cuts, most manufacturers keep low utilization rates. Faced with the oversupply and continuous price declines, navigating through an industry life cycle remains the primary focus of manufacturers.