Recent trends in the Chinese market have shown a downward trajectory for the prices of battery-grade lithium carbonate. As of late December, the market witnessed a decline in spot prices to between RMB 93,000 and 99,000 per metric ton. This marks a notable reduction, averaging RMB 96,000 per ton by the month’s end—a 26.2% decrease compared to November’s figures.
In a similar vein, the CIF prices for Chinese lithium spodumene concentrate (SC6) also witnessed a downward spiral. Prices fell to USD 950-1,150 per ton, averaging at USD 1,050 per ton by December’s end, which is a significant 31.4% drop from the previous month.
The industry outlook for early 2024 remains guarded, influenced by factors such as inventory depletion and subsidy phase-outs. Downstream purchasers are increasingly hesitant to build up inventory, instead opting for lower-cost orders to mitigate expenses. This trend is leading to a supply surplus in lithium compounds, overshadowing the demand for cell production. China’s escalated imports of spodumene concentrate from Australia and Zimbabwe, up by 60% from the previous year, are exacerbating this surplus. Despite this, lithium carbonate prices are still 33% above the comprehensive cost curve.
The rapid price decline in Chinese lithium spodumene concentrate has led to an adjustment in the currency exchange rate, now based on the late November average price of USD 1,050 per ton CIF. Manufacturers are strategizing to maintain minimal inventory to control costs, with production costs hitting RMB 76,000 per ton LCE before tax. The market is poised for a lithium oversupply of 13.4 million metric tons in 2024, representing 11.3% of the global demand. This surplus is expected to stabilize prices closer to the comprehensive cost curve, balancing supply and demand. According to InfoLink, the average price of battery-grade lithium carbonate, excluding VAT, is estimated at RMB 78,000 per metric ton.
China’s LFP Energy-Storage Cell Prices in Decline
The end of December also saw a continued drop in the prices of LFP energy-storage cells in China. Prices for 280 Ah LFP cells descended to RMB 0.36-0.50 per Wh, averaging at RMB 0.43/Wh. Similarly, the 100 Ah LFP cell prices reduced to RMB 0.37-0.51/Wh, with an average of RMB 0.44/Wh. These figures represent a monthly decrease of 6.5% and 6.4%, respectively.
InfoLink’s Global Lithium-ion Battery Supply Chain Database indicates that the direct material cost for 280 Ah LFP cells is roughly RMB 0.30 per Wh, attributed to the ongoing dip in material costs. The overall production cost, including personnel, factory depreciation, and other expenses, ranges from RMB 0.39 to 0.47 per Wh. The narrow, often negative, profit margins have led to low operational rates among manufacturers, limiting their ability to reduce prices further. The combination of oversupply and persistent price drops presents substantial challenges for the industry, highlighting the need for strategic navigation through the market’s lifecycle.
