The lithium carbonate market has undergone unprecedented price volatility in the past two years. After a sharp drop of approximately 80% in 2023, prices continued to fall in 2024, with an accumulated decline of nearly 30% for the year. From the beginning of the year to December 27, the futures price of lithium carbonate plummeted from 107,100 yuan/ton to 76,500 yuan/ton, showcasing a significant decline. Particularly on December 27, the trading volume in the futures market surged, with a single-day volume of 122.6 thousand tons, reaching a yearly high, indicating intense market competition driven by capital forces.
It's noteworthy that despite the substantial price drops, demand remains strong. From January to November 2024, China's imports of lithium concentrate reached 5.215 million tons, a year-on-year increase of 35%. In November, domestic lithium carbonate production was about 64,000 tons, up 7% month-on-month. As we entered December, the strong downstream demand continued to boost upstream production, with output expected to remain high.
However, downstream enterprises have been relatively cautious in stockpiling. Based on a monthly production scale of 100-150 GWh for lithium batteries, the total inventory of lithium carbonate is roughly equivalent to one month's demand, maintaining a reasonable inventory level overall.
The continuous decline in lithium carbonate prices has directly impacted the performance of related listed companies. In the first three quarters of 2024, more than half of the lithium mining companies saw their net profits decline by more than 50%. Among them, the "lithium giants" Tianqi Lithium Industry and Ganfeng Lithium reported losses of 5.701 billion yuan and 640 million yuan, respectively; while Salt Lake Potash, leveraging its low-cost advantage, achieved a net profit of 3.141 billion yuan, though it still decreased by 43.91% year-on-year.
Despite the sharp decline in lithium prices, the industry's capital expenditure has not slowed down significantly. A research report indicates that the lithium carbonate market is expected to enter an adjustment period in 2025, with cost becoming the key factor to drive the next cycle. As the supply-demand surplus gradually narrows, it is predicted that there will not be a significant increase in supply, while demand is expected to grow steadily. The price trend may stabilize, with a possibility of prices falling below 60,000 yuan/ton being unlikely.
Futures companies predict that the price of lithium carbonate may continue to fluctuate in a weaker range in 2025, with an expected price range of 70,000 to 100,000 yuan/ton. Market observers believe that the earliest marginal changes may be observed in the second half of 2025, signaling a potential price turning point.
Industry insiders believe that the decline in lithium carbonate prices in 2024 is not only influenced by supply and demand relationships but also by market expectations and the game between upstream and downstream. Although downstream demand has continued to grow, the psychological "fear of excess" has always suppressed prices, creating a self-fulfilling prophecy. From the perspective of production relations and the game, the fluctuation of lithium carbonate prices will ultimately be constrained by cost floors. However, with the continuous advancement of purification and recycling technology, production costs are expected to further decrease, and the market may find a new balance point at a lower price.
From a global perspective, China's continued growth in lithium resources has not changed the trend of global supply chain adjustments. The mining and processing capabilities of lithium resources in other countries and regions are also increasingly strong, which will lead to diversification and decentralization of global lithium supply in the coming years. This change will not only affect prices but also change the supply and demand structure of the market, driving supply chain optimization and intensifying competition.
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