Mining

China Lithium Prices to Tank in 2024 Amid Global Supply Surge

 

Lithium prices in China — the world’s largest producer of the key electric vehicle battery metal — are set to tank in 2024 with global miners poised to bump up supplies.

Prices of lithium carbonate in China could fall by more than 30% from the current level next year, analysts say.

Prices of the chemical have already tumbled close to 80% this year with supply from major producers outpacing the rise in demand from battery users.

 

Also on AF: Spiralling China Lithium Prices Hit 26-Month Low on Supply Glut

 

The slowing demand for batteries comes, in part, on the back of Beijing slashing subsidies for electric vehicles from January.

Uncertainty around the global economic outlook and the possibility of continuing interest rate hikes by global central banks has also fuelled a slowdown in EV demand.

The most-traded January lithium contract on the Guangzhou Futures Exchange hit a fresh low of 106,200 yuan per ton on Thursday, less than half of its listing price when trading began in July.

Prices outside China tend to follow a similar trend. Benchmark lithium carbonate prices to China, Japan and South Korea of $18.50 per kg on Thursday, down 77% from a peak of $81 per kg in November 2022.

The price plunge will hit high-cost lithium producers, but offer some support to a slowing EV sector. China produces about 70% of the world’s batteries and over half of its EVs.

 

Profit margins hit

The spot price of lithium carbonate hit a more than two-year low of 115,500 yuan ($16,185.54) per metric ton this week. It is likely to drop to as low as 80,000 yuan next year as global supply continues to rise, four China-based analysts said.

China’s CITIC Futures said it expects Chinese lithium carbonate prices as low as 80,000 yuan a ton in 2024, averaging at around 100,000 yuan.

That’s equivalent to production costs in Jiangxi, China’s biggest producing region of the chemical. The province normally accounts for a third of China’s lithium output.

Producers in Jiangxi mostly use locally mined lepidolite, a hard rock lithium ore, for production.

Costs for those who own mining assets in the province range from 80,000 to 120,000 yuan, according to two producers and two analysts.

For producers relying on external ore supply, costs can rise to 200,000 yuan per ton, analysts said.

Some major producers in Jiangxi have already lowered production since September, according to information provider Mysteel.

But producers elsewhere, like the lakes of northwestern Qinghai province, with costs estimated at about 50,000 yuan per ton, are still expanding.

 

Surging supply vs slowing EV demand

Global lithium supply, meanwhile, will jump by 40% in 2024, UBS forecast last week, to more than 1.4 million tons of lithium carbonate equivalent.

Output in top producers Australia and Latin America will rise 22% and 29% respectively, while that in Africa is expected to double, driven by projects in Zimbabwe, the bank said.

Lithium production in China will also jump 40% in the next two years, said UBS, driven by a major CATL project in southern Jiangxi province.

The supply surge will result in a global lithium surplus of 12%, up from 4% this year, according to CITIC Futures.

The brokerage expects that surge to coincide with a slower growth rate for the energy storage sector — the second-biggest lithium consumer.

CITIC said it expects a demand slowdown in the sector, both at home and abroad.

Domestic EV car sales are forecast to grow 25% to 9.44 million units next year, slowing from annual growth of 31% and 89% in 2023 and 2022 respectively, CITIC said last month.

 

  • Reuters, with additional editing by Vishakha Saxena

 

Also read:

 

LFP Becoming the Battery of Choice for Electric Vehicles

 

China’s EV Battery Giant CATL Profit Eases on Slower Demand

 

Lithium Producers Upbeat Despite EV Switch Slowdown

 

China’s CATL Unveils Game-Changing Fast-Charging LFP Battery

 

China Leading the Way With Rechargeable Sodium Batteries – NYT

 

 

Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at vishakha.saxena@asiafinancial.com

Recent Posts

Japan’s SLIM Moon Lander Sparks Back Into Life, Makes Contact

The probe unexpectedly survived a two-week lunar night after touching down on the lunar surface…

5 mins ago

Bitcoin Hits $57k, Posts Two-Year High as Big Players Wade In

The leading crypto coin has gained 32% in value so far in February, still riding…

2 hours ago

China-Wary Investors ‘Icing on Cake’ For Japan’s Nikkei

Nikkei heavyweights with a significant presence in China have seen mega rallies, especially in the…

4 hours ago

Tougher Penalties in China for Firms Understating Emissions

Emissions data fraud has been a big problem for China's carbon trading scheme, but State…

4 hours ago

AI Model Boosts Scientists’ Nuclear Fusion Energy Dream – IS

An artificial intelligence (AI) trained on previous experiments has been able to predict instabilities in…

6 hours ago

Nikkei Flatlines After Record Push, AI Optimism Lifts Hang Seng

Tokyo’s benchmark hit another record before retreating while China stocks rode the AI wave to…

6 hours ago