Lithium Carbonate: Dead Cat Bounce Or End Of Bear Market?

After stabilizing for four consecutive trading days, battery-grade lithium carbonate prices had risen for two days, with the average price climbing 5,000 yuan/mt to 189,000 yuan/mt at the end of April. As of May 8, SMM battery-grade lithium carbonate prices rose as much as 9,500 yuan/mt or 5.26% from the previous tading day to 180,000-200,000 yuan/mt.

Cui Dongshu, secretary general of the China Passenger Car Association (CPCA) said one of the reasons for the rally is boosted consumer confidence at the Shanghai International Auto Show (April 18-27), which attracted numerous number of visitors.

Besides, analyst at Guotai Junan Securities, expects that demand for electric cars will recover in May as wait-and-see attitude towards EVs triggered by previous price cuts by gasoline-powered car makers has faded. 

Some battery makers said that LFP battery prices have stabilized and LFP battery makers are unlikely to slash prices during future negotiations. Some industry players pointed out that destocking by power battery makers will come to an end in May in optimistic scenario, thus raw material purchases will pick up, which will support lithium carbonate prices. 

Survey by Iccsino shows that some leading battery makers have raised their production schedules for May by 20-30% from April, and some smaller battery makers plan to raise their production schedules by more than 50% due to low production.   

However, some industry players said it is still difficult to determine whether the price rally will sustain as it remains to be seen whether the end demand has truly recovered. 

For future price trend, lithium carbonate prices will rise to 250,000 yuan/mt in optimistic scenario and fall below 100,000 yuan/mt in pessimistic scenario.

From the perspective of prices in battery industry chain, prices of lithium hexafluorophosphate, artificial graphite and pole piece powder have stabilized.

Survey by GG-lb shows inventory of battery makers has gradually fallen back to healthy levels.

In terms of purchases, battery makers and auto makers have begun to place orders.