Lithium prices fall below the "break-even point" to 65,000 yuan/mt!

On May 16, Gasgoo learned that the latest data showed that the average price of domestically produced battery-grade lithium carbonate had dropped to 65,050 yuan/mt. This price represented a significant decline compared to the beginning of the year.

Since the start of the year, the market quotes for battery-grade lithium carbonate have fallen by over 10,000 yuan/mt.

The current price has fallen below the break-even point for most lithium carbonate producers, and the entire lithium carbonate industry is facing severe challenges.

Price Avalanche: 70,000 yuan/mt Becomes Break-even Line

As a core raw material for new energy batteries, the price trend of lithium carbonate has always been closely watched. Over the past period, lithium carbonate prices have experienced sharp fluctuations. Nowadays, the continuously declining prices have caused significant hardship for many producers.

It is reported that a leading lithium carbonate producer in Yichun, Jiangxi, had fully suspended operations by the end of 2024. Currently, the company is facing lawsuits due to issues such as overdue payments to suppliers and failure to fulfill customer orders, and the enterprise is no longer able to operate normally.

In addition, several small and medium-sized enterprises are similarly facing a critical test of survival.

A person in charge of a lithium carbonate production enterprise revealed that there is no profit to be made when the price of lithium carbonate falls below 70,000 yuan/mt. Currently, all the company can do is reduce production through shutdowns for maintenance, minimize costs as much as possible, and continue to monitor market dynamics.

The industry generally believes that 70,000 yuan/mt is the break-even line for lithium carbonate processing enterprises. Based on the current price trend, the operating conditions of most domestic lithium carbonate producers are concerning. To this end, many enterprises are striving to minimize production costs.

Dazhong Mining Co., Ltd. stated at an earnings briefing that the company would reduce production costs through innovation. Jiangxi Ganfeng Lithium Group Co., Ltd. also indicated that the company would optimize lithium ore operations on the resource side, accelerate and promote the construction and commissioning of low-cost lithium resources, further optimize the company's lithium resource supply and cost structure, and increase investment in R&D to develop high value-added lithium products and enhance market competitiveness.

Yongxing Special Materials Technology Co., Ltd. stated in its latest 2024 annual report that the company possesses high-quality lithium ore resources, enabling it to lock in upstream raw material costs and provide a stable and reliable supply of lithium resources for lithium chemical production. The company's adopted process route enables comprehensive utilization of lepidolite resources, minimizing production costs.

Multiple Factors Converge, Complex Sentiment Across the Entire Industry Chain

Regarding the reasons for the continuous decline in lithium prices, insufficient downstream demand is considered the primary factor. A professional familiar with the power battery industry stated that despite the high growth in power battery production and installation volumes, the penetration rate of new energy vehicles in China is already very high, and the slowdown in growth is an objective reality.

Meanwhile, although the ESS market has broad prospects, it is still in the development stage and has not yet been able to form strong support for the demand for lithium carbonate.

In addition to insufficient downstream demand, market participants believe that the "dumping" behavior of traders has also had a significant impact on price trends.

A trader familiar with the lithium carbonate industry said that in the current market environment, the growth in the supply of lithium carbonate has outpaced downstream demand. Despite lithium prices having reached the bottom recognized by the industry, there is still insufficient upward momentum in the short term.

For the entire lithium battery industry chain, the sharp decline in lithium carbonate prices has brought complex impacts.

For upstream lithium ore mining and smelting enterprises, profit margins have been significantly compressed, and some high-cost projects are even facing losses. This may lead some enterprises to reduce capacity investment or even exit the market.

For midstream battery producers, although raw material costs have decreased, battery prices are also facing downward pressure due to fierce market competition. Whether they can truly benefit from the decline in lithium carbonate prices remains to be seen.

For downstream NEV enterprises and ESS system integrators, the decline in battery costs could theoretically provide some room for price reductions, thereby stimulating market demand. However, the current weak market demand makes it difficult to fully leverage this advantage.

Looking ahead, the prospects for the lithium carbonate industry remain uncertain. If downstream demand cannot be effectively boosted, prices may continue to linger at low levels.

However, some industry insiders believe that with the market's self-regulation, some high-cost capacity will gradually exit the market, and the supply-demand relationship is expected to improve in the future.

In addition, with continuous technological advancements, new battery technologies may impact the demand structure for lithium carbonate. For example, the development of new-type battery technologies such as solid-state batteries, if breakthroughs are achieved and large-scale applications are realized, may change the current dominant position of lithium carbonate in battery materials. However, in the short term, lithium carbonate will still be an important raw material for new energy batteries. How to find a way out of the current dilemma is a problem that the entire industry needs to face together.