Lithium carbonate prices continued to hit bottom in H1. Miners' semi-annual reports forecast both optimism and concern. Is there anything to look forward to in H2? [SMM Hot Topic]

SMM July 16: Recently, many upstream enterprises in the lithium industry chain have released their H1 2025 performance forecasts, inevitably mentioning the significant YoY decline in lithium carbonate prices dragging down their respective results. However, several lithium miners including Tianqi Lithium and Sinomine Resource Group still expect net profits attributable to shareholders of publicly listed firms to remain profitable in H1... SMM compiled performance forecasts of several lithium enterprises as follows:

Ganfeng Lithium:

According to its performance forecast,the company's H1 net profit attributable to shareholders of publicly listed firms was a loss of 300-550 million yuan, narrowing from a loss of 760 million yuan in the same period last year.Regarding reasons for performance changes, Ganfeng Lithium stated that during the reporting period,although the company's battery segment saw orderly capacity release and sales growth, overall operating performance was impacted by continuous declines in selling prices of lithium chemicals and lithium battery products.Additionally, the company made asset impairment provisions for inventory and related assets under accounting standards, while also recording significant non-recurring gains. These mainly resulted from combined investment income and fair value change losses - including gains from disposal of ESS power station projects by subsidiary Shenzhen ESS Technology Co., Ltd. and equity sales of other companies, offset by fair value losses from declining prices of financial assets (primarily Pilbara Minerals Limited shares). The company used collar option strategies to hedge partial fair value change risks from PLS share price declines.

Tianqi Lithium:

Its H1 performance forecast showsnet profit attributable to shareholders of publicly listed firms between 0-155 million yuan, compared with a 5.206 billion yuan loss in H1 2024.

The company attributed this to:YoY declines in lithium product selling prices, mitigated by shortened lithium ore pricing cycles that significantly reduced historical timing mismatches between Talison Lithium Pty Ltd's chemical-grade lithium concentrate pricing mechanism and its lithium chemical products' sales pricing. As newly purchased concentrates arrived and inventory was consumed, production costs at lithium chemical sites better reflected latest purchase prices.Meanwhile, associate SQM's YoY earnings growth boosted investment income, while Australian dollar appreciation increased exchange gains.

Chengxin Lithium:

Chengxin Lithium recently announced that the company's net loss attributable to shareholders of publicly listed firms for H1 2025 is expected to range from 720 million yuan to 850 million yuan, compared to a loss of 187 million yuan in the same period last year, representing a decline of 285.13% to 354.67% YoY. Regarding the reasons for the company's performance changes, Chengxin Lithium stated that during the reporting period, mainly due to factors such as the industry's supply-demand pattern, the market price of lithium products continued to decline in Q2, leading to a decrease in the company's gross profit compared to the same period last year. Meanwhile, the company set aside provisions for asset impairment on inventories in accordance with accounting standards. It is expected that the provisions for asset impairment set aside in this reporting period will increase significantly compared to the same period last year, affecting the company's profit in this reporting period.

Jiangxi Special Electric Motor:

Jiangxi Special Electric Motor also recently released its earnings forecast for H1 2025, stating that the company expects a net loss attributable to shareholders of publicly listed firms ranging from 95 million yuan to 125 million yuan for H1 2025, compared to a loss of 4.0656 million yuan in the same period last year. Regarding the reasons for the company's performance changes, Jiangxi Special Electric Motor stated that during the reporting period, the company further increased R&D and investment in the motor sector, effectively enhancing the competitive advantage of motor products, and achieving steady growth in the motor sector. At the same time, during the reporting period, influenced by market supply and demand, the price of lithium carbonate continued to decline, leading to losses in the lithium chemicals sector.

Sinomine Resource Group:

announced its earnings forecast for H1 2025, stating that the company expects net profit attributable to shareholders of publicly listed firms for H1 2025 to be around 65 million yuan to 90 million yuan, a decrease of 80.97% to 86.26% YoY. Regarding the reasons for the company's performance changes, Sinomine Resource Group stated that in H1 2025, the rare light metal (cesium, rubidium) business of Sinomine Resource Group Co., Ltd. (hereinafter referred to as "the company"), which has core competitiveness, continued to leverage its advantages, maintaining a good growth momentum and profitability, serving as an important support for the company's performance. During the reporting period, the rare light metal (cesium, rubidium) business generated total operating revenue of approximately 710 million yuan, up approximately 50.88% YoY, and achieved a gross profit of approximately 490 million yuan, up approximately 43.78% YoY. In H1 2025, the company achieved sales of approximately 17,800 mt of its own lithium chemical products, up approximately 5.95% YoY. However, influenced by market fluctuations in the new energy lithium battery industry, the market price of lithium chemical products has seen a significant correction compared to the same period last year. Despite the company's continuous efforts to optimize the business model of the lithium chemicals sector and reduce comprehensive costs, the sales revenue and gross profit margin of this sector have been significantly affected YoY against the backdrop of industry-wide price declines. In the first half of 2025, the copper smelting business of the company's Tsumeb smelter in Namibia was affected by the tight global supply of copper concentrates, which led to a significant decline in industry processing fees (TC/RC). This resulted in a net loss of approximately RMB 200 million for the company, having a phased impact on its performance during the reporting period. The company has formulated corresponding cost-reduction measures to shut down the copper smelting production line as soon as possible and will form new profit growth points by releasing the capacity of its germanium business, striving to achieve a turnaround for the Tsumeb subsidiary in Namibia as early as possible.

Yongshan Lithium:

Yongshan Lithium also announced that, based on preliminary calculations by the financial department, it is expected to record a net loss attributable to shareholders of publicly listed firms ranging from RMB 173 million to RMB 116 million for the first half of 2025. Compared to the same period last year, a loss will occur, as the company recorded a profit of RMB 66.8162 million in the same period last year. When mentioning the main reasons for the company's anticipated loss, Yongshan Lithium noted that, in the first half of 2025, the overall lithium chemicals market continued the downturn of oversupply from 2024, leading to a further decline in lithium chemical product prices. Despite the company's efforts to mitigate various risks brought about by the market downturn through measures such as increasing production, reducing costs and increasing efficiency, optimizing product structure, and expanding its customer base, these efforts were still not enough to offset the adverse impact of the continuous decline in lithium chemical product prices on the company's operations.In the first half of the year, the company's product gross margin decreased, and the risk of inventory depreciation increased, resulting in losses in the lithium chemicals segment business.

In the first half of the year, lithium carbonate prices fell significantly YoY. Will the rebound trend in July continue in the second half of the year?

It is also evident from the performance forecasts of the aforementioned enterprises that, when mentioning the reasons for the decline in performance, they all refer to the significant correction in the market prices of lithium chemical products in 2025 compared to the same period last year. According to historical SMM prices, the average spot price of battery-grade lithium carbonate in the first half of 2025 was around RMB 70,400/mt, a decrease of RMB 33,300/mt compared to the average spot price of battery-grade lithium carbonate of RMB 103,700/mt in the first half of 2024, representing a decline of 32.11%.

》Click to view SMM's spot quotes for new energy products

In addition, against the backdrop of overall oversupply, lithium carbonate prices have continued to decline since February. As of June 24, the lowest average spot price once fell below the RMB 60,000/mt threshold to RMB 59,900/mt, hitting a new historical low in nearly three years.

Looking at the price changes of lithium carbonate in stages, according to SMM:

Early January 2025 - Late January 2025:Stockpiling before the Chinese New Year drove active market transactions, and lithium carbonate prices rose

In the early to mid-January, downstream material plants were still in the stockpiling phase before the Chinese New Year. Amid ongoing negotiations over long-term contract discounts for lithium carbonate between upstream and downstream players, the low signing ratio has kept downstream material plants active in spot lithium carbonate procurement. Additionally, some upstream lithium chemical plants initiated production line maintenance early in the month, tightening spot market liquidity amid robust downstream purchases, which further drove spot lithium carbonate prices upward, peaking at 78,000 yuan/mt.

Early February to early April 2025: Lithium Carbonate Supply Hits Record High, Clear Surplus Drags Prices into Steady Decline

After the Chinese New Year holiday, downstream material plants maintained ample pre-holiday stockpiles, resulting in weak purchase willingness and a predominantly wait-and-see attitude. Meanwhile, domestic lithium carbonate output in March reached approximately 79,000 mt, a historic high, coupled with elevated imports, sustaining a significant surplus that dragged prices into a prolonged downtrend.

Mid-April to late June 2025: Customer-Supplied Ratio Rises Again + Intensified Tug-of-War Between Longs and Shorts Accelerates Lithium Carbonate’s Bottom-Hitting Process

In April, the customer-supplied ratio for downstream material plants rose again, further weakening procurement and stockpiling willingness. Against the backdrop of intensified futures market battles between longs and shorts, lithium carbonate prices entered a rapid bottoming phase. The most-traded futures contract plunged from above 70,000 yuan/mt to 58,000 yuan/mt, while spot prices dropped from 70,000 yuan/mt to 60,000 yuan/mt, with the monthly average price declining over 10%. Cost side, high port lithium ore inventories drove ore prices sharply lower, further eroding cost support and accelerating lithium carbonate’s price slide.

Late June to mid-July 2025: Irrational Futures Rebound Amid Persistent Fundamental Surplus

Market rumors of substantial H2 demand growth and supply-side production cuts triggered an irrational sustained rebound in lithium carbonate futures. Downstream players showed minimal acceptance of these price levels, avoiding stockpiling and relying instead on increased long-term contracts or customer-supplied materials for production. Only a few firms, driven by just-in-time procurement needs, lifted the transaction price center, though overall market activity remained sparse. The average spot lithium carbonate price rebounded to around 64,500 yuan/mt.

For H2, Demand side, China remains the leading market for NEVs and ESS. In the NEV market, the country’s H2 2024 "trade-in" subsidy policy spurred above-expectation growth, with full-year NEV sales exceeding 12.5 million units. In H2 2025, impacted by a high base effect, the YoY growth rate is expected to slow down but remain at aZ56/>stable growth level. Driven by the dual factors of continuously intensified local subsidy policies and power market reforms, combined with support from emerging overseas energy storage markets, China's ESS market is projected to achieve a YoY growth rate exceeding 30% in H2.

From the supply side, first- and second-tier lithium chemical plants are expanding their market shares through cost advantages and integrated operations. Moreover, the irrational sustained rebound in futures markets has provided production momentum for the entire industry, with previously low-operating non-integrated lithium chemical plants seizing hedging opportunities to significantly raise operating rates. Domestic lithium carbonate production is expected to achieve a YoY increase exceeding 30% in H2. Meanwhile, overseas lithium carbonate imports are also showing incremental growth. Chile's shipments remain stable at high levels, while Argentina's production continues to rise. Overall, domestic lithium carbonate supply remains robust, and the market is expected to maintain a surplus situation in H2.》Click to view details

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[SMM Analysis] In-depth Review of H1 2025 Lithium Carbonate Market and H2 Outlook