When does lithium carbonate fall off the price altar?

Over the past year, the price of lithium salt, a key material used in lithium batteries, has continued to soar wildly. According to industry data, the prices of battery-grade lithium carbonate and battery-grade lithium hydroxide soared from 53000 yuan / ton and 49500 yuan / ton at the beginning of 2021 to 502500 yuan / ton and 491500 yuan / ton recently, up by an astonishing 848% and 892% respectively.

As the prices of upstream raw materials such as lithium batteries continue to rise, relevant domestic battery companies have adjusted the prices of their products upward. According to media reports, since the second half of last year, the price of power battery in Ningde era has been raised twice, and many power battery manufacturers of other brands are also planning to raise prices.

"one of the reasons for the rise in material prices is the growth in vehicle demand, battery expectations are higher, and enterprises expand production capacity and increase reserves. Another reason for the impact is the delay in supply, because the production capacity release cycle of lithium carbonate in typical ore production is 3-5 years, and the cycle of extracting lithium from brine is longer; in addition, the impact of the epidemic affects the production of lithium resources, and transportation capacity affects supply. " Ouyang Minggao, academician of the Chinese Academy of Sciences, analyzed at the China Electric vehicle 100 Forum.

With regard to the growth of downstream demand, Li Kun, chairman of Guoxuan Hi-Tech, mentioned in his speech that with the internationalization of the "double carbon" strategy, Bloomberg expects the rapid growth of the global new energy industry by 2025 and 2030, the total demand for batteries will exceed 1.5TWh and 3TWh respectively. This is bound to lead to a substantial increase in the demand for lithium materials. "in fact, we Chinese consumed 300000 tons of lithium resources in 2021, when China imported and produced about 330000 tons of lithium resources. It is estimated that China's demand for lithium carbonate will be 600000 tons in 2025. " Li Gong said.

From the supply side, Ouyang Minggao pointed out that the global economic recoverable reserves of lithium resources have increased rapidly in recent years, increasing by 400% from 2005 to 2010. Now the global economic recoverable reserves of lithium resources are 22 million tons. Taking NCM811 batteries as an example, 227TWh power batteries can be produced. According to the battery capacity of 100kWh per vehicle, it can be matched with more than 2.27 billion vehicles. With the increase of demand, new exploration and recoverable reserves will continue to increase, and resources are completely adequate.

However, although lithium resources are sufficient in the long run, the contradiction between supply and demand is prominent in the short term. According to industry forecasts, the global release of lithium resources will accelerate from 2020 to 2025, and the output of lithium resources will grow at a compound growth rate of 31% over a five-year period. The growth rate of demand for lithium resources is expected to be about 36% in the same period. It is obvious that the growth rate of production still cannot keep pace with the growth rate of demand.

From the situation of our country, according to Baichuan Yingfu statistics, by the end of 2021, the effective capacity of domestic lithium salt is 462400 tons, but the total output of the current period is only 230400 tons, and the capacity utilization rate is 49.82%. Industry analysts point out that this is due to the hindrance of upstream resource supply in lithium salt production. Throughout the domestic lithium salt production enterprises, at this stage, only a few can achieve 100% raw material self-sufficiency.

According to Minmetals Securities data, from the distribution of lithium resources, global salt lake lithium, ore lithium and clay lithium accounted for 58%, 26% and 7%, respectively. In China, salt lake lithium accounts for 85% of the total lithium resources in China, and the exploitation is difficult and the cost is high. Bolivia, Argentina and Chile in South America account for 58% of the world's lithium reserves, according to IFC Securities. According to statistics, the external dependence of lithium raw materials in China is still as high as 65%.

Liu Jincheng, chairman of Yiwei LiNeng, believes that the supply volume, supply stability and price stability of the supply chain have become a key factor restricting the development of the industry. In these supply chains, metal lithium and lithium carbonate have become key elements, which used to be called "reasonable all over the world". Now with lithium carbonate, you are the winner of the industry and become the hallmark of the new era. At present, all kinds of capital and enterprises have traveled all over the world to look for lithium resources, which has also become a new ideal of the capital market.

With regard to the phenomenon of soaring lithium prices, Li Bin, chairman of Lailai Automobile, said: "We have done in-depth research on various links upstream and believe that there are more speculative factors for the current price increase of lithium carbonate, and there is not such a big gap between supply and demand. Recently, we have also seen competent departments such as the Ministry of Industry and Information Technology coordinating the price mechanism. We call on upstream lithium mines, lithium salts and other manufacturers to proceed from long-term interests and not to artificially raise prices, which is not a good thing for the industry. "

Wang Chuanfu, chairman of BYD, also shouted that the sharp rise in the price of raw materials for lithium and other batteries is a challenge for the industry to overcome. He suggested that we should comprehensively sort out the distribution and production capacity of lithium carbonate resources, increase domestic mining and foreign imports, maintain market supply and demand, stabilize price expectations, and promote the healthy and safe development of the industry.

It is gratifying to note that with the intensification of the game between the upstream and downstream of the new energy industry chain, the rising momentum of lithium carbonate prices has slowed down. On the supply side, the lithium salt plant basically returned to normal production and maintained a high operating state, superimposed the temperature in Qinghai area rebounded, and the overall supply of lithium carbonate increased. On the demand side, the downstream lithium iron phosphate plate has varying degrees of maintenance and production reduction, resulting in a slight slowdown in procurement demand.

Ouyang Minggao pointed out that from the supply and demand side, the demand amplification brought about by panic inventory reserves is temporary, with the improvement of lithium carbonate supply capacity, will gradually return to the basic demand side. It is expected that lithium carbonate will be able to restore a complete balance of supply and demand in two or three years.

"We invest in lithium resources in Yichun," Li said. In the next five years, with the rapid growth of Yichun lithium mica project, the improvement of lithium extraction technology from Qinghai brine, the exploitation of spodumene resources in Sichuan, and the progress of battery recycling technology, the demand for imported lithium resources will be greatly reduced. By 2025, Yichun will form a development capacity of 500000 tons of lithium resources, completely ending the shortage of lithium resources in China.