【SMM Analysis】Will the Price of Lithium Iron Phosphate Surge in March 2024?

【SMM Analysis】Will the Price of Lithium Iron Phosphate Surge in March 2024?
【SMM Analysis: Will the Price of Lithium Iron Phosphate Surge in March 2024?】Recently, there has been a rebound in the price of lithium iron phosphate raw materials. Will lithium iron phosphate follow suit with a significant increase in price? Overall, the high prices in the current market for lithium carbonate are not driven by genuine market demand but are more priced in anticipation of the recovery in demand. As a result, most cathode material companies find it difficult to procure and stockpile materials at current high prices. They only purchase small quantities of low-priced materials available in the market or procure a small amount of high-priced materials based on immediate demand to maintain raw material inventory at relatively reasonable and safe levels.

SMM News on March 4th,
Recently, there has been a rebound in the price of lithium iron phosphate raw materials. Will lithium iron phosphate follow suit with a significant increase in price?
Compared to 2023, there are several changes in the lithium iron phosphate material market in 2024:

1. Slower growth in demand: The growth rate of consumption in the downstream new energy vehicle power and large-scale energy storage sectors continues, but at a slower pace.

2. Price pressure: The price of the main raw material, lithium carbonate, will become more rational, and the price throughout the year will be suppressed by overcapacity. With the continuous release of new capacity, there continues to be a scene of low-price grabbing.

3. Accelerated capacity clearance: Compared to the demand of 1.6-1.7 million tons in 2024, the production capacity of lithium iron phosphate in 2024 is over 4.5 million tons, with a capacity utilization rate of less than 40%. The excessively low operating rate has led to severe losses for companies, coupled with the cooling of the capital market, which will inevitably tighten the capital chain of competitive enterprises and reduce their operating scale until they exit the market. At the beginning of 2024, the lithium iron phosphate industry is contemplating this harsh and realistic question: which company will be the first to exit the race?

After the Spring Festival, with the gradual resumption of work by industry enterprises, the price of raw material lithium carbonate has irrationally rebounded, with an increase of nearly 10%. The production cost of lithium iron phosphate has risen, but the transmission to downstream is slow. Firstly, there is still a price war scene of low-price shipments by battery companies, and the price of raw materials, lithium iron phosphate; secondly, some battery companies have locked in prices when prices were low.
Overall, the high prices of lithium carbonate in the current market are not driven by genuine market demand but are more priced in anticipation of the recovery in demand. Therefore, most cathode material companies generally find it difficult to procure and stockpile materials at the current high prices. They only purchase small quantities of low-priced materials available in the market or procure a small amount of high-priced materials based on immediate demand to maintain raw material inventory at relatively reasonable and safe levels.

In the long run, terminal demand is currently within a reasonable recovery period, with no significant increase. The demand for lithium iron remains within the expected range. The cost support for lithium carbonate at high prices is limited, and the price of lithium iron phosphate in March may experience a phase of firmness, but overall, it will fluctuate and is unlikely to see significant increases.