The price of battery-grade lithium carbonate fell below RMB 200,000 per ton for the first time in four months, as industry players' expectations of supply-demand balance changes.

The price of lithium carbonate, a key raw material for batteries, fell below a key level in China, as the decline since late June continues.

The average price of battery-grade lithium carbonate fell to RMB 198,500 ($27,030) per ton in China on September 8, down RMB 3,000 per ton, or 1.49 percent, from the previous day, data from Mysteel monitored by CnEVPost showed.

It was the first time since May 6 that the price of battery-grade lithium carbonate was back below RMB 200,000 a ton.

The average price of industrial-grade lithium carbonate fell to RMB 190,000 on September 8, down RMB 3,000 per ton, or 1.55 percent, from the previous day.

Industrial-grade lithium carbonate fell to RMB 198,500 per ton on the earlier September 1, the first time it had fallen to RMB since May 10.

The price of lithium carbonate in China rose to about RMB 600,000 per ton at one point in November 2022, about 14 times the June 2020 price that averaged RMB 41,000 per ton.

After that, however, lithium carbonate prices slumped and did not stop falling until the end of April this year. After a brief rebound in the second quarter, lithium prices resumed their decline.

The rebound in lithium carbonate prices from the end of April continued into early June, with the average price of battery-grade lithium carbonate rising from RMB 180,000 per ton on April 25 to RMB 315,000 per ton on June 9, an increase of about 75 percent.

This increase was not sustained and since June 9, the average price of battery-grade lithium carbonate has fallen 37 percent in China.

The fall in lithium carbonate prices was seen as favorable for the electric vehicle (EV) industry, and the weak performance of the raw material so far this year has also led to a significant change in mindset among industry players.

A reasonable drop in lithium carbonate prices compared with 2022 would be favorable to the battery industry and positive development of the new energy vehicle (NEV) and energy storage sectors, China's official media outlet Securities Daily said in a report today, citing a number of industry sources.

The report attributed the drop in lithium carbonate prices this year to increased supply and the emergence of new battery technologies.

The price of lithium carbonate rose several times in the previous two years, which attracted a lot of capital into the industry, resulting in a significant increase in upstream lithium mining, the report cited Zhang Xiang, a researcher at the Jiangxi New Energy Technology Institute, as saying.

In addition, while production and sales in the lithium battery market are still increasing, the emergence of technology routes such as sodium-ion batteries and solid-state batteries provides more options, Zhang said.

Zhang Weixin, an industrial products analyst at China Futures, cautioned about changes in expectations regarding industry participants.

On the one hand, battery makers and car companies have higher inventory levels, which has led them to reduce purchases, China Futures' Zhang said.

On the other hand, battery makers expect abundant supply in the future, and thus will not aggressively increase their inventories to ensure security of supply as they did in 2022, he said.

According to Zhang Xiaorong, president of the Deep Tech Research Institute, lithium carbonate prices are likely to remain low in the short term, though they will be supported in the medium to long term.

In the short term, upstream inventory pressure is high, and lithium carbonate prices may fall further, he said.

In the medium and long term, with the expansion of exports to overseas, the demand for lithium carbonate is expected to increase, which will have some support for the price, he said.

Market research firm TrendForce noted in a report last week that lithium prices in China are expected to stop falling in September, as suppliers have begun to cut production.

Overall, lithium suppliers have begun to cut production as demand in the power battery market grows slowly, and the market is looking forward to the September-October peak demand season, TrendForce said.

($1 = RMB 7.3440)

Daily price changes of lithium carbonate in China