Lithium carbonate prices are expected to still have room to fall, with the supply-demand balance point expected to occur by the end of 2024 or 2025, an expert said.

Lithium carbonate prices are still expected to have room to fall, with the supply-demand equilibrium point expected to occur by the end of 2024 or 2025, said Zhang Jiafeng, a professor at the School of Metallurgy and Environment at Central South University, as quoted by the Securities Times in a report today.

Demand for lithium carbonate remains weak, while supply continues to be released, according to Zhang.

It has become an industry consensus that lithium carbonate is in a state of oversupply, which is attributed to the fact that the expansion of production in 2021 and 2022 were too fast and there were too many players entering the field from other industries, resulting in the supply exceeding the demand, the report said, citing an unnamed analyst in the energy and metals industry.

As the price of lithium carbonate goes down, some players who joined the sector when prices were high are being gradually pushed out, but the current trend for this is not strong enough, the analyst said.

Only when the price of lithium carbonate falls to much lower levels and some companies suffer losses and exit voluntarily will the industry come close to a supply-demand balance, the analyst said.

The price of lithium carbonate could fall below RMB 100,000 per ton, the analyst said, according to the report.

The Securities Times report also noted that China's new energy vehicle (NEV) sales remain strong, which may be able to provide some support to raw material prices.

NEV production and sales figures exceeded expectations, which had a boosting effect on the entire industry chain, the analyst said.

The continued decline in lithium carbonate prices will help NEV makers see a drop in battery costs, thus boosting gross margins.

Every RMB 50,000 drop in lithium carbonate prices brings roughly a 1.5 percent improvement in gross margins for Nio (NYSE: NIO), William Li, the company's founder, chairman, and CEO, said in September in response to a question from CnEVPost.

In addition, the plunge in lithium carbonate prices could potentially hamper the development of sodium-ion batteries, whose lower cost is the biggest advantage.

($1 = RMB 7.1537)

Lithium carbonate supply in China seen as still in surplus, despite recent price rebound