Energy-storage cells prices hold ground while lithium carbonate keeps dropping

Lithium carbonate

The price of battery-grade lithium carbonate in China continued decreasing in November. As of November 30, spot prices dropped to RMB 126,000-134,000/MT, averaging RMB 130,000/W at the month’s end, a 20.5% month-on-month decrease. For Chinese lithium spodumene concentrate (SC6), prices dropped to USD 1,470-1,590/MT, averaging USD 1,530/MT at the month’s end, a 23.9% month-on-month decrease.

In the short term, due to a sustained slowdown in end-user demand and continuous supply increases from domestic brines and overseas lithium salt imports, the oversupply of lithium carbonate will continue, pressuring prices to reach new lows as the industry has effectively depleted inventories and awaits a resurgence in end-user demand. 

From a mid- to-long-term perspective, the increasing supply of lepidolite in China and spodumene in Africa in the coming two years will not only affect the supply-demand balance of the global lithium market but also reshape the lithium carbonate cost curve for the world. Chinese lepidolite and African spodumene will contribute to over one-third of the production growth during 2024 and 2025, determining the marginal cost of lithium carbonate production.

Considering environmental costs like tailings and lithium slag management, the cash cost of producing lithium carbonate from Chinese lepidolite is around RMB 57,000-99,000/MT, averaging about RMB 78,000/MT. Most African lithium resource projects are in Zimbabwe and Mali, aiming to produce spodumene concentrate locally and cooperate with Chinese smelters. Under such a business model, the estimated cash cost for lithium carbonate production is RMB 60,000-99,000/MT, averaging RMB 79,000/MT. In 2024, the average price of lithium carbonate may reach RMB 113,000/MT and that of spodumene at USD 1,300/MT, given the supply-demand dynamics of the global lithium market, marginal cash costs, and a reasonable cash-push inflation that sustains production expansions. 
 

Energy-storage cell

Price declines for LFP energy-storage cells in China slowed down. As of November 30, prices for 280 Ah LFP energy-storage cells decreased to RMB 0.41-0.51/Wh, averaging RMB 0.46/Wh at the month’s end, an 11.5% month-on-month decrease. For 100 Ah LFP energy-storage cells, prices dropped to RMB 0.42-0.52/Wh, averaging RMB 0.47/Wh at the month’s end, a 13% year-on-year decrease.

Due to a supply-demand mismatch, the price gap between 280 Ah and 100 Ah LFP energy-storage cells was as huge as 30%. The gap narrowed and had almost diminished by the end of November. Currently, based on statistics from the Global Lithium-Ion Battery Supply Chain Database of InfoLink,  the direct material cost of 280 Ah LFP energy-storage cells is around RMB 0.325/Wh and the total production cost (including personnel cost, factory depreciation, and management and sales expenses) is RMB 0.42-0.50/Wh, varying among manufacturers. With slim, even negative profit margins, some Tier-2 and Tier-3 cell manufacturers now face operational challenges. The market awaits another round of price war in December despite the temporary stabilization after mid-November due to cost pressures.