Lithium carbonate and energy-storage cell prices hold steady

Lithium carbonate

The price of battery-grade lithium carbonate in China held steady in January. As of January 31, spot prices came in at RMB 93,000-98,000/MT, averaging RMB 95,500/W at the month’s end, a 0.5% month-on-month decrease. For Chinese lithium spodumene concentrate (SC6), CIF prices dropped to USD 830-950/MT, averaging USD 890/MT at the month's end, a 15.2% month-on-month decrease.

Risks of oversupply persist, given weaker demand in China and sluggish EV demand in non-China markets before the Lunar New Year holiday. Upstream sectors began slowing down expansion or reducing production. For instance, Core Lithium recently announced to reassess its production after 2025. With lithium carbonate prices losing ground on the spot market, reaching the top of the cost curve, trading prices and profits of spodumene concentrate have declined. 

In China, the increase in cell production volume has been slower than lithium supply. The upcoming holiday may prolong the time needed for the cell supply chain to further deplete lithium demand. Without intermediate traders and long-term inventory, lithium prices will remain low for an extended period of time until marginal producers cut supply significantly.

As the market will see a 134,000-MT lithium oversupply (11.3% of global demand) in 2024, prices will not increase substantially, approaching the comprehensive cost curve for a supply-demand equilibrium. Most manufacturers strive to operate with low inventory in a lackluster market. InfoLink maintains the estimation of average battery-grade lithium carbonate prices at RMB 78,000/MT (value-added tax excluded) in 2024.
 

Energy-storage cell

LFP energy-storage cell prices in China held steady in January. As of January 31, prices for 280 Ah LFP energy-storage cells have fallen to RMB 0.35-0.49/Wh, averaging RMB 0.42/Wh at the month's end, a 2.3% month-on-month decrease. For 100 Ah LFP energy-storage cells, prices dropped to RMB 0.38-0.5/Wh, averaging RMB 0.44/Wh at the month's end, on par with the previous month.

Based on statistics from the Global Lithium-lon Battery Supply Chain Database of InfoLink, the direct material cost of 280 Ah LFP energy-storage cells currently comes in at around RMB 0.283/Wh due to the constantly diminishing material prices. The total production cost (including personnel cost, factory depreciation, and management and sales expenses) is RMB 0.37-0.45/Wh, varying among manufacturers. With slim, even negative profit margins and severe overcapacity within the industry, most manufacturers keep low utilization rates. Pressures on suppliers remain as the Lunar New Year holiday approaches, while global demand sees no apparent recovery. However, bottom-low, even lower-than-break-even-point material prices left little room for battery price declines. With cell manufacturers actively exploring more lucrative non-China markets, risks of oversupply are likely to decrease in the second quarter, reaching a theoretical supply-demand equilibrium.