Lithium price slide deepens as Chinese battery giant bets on cheaper inputs | – #Lithium #price #slide #deepens #Chinese #battery #giant #bets #cheaper #inputs
BEIJING/MELBOURNE, Feb 28 (Reuters) – Chinese battery giant CATL ( 300750.SZ ) by car to the manufacturers offer rare discounts have accelerated the decline in lithium prices, and the market is poised to fall another 25% as supply growth outpaces demand. say analysts and traders.
Electric car The bubble burst after a rush by producers to secure raw materials sent lithium carbonate prices up more than sixfold and spodumene nearly tenfold over the past two years.
“Supply is flowing faster than you can say ‘boo,'” says analyst Dylan Kelly of Ord Minnett in Sydney.
“Demand remains strong, however prices It has been unsustainable for some time.”
Lithium prices The turning point for electric in China at the end of last year car demand 87 for Beijing’s largest and fastest growing industry in the world billion slowed sharply ahead of the end of dollar subsidies.
Latest UpdatesBusiness CategoryOil prices fell 1.5% during the week on recession worries, article with imageBusinesscategoryDutch government Bergermeer gas has raised the filling target for its warehouse to 90%, picture article
See 2 more stories
According to analysts, investors in China january The slide was exacerbated by fears over CATL’s discount terms, which included a fall in electric vehicle sales in May and speculation that prices of lithium carbonate, a key component of car batteries, would more than halve.
Analysts say that while demand concerns are weighing on markets, prices Again, it is the supply from China, Australia and Chile that is bringing it down.
Rystad Energy sees lithium’s global market deficit from 76,000 tonnes LCE in 2022 to around 20,000 to 30,000 tonnes of lithium carbonate equivalent (LCE) is seen declining.
Given the increased supply, Goldman Sachs sees spot prices for lithium carbonate, a precursor to the compound used in making lithium-ion batteries, falling from an average of $53,304 this year to $34,000 a tonne over the next 12 months.
It expects lithium supply to grow by an average of 34% by 2025, versus a 25% annual growth rate.
“Probable supply growth and downstream overcapacity will keep lithium prices lower over the medium term,” it said in a February 23 note.
Reuters Graphics DEMAND FEARS
January Sales of new energy vehicles, including all-electric vehicles and plug-in hybrids, fell 6.3% in China in 2018 after rising 90% in 2022, fueling concerns that growth is slowing, which will dampen demand for batteries and battery materials.
“While we remain bullish on lithium over the long-term, the short-term outlook is less clear, with a clear acceleration of EV sales in China needed to allay market fears,” Barrenjoey analysts said in a Feb. 17 research note.
Some, including lithium giant Albemarle ( ALB.N ), blamed the drop in auto sales on temporary weakness given the start of the Lunar New Year. Albemarle sees China’s EV market grow 40% this year. But prices continues to descend.
“Demand is still healthy, but battery and EV manufacturers are currently reducing inventories rather than placing new orders. Therefore, low spot demand affects sentiment and lowers prices,” said Susan Zou, Shanghai-based vice president of consulting firm Rystad Energy.
MINERS DO NOT HEAL
Falling lithium prices in China, the world’s largest consumer, have also hit overseas lithium producers. Shares in Albemarle and Australia’s Pilbara Minerals ( PLS.AX ) have both fallen by a quarter since November, while Allkem ( AKE.AX ) is down nearly 30%.
However, Christian Barbier, Allkem’s chief sales and marketing director, said the price slide in China “had to happen” and was “beneficial”, adding that it was made worse by the country’s battery makers fighting for market share.
Miners’ profitability remains very strong, he told analysts on a Feb. 23 earnings call.
“So we’re not too worried about the overall fundamentals and the future direction of prices,” Barbier said.
S&P analysts estimate the average cash operating costs of lithium carbonate production at 4,563 per tonne of LCE dollars and 7,540 per tonne LCE of total cash dollars which is a fraction of what analysts were predicting for lithium carbonate.
“Therefore, finding a bottom for lithium prices is extremely difficult, as lithium producers lower prices they will remain profitable,” he said.
LITHIUM CARBONATE LAVAS
The price drop was sharp. Chinese spot prices for lithium carbonate rose from an eye-watering 600,000 yuan (86,207 dollars) has now fallen below 400,000 yuan.
Reuters graphics
By the end of this year, they are expected to fall below 300,000 yuan, roughly half of their peak in November 2022, according to four Chinese analysts and five traders, buyers and producers.
Rystad’s Zou, “Per ton of lithium carbonate 20The price of 0,000-300,000 yuan is where both upstream and downstream will feel comfortable,” he said.
Analysts say even support from supply cuts will be temporary as China investigates illegal lithium mining.
The prices of spodumene, a lithium raw material, have reached a five-month low.
RBC Capital Markets sees spodumene prices at $5,800 and falling to an average of $4,275 a tonne in 2024.
“The decline in spodumene prices has been faster than we expected,” RBC analyst Kaan Peker said.
Reuters graphics
($1 = 6.9600 Chinese Yuan Renminbi)
Reporting by Melanie Burton in Melbourne, Siyi Liu in Beijing and Zoey Zhang in Shanghai; Additional by Nelson Banya and Beijing Newsroom in Singapore and Florence Tan report; Edited by Dominic Patton and Sonali Paul
Our standards: Thomson Reuters Trust Principles.
2023-02-28 17:37:24
Source – reuters
Translation“24 HOURS”