Source: Photo.com
Lithium carbonate, the core raw material of lithium batteries, is known as "white oil", and its price trend has been attracting market attention.
On July 1, according to foreign media reports, four new lithium projects in Argentina will be put into production in the next few weeks to months, which will significantly increase Argentina's annual lithium production capacity by 79% to 202,000 metric tons of equivalent. For the global lithium market, Argentina's aggressive expansion comes at a time when lithium prices continue to fall.
It is understood that Argentina is a major country in the world's lithium reserves, with proven lithium reserves of nearly 19 million tons, accounting for about 21% of the world's total reserves. In addition, according to data from Argentina's National Institute of Statistics and Census (Indec), cited by Reuters, thanks to the booming lithium industry, as well as new projects and new investments, in the first four months of 2024, Argentina's lithium production, the world's fourth-largest lithium producer, increased by 49.7% compared with the same period in 2023, and the country's lithium production increased by 40.6% year-on-year in April.
"In the medium to long term, these projects are expected to be put into production this year and next, and their commissioning will not increase the supply pressure on the market. In the short term, the pressure of increasing supply will not be reflected in the short term. Zhang Weixin, an analyst at China Securities Construction Investment Futures, believes that the news of the production is more of an emotional impact.
However, according to the Global Times, Bloomberg reported that although the new capacity will not be fully operational immediately, it is still a serious overcapacity for a market that will have a total global output of 1.4 million tons this year. There are also comments that the increasing inventory in the current situation of sufficient supply has increased the downward pressure on lithium prices, and mining companies need to face the challenge of balancing supply and demand.
Global lithium demand gap to reach 50% by 2030
From the perspective of supply and demand, the current global lithium production is 82,000 tons of lithium metal equivalent, equivalent to about 440,000 tons of lithium carbonate equivalent, which can basically meet the demand for lithium. However, according to the International Energy Agency's forecast data, driven by downstream market demand, there will be a global lithium demand gap of about 50% by 2030 with only existing and ongoing lithium production projects.
In 2023, China's lithium carbonate trade deficit will reach 40.7 billion yuan
According to the data disclosed by the General Administration of Customs of China (customs code: carbonate of 28369100 lithium), the total import and export trade of lithium carbonate in China continued to rise from 2019 to 2022 and decreased in 2023. In 2023, China's lithium carbonate imports will reach 44.3 billion yuan, exports will reach 3.6 billion yuan, and the trade deficit will reach 40.7 billion yuan.
Analysis of representative companies in the lithium carbonate industry
The main raw materials for the production of lithium carbonate are spodumene, lepidolite and brine. From the perspective of the layout of representative enterprises, the raw material layout of lithium carbonate advantageous enterprises such as Tianqi Lithium, Ganfeng Lithium, Salt Lake Co., Ltd., Zhicun Lithium, etc., is relatively sufficient, so as to ensure the stability of raw material cost and lithium carbonate production; The second and third echelon enterprises such as Tianhua New Energy, CITIC Kunlun, Liaoning Taifeng, Weiling Co., Ltd. and other enterprises still rely on external enterprises for raw materials.
Looking ahead, Zhang Weixin, an analyst at China Securities Construction Investment Futures, believes that it is difficult for lithium carbonate to rebound in July, and weak operation is still the main tone. "From a cyclical point of view, although the current price has fallen to around 90,000 yuan/ton, there has not been a major reduction in production on the supply side, and the new supply is still being put into production, that is, the supply reduction before the end of the downward trend in prices has not yet appeared, so it is expected that the downward cycle has not ended." Zhang Weixin explained.
"The recent rebound of lithium carbonate is more a reflection of the results of the bottom test of cost support prices, and the long-term trend inflection point and elasticity are still waiting for the inflection point of supply and demand fundamentals." Wang Chuhao, an analyst at Chang'an Futures, believes that although from the current market price, it is unlikely that it will fall further and break through the previous low, but the high certainty of supply growth expectations and the weak demand will make lithium prices continue to fluctuate and operate weakly in the short term.
Note: This article is for content purposes only and does not constitute any investment advice.
Prospective Economist APP Information Group
For more research and analysis of this industry, please refer to the "Global and China Lithium Carbonate (Li2CO3) Industry Development Prospect and Investment Strategic Planning Analysis Report" by Qianzhan Industry Research Institute
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