China's Lithium Carbonate Production Expected to Reach 650,000 Tons in 2024

Anticipated Surge in Domestic Lithium Carbonate Production for 2024

In 2024, the domestic production of lithium carbonate in China is projected to reach 650,000 tons, reflecting a remarkable 41% increase compared to the previous year. Since the second quarter of this year, the domestic supply of lithium salt has been exceeding demand by over 10,000 tons per month, with an estimated surplus of about 100,000 tons for the entire year. The first half of the year saw a production of approximately 300,000 tons of lithium carbonate, and this figure is expected to rise to 350,000 tons in the second half. Senior expert Fan Runze from the research institution Antaike predicts that the price of lithium might decline to its lowest point of the year in the latter half of 2024. Despite potential downstream inventory adjustments during the peak of industrial activity in September and October, there is a likelihood of substantial surplus in lithium salt supply in November and December. Additionally, Tianqi Lithium is projected to face a pre-tax loss of over 4.8 billion yuan for the first half of the year, with a 70% year-on-year drop in lithium prices.

Key Takeaways

• The projected 2024 domestic lithium carbonate production in China is expected to reach 650,000 tons, showcasing a 41% year-on-year increase.
• Since the second quarter, the domestic lithium salt supply has been exceeding demand by over 10,000 tons per month, with an estimated annual surplus of about 100,000 tons.
• The price of lithium in the latter half of the year is anticipated to plummet to its lowest point for the year.
• Despite potential inventory adjustments during the peak industrial activity, there is a possibility of substantial surplus in lithium salt supply by year-end.
• Tianqi Lithium is expected to encounter a pre-tax loss exceeding 4.8 billion yuan for the first half of the year, with a 70% year-on-year decline in lithium prices.

Analysis

The significant upsurge in domestic lithium carbonate production by 41% to 650,000 tons in 2024 has resulted in considerable oversupply, exacerbating the drop in prices. This surplus, combined with reduced demand projections, particularly after the "golden September and silver October" period, may lead to a decline in lithium prices reaching annual lows. Financial strains are evident, as indicated by Tianqi Lithium's forecasted loss exceeding 4.8 billion yuan due to a 70% drop in lithium prices. These short-term effects include financial stress for producers, while long-term ramifications could reshape the industry landscape, favoring more efficient and sustainable producers.

Did You Know?

• Lithium Carbonate Production and Oversupply
  • Lithium Carbonate: An essential lithium compound widely used in battery manufacturing, particularly in lithium-ion batteries, serving as a critical material for electric vehicles and renewable energy storage.
  • Production Growth and Oversupply: The projected 2024 domestic lithium carbonate production of 650,000 tons, reflecting a 41% year-on-year increase, demonstrates the rapid market demand for lithium. However, since the second quarter, there has been a monthly surplus of over 10,000 tons, with an estimated annual surplus of about 100,000 tons, indicating that despite the growth in demand, supply has outpaced it, resulting in a market oversupply.
• Fluctuation in Lithium Prices and Market Forecast
  • Decline in Lithium Prices: The latter half of 2024 is anticipated to witness a decline in lithium prices to the lowest point of the year, reflecting the pressure on prices due to the market oversupply. The volatility of lithium prices has a significant impact on the overall cost and profitability of the entire electric vehicle industry chain.
  • Market Forecast: Senior expert Fan Runze from the research institution Antaike forecasts that despite potential adjustments in lithium salt surplus during the "golden September and silver October" period, there is a likelihood of substantial surplus in supply by year-end. This forecast, based on a comprehensive analysis of supply and demand dynamics, holds significant reference value for industry participants in formulating strategies.
• Financial Status of Tianqi Lithium
  • Projected Loss: Tianqi Lithium is anticipated to encounter a pre-tax loss exceeding 4.8 billion yuan for the first half of the year, highlighting the severe impact of declining lithium prices on the company's financials. The reduction in lithium prices directly affects the company's revenue and profits, particularly in situations with relatively fixed costs.
  • Industry Impact: As a major player in the industry, the deteriorating financial condition of Tianqi Lithium may have a cascading effect on the entire lithium industry chain, influencing decisions made by suppliers, customers, and relevant investors.