Battery companies expand production - lithium carbonate prices soar

The price of lithium carbonate fluctuates greatly

It is reported that after proportionally adjusting the lithium content and freight, it is equivalent to a bid of about 7,830 USD/ton based on the equivalent value of SC6.0 (CIF China). 534,700 RMB/ton (including VAT).

In the spot market, battery-grade lithium carbonate prices have been changing this week. On October 20, the price of lithium carbonate rose again by 1,000 RMB/ton.

The lowest transaction price of battery-grade lithium carbonate was 533,000 RMB/ton, and the highest was 548,000 RMB/ton. Some transaction prices were lower than the cost price, which also means The price of battery-grade lithium carbonate still has room to rise.

Entering the traditional peak season in the fourth quarter, the demand for lithium carbonate is further increasing, while the supply side has decreased. Currently in the peak season of new energy vehicles, the demand for lithium carbonate maintains a steady increase.

Due to the long release cycle of resources, the mismatch between lithium mining and downstream demand has led to the inability of supply to keep up. Multiple reasons are superimposed, and the prices of lithium ore and lithium carbonate remain high.

As the price of lithium ore in Australia hit a new high, many market participants believe that the price of lithium carbonate is not far from 600,000 RMB/ton.

The market price trend is guided by costs and supply and demand, and the spot market does not rule out the possibility that just-needed orders will reach 600,000 RMB/ton.

The downstream demand for lithium is still very strong, and after entering the fourth quarter, the output of lithium in Qinghai Salt Lake will decrease due to the influence of temperature, and the supply of lithium carbonate will decrease compared with summer.

Power battery companies are busy expanding production

Not only is the demand for lithium carbonate increasing, but also the production and sales of power batteries are booming, and the company continues to expand production.

The China Power Battery Industry Innovation Alliance recently released the data on China’s power battery installed capacity in September.

The data shows that in September 2022, the installed capacity of power batteries in China was 31.6GWh, a year-on-year increase of 101.6% and a month-on-month increase of 14.0%.

From January to September, the installed capacity of power batteries in China was 193.7GWh, a year-on-year increase of 110.5%. Compared with last year, the installed capacity of power batteries doubled in the first three quarters of this year.

Power battery companies represented by CATL and Guoxuan Hi-Tech are accelerating production expansion to further expand their market share.

The fourth quarter is the peak period for the rush to install power batteries, and the demand for lithium carbonate is strong, which further leads to the shortage of power batteries.

In addition to the promotion of new energy vehicles, energy storage demand for power batteries is also increasing. If you want to know other power battery companies, refer to our top 10 power battery companies article.

Gotion Hi-Tech recently stated that Hefei Gotion, a wholly-owned subsidiary, recently won the bid for 60% of the second project share of the energy storage equipment of Xinyuan Zhichu in 2022.

It is estimated that the total winning bid is about 800 million RMB. CATL also recently stated that it has reached a cooperation with FlexGen, an American energy storage technology platform and solution provider, to supply 10GWh of energy storage products within three years.

The main reason for the strong growth in demand for power batteries is that, on the one hand, the installed capacity of power batteries hits a new high, and the market share of leading companies such as CATL and BYD continues to increase, and high demand boosts companies to expand production capacity.

On the other hand, it is difficult to find batteries for energy storage systems outside China, especially in the energy storage markets in Europe and the United States, where the demand for power batteries is even stronger.

It is difficult to fundamentally change the supply and demand pattern

​The expansion of power battery companies has also triggered market thinking. On the one hand, it is to cope with the dual needs of new energy vehicles and energy storage, and to continuously expand production.

For every 100,000 RMB/ton increase in lithium carbonate prices, the gross profit of power battery manufacturers will drop by about 7% to 8%. When the price of lithium carbonate exceeds 530,000 RMB/ton, it will approach the break-even point of power battery manufacturers.

After the price of raw materials has risen sharply, power battery companies use the metal price linkage mechanism to transmit costs downstream, and the cost pressure will be shared by battery companies and vehicle companies.

In the short term, it is difficult to fundamentally change the supply and demand pattern of lithium carbonate. Lithium ore resources are king, and the constraints of the industrial chain are still upstream.

In 2023, the supply side of lithium carbonate will increase, and the contradiction between supply and demand will be alleviated, but the uncertainty of the supply side is greater than that of the demand side.

The supply and demand will also be adjusted according to the progress of the project. Downstream demand is growing rapidly, but there are too many uncertainties in the release of upstream mining capacity.

The price of lithium carbonate is at a high level, the profit space of battery manufacturers and OEMs is squeezed, and the price increase in each link is not conducive to the balance of industrial development.

In this regard, experts believe that power battery companies should continue to find ways to reduce costs and increase efficiency, and accelerate the application of new battery technology.

There is a vast prospect of energy storage battery

In general, energy storage is also a technology-intensive industry with a high degree of specialization. There are certain technical requirements between different links in the industrial chain such as batteries, converters, and management systems.

Therefore, most of the enterprises are beginning to seek various forms of cooperation between upstream and downstream while they are committed to becoming specialized manufacturers.

According to statistics, this year alone, 26 expansion projects related to the production of energy storage batteries and power batteries have been announced. Their total investment will exceed 290 billion RMB and their total production capacity will reach 820GWh.