What impact of lithium carbonate falling below three hundred thousand on energy storage downstream

What impact of lithium carbonate falling below three hundred thousand on energy storage downstream

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On March 20, 2023, the price of battery-grade lithium carbonate was quoted at 293,000 RMB/ton. After the price of battery-grade lithium carbonate fell below 400,000 RMB/ton at the end of February, the price of lithium carbonate in top 10 lithium carbonate manufacturers fell below 300,000 RMB/ton again in the past three weeks. The price of lithium carbonate has fallen sharply since the beginning of 2023. What impact will it have on the downstream of energy storage in 2023?

There are currently two main impacts on the market:

● The first impact is that with the accelerated decline in the price of lithium carbonate, some owners are waiting for the arrival of the 200,000 RMB/ton mark, which temporarily slowed down the bidding pace of energy storage projects.
● The second impact is that the price of lithium carbonate has fallen off a cliff, which will also bring another major benefit to the energy storage industry in 2023, and the gross profit margin of the energy storage downstream is expected to increase significantly.

Some energy storage users are waiting for the two hundred thousand mark

Excessive lithium prices were once seen as an obstacle to the development of new energy storage. Since the end of 2022, the price of lithium carbonate has fallen precipitously, bringing good news to the energy storage industry chain again.

According to statistics, the price of battery-grade lithium carbonate soared to 600,000 RMB/ton in mid-November 2022, and fell to 400,000 RMB/ton by the end of February 2023. After about 100 days, the average daily drop was about 2,000 RMB/ton . However, at the end of February, after the price of lithium carbonate fell below the price level of 400,000 tons, as of March 20, it took about 20 days to fall below 300,000 RMB/ton again, with an average daily drop of nearly 5,000 RMB/ton.

Excessive lithium prices were once seen as an obstacle to the development of new energy storage

The rate of decline in the price of lithium carbonate in the past month was 2.5 times that of the rate of decline in the price of lithium carbonate in the past three months. At the same time, at the beginning of this year, CATL launched a “lithium mine rebate” plan, with a price of 200,000 RMB as the benchmark. Therefore, the lithium carbonate price of 200,000 RMB/ton has also become the psychological price of the game in the middle and lower reaches of the lithium battery industry.

Relevant analysis believes that the decline rate of lithium carbonate has exceeded the data predicted by most markets, and is heading for a price of 200,000 RMB/ton. According to this rate of decline, the market originally expected the price to fall to 200,000 RMB/ton by the end of the year, which may come in the second quarter of this year.

Professionals also said that there is a high probability that the price of lithium carbonate will drop in the first half of the year, and it may stabilize at least around 250,000 RMB/ton in the second half of the year. There are two main factors: one is that recycling has begun to increase and matures day by day, and the other is that the mining of new mines has increased and the supply is sufficient.

It is also the strong perception of the price of 200,000 RMB/ton of lithium carbonate that has caused some energy storage users to wait for the 200,000 RMB mark. Based on the current downward trend of lithium carbonate, some energy storage users are waiting for this threshold to arrive. It is estimated that some projects will start bidding when lithium carbonate drops to 200,000 RMB/ton, especially those projects that will not be connected to the grid until the end of the year.

Some energy storage users are waiting for the two hundred thousand mark

It is understood that some major battery cell manufacturers have already shut down some production lines. Under the fierce offensive of downstream entities such as energy storage and new energy vehicles, it is inevitable for lithium carbonate to return to rationality.

Taking off the high-priced lithium, energy storage is developing

On the contrary, the positive impact of the drop in the price of lithium carbonate on the energy storage industry chain has also begun to boost the energy storage industry chain. At present, the pace of development of global energy storage is unstoppable. It is estimated that the global installed capacity of energy storage will approach 200GWh in 2023. The accelerated decline in lithium carbonate also provides an edge to this development.

Based on the cliff-like decline of lithium carbonate, the price of lithium iron phosphate has also dropped again and again. According to the data of major quotation platforms, the price of lithium iron phosphate on March 21 was about 120,000 RMB/ton. Since the start of 2023, the high-priced lithium barrier from the upstream material side of energy storage has been basically lifted, so energy storage will develop in a lighter way in the future.

From the battery point of view, some of the top 5 energy storage battery companies fell into the dilemma of low gross profit margin in the first half of last year, and this is also the general dilemma of the energy storage industry in 2022. Since the end of 2022, the downward trend of lithium carbonate prices has generally released better market signals to battery companies.

According to industry insiders, the return of lithium carbonate prices will benefit the market in the long run. It will ease the pressure on downstream profitability, expand market demand, and benefit the overall energy storage market. The investment payback period of energy storage systems will be greatly shortened. In particular, it is good for industrial and commercial energy storage, which is the eve of the current industrial and commercial energy storage entering the market.

Taking off the high-priced lithium, energy storage is developing

It seems that the price of lithium carbonate has been adjusted in the previous stage, and the market has returned to rationality. It is expected that from the perspective of futures prices in April and after April, it is possible to enter a reasonable price of supply and demand balance.

From the perspective of system integration, energy storage system companies will generally be affected by “bad money drives out good money” in 2022, and energy storage system integration companies in China generally have low gross profit margins. Since the beginning of 2023, the integration of energy storage systems has gradually shown a trend of increasing profitability and improving product quality.

Since the beginning of 2023, as users have more awareness of product quality and the price of lithium carbonate continues to drop, the overall situation of energy storage is very clear.

Conclusion

The rational return of lithium carbonate can be regarded as what all industrial chain companies except lithium mines have been looking forward to. The rational return of lithium carbonate is also regarded as an important signal of industrial changes. It can be predicted that energy storage will usher in a new round of growth in 2023, with the help of upstream lithium carbonate whose prices return to rationality.

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