Lithium carbonate prices have been on a steady decline since the end of last year, and the trend is expected to continue, according to Ouyang Minggao, a member of the Chinese Academy of Sciences. Speaking at an electric vehicle industry conference, Ouyang predicted that lithium carbonate prices in China will fall to between 350,000 yuan ($50,890) and 400,000 yuan per ton in the second half of 2023. This forecast suggests that prices could drop by as much as 20 percent further in China this year.
The current average prices for battery-grade and industrial-grade lithium carbonate in China are RMB 440,000 per ton and RMB 412,500 per ton, respectively, down from RMB 5,500 and RMB 4,000 per ton respectively, as reported by My Steel.
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Ouyang attributed the declining demand for power batteries to lower growth rates in the new energy vehicle (NEV) industry, particularly in lower-capacity models such as plug-in hybrids. This decrease in demand is expected to ease the pressure on the lithium-ion battery market, but Ouyang warned that a more reasonable equilibrium price range for the development of the battery recycling industry would be between RMB 300,000 to RMB 400,000 per ton.
The growth rates in China’s lithium-ion battery shipments are also set to drop sharply this year, with an expected shipment of about 1 billion kWh, according to Ouyang. This is in line with his previous statement last year that while the drivers of NEV sales growth will be there for the long term, the amplified demand for lithium resources brought on by panic stockpiling was temporary.
The rapid development of China’s NEV industry led to a sharp rise in lithium carbonate prices in the past two years, with battery-grade lithium carbonate prices briefly exceeding RMB 600,000 per ton in November 2022. However, upstream raw material sellers have started to loosen their offers, and demand for NEVs has been lower than expected, leading to stabilizing prices.
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Morgan Stanley sees the potential for a material correction in lithium prices in 2023 as headwinds to demand growth allow supply to catch up. The bank expected lithium carbonate prices in China to be at $67,500 per ton in the first half of 2023, falling to $47,500 per ton in the second half of 2023, implying a 35 percent decline from spot prices at that time.
The rise in lithium carbonate prices has also impacted EV makers, with higher battery costs leading to a relatively big impact on NIO’s gross margin, according to William Li, the company’s founder, chairman, and CEO. However, Li believes that the continued rise in lithium carbonate prices was due to speculation rather than a supply-demand imbalance. NIO expected the price of lithium carbonate to fall back to RMB 300,000 to 400,000 per ton in 2023.
