Battery-Grade Lithium Carbonate Prices will Correct Another 20-25 Percent in 2023 After Seeing Their Biggest One-Day Drop of the Year

The year's largest one-day reduction in lithium carbonate pricing was recorded on Monday in China, according to a new research, as lithium price falls accelerated there. All lithium stock prices have been reportedly increased.

In a separate analysis released, it is predicted that the lithium shortage from last year, which caused spot prices to more than thrice between November 2021 and November 2022, will turn into a surplus in 2023.

According to data compiled by CnEVPost, the average price of battery-grade lithium carbonate decreased from last Friday to Monday by 12,500 yuan per tonne (USD 1,814 per tonne).

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This represents a decrease of 3.85%, the largest decline of the year according to the data. As of March 20, lithium carbonate prices have decreased by roughly 47% from their peak near 600,000 yuan in November of last year and by roughly 40% year to date. According to a recent Reuters story, the market is expected to fall another 25% by year's end, to below 300,000 yuan, according to analysts.

Falling prices could relieve cost pressures for EV manufacturers. The decreases in price have ruined shares for lithium miners.

Nio management stated on a March 1 results call that they anticipate lithium carbonate costs to drop to 200,000 yuan per tonne this year, increasing gross margins. Livent provided a depressing sales forecast for 2023 on February 15.

Lithium-ion batteries are created using lithium carbonate. 80% of the demand for lithium-ion batteries comes from electric cars (EVs), and businesses are competing to develop better EV battery technologies.

EV stocks and lithium stocks

In Monday's stock market trading, shares of Livent (LTHM) and Albermarle (ALB) each increased by 0.9% and 2.5%, respectively. SQM (Sociedad Quimica y Minera) increased by 3.2%. Piedmont Lithium (PLL) slowed down by 0.4%. Following a decline in profits in February, lithium stock prices generally linger below important moving averages. Around a third of ALB's shares have been lost since last November.

Nio (NIO) increased 5.7% to 8.73 on Monday, a significant decline from the 50-day moving average.

Lithium Prices Drop

The price decline of lithium is the result of several reasons. The world's largest and fastest-growing market for electric vehicles, China, saw a dramatic decline in EV demand towards the end of last year before the expiration of the subsidies used to encourage sales there.

Rare reductions offered to automobiles this year by Chinese battery juggernaut CATL spurred the price decline.
Presently, companies like Albermarle and Livent are adding capacity, and established mines like Sociedad Quimica y Minera's Salar de Atacama are rapidly growing.

In fact, according to Bank of America Securities, the shortage of lithium that drove up prices in 2022 may become a surplus in 2023 as "a lot of supplies pour out" of mines.

This year, a 38% increase in the supply of lithium is anticipated. Because of this, 2023 is probably going to end up being a lithium surplus year, the bank's head of Asia-Pacific basic materials, Matty Zhao, told CNBC.

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Zhao claims that since 2021, the sharp increase in lithium prices has stimulated new supply sources.

The EV market in China nearly doubled in size in 2022, but growth is forecast to abruptly halt to 31% in 2023. Zhao anticipates a 22% increase this year.

As per Procurement Resource, Prices for battery-grade lithium carbonate will recuperate another 20–25 percent in 2023 after seeing their largest one-day decline of the year. According to a new research, the price of lithium carbonate fell by the most in one day this year on Monday in China as the country's lithium price declines increased. Prices for all lithium stocks rose.

According to a different analysis, the lithium shortfall from the previous year, which increased spot prices by more than a third between November 2021 and November 2022, will change into a surplus in 2023. CnEVPost data show that from last Friday to today, the average price of battery-grade lithium carbonate dropped by 12,500 yuan per tonne (USD 1,814 per tonne).