In the first half of the year, supply and demand achieved a balanced state, but it is anticipated that the balance will shift towards loosening in the second half. In the latter half of the year, global demand for new energy vehicles is expected to continue growing, although at a slower rate compared to the previous year’s high demand. Both domestic and overseas storage levels have been steadily increasing, albeit with relatively low contributions. On the supply side, increased production from Australian lithium mines, South American salt lakes, African lithium mines, and domestic mica sources will drive overall supply growth in the second half of the year. This increased supply growth is projected to outpace the growth rate of demand, resulting in an oversupply of 85,000 tons of lithium carbonate equivalent (LCE). As a result, lithium prices are estimated to fluctuate between 200,000 and 300,000 RMB per ton in the second half of the year.
Core logic:
- Policy measures implemented in the first half of 2023 are expected to stimulate the consumption of new energy vehicles in both the short and long term.
- Regarding supply, disruptions in the domestic mica supply will lead to a decrease in lithium supply to 1.161 million tons LCE in 2023. However, the growth in lithium production projects from Australian mines, Africa, and South America will compensate for this decline.
- On the consumption side, the global demand for new energy vehicles is anticipated to maintain a high growth rate in 2023. Nevertheless, due to last year’s elevated consumption levels, the growth rate will slow down in the second half of the year. Energy storage, driven by policies, will continue to experience significant growth and become the primary driver of lithium salt consumption. An inflection point is expected for consumer electronics terminals in the third quarter, with an annual demand of approximately 1.076 million tons of LCE.
- Considering the supply-demand balance, the domestic market shifted from a significant surplus to a tight balance between May and June in the first half of this year, while a small surplus persisted globally. However, the resumption of domestic mica production and the output from overseas projects in the second half of the year will result in both global and domestic supply surpluses, amounting to approximately 85,000 tons of LCE.With the anticipated resumption of domestic mica ore production and increased volumes of imported lithium ore, domestic supply is expected to witness significant year-on-year and quarter-on-quarter growth in the third and fourth quarters. However, the growth rate of demand may slow down during this period, leading to lithium carbonate prices fluctuating between 200,000 and 300,000 RMB per ton in the second half of the year.
