China's Lithium Carbonate Futures Show Resilient Decline Amidst Price Reductions

The relentless decline in China's lithium carbonate futures continues, reaching new record lows, spurred by a significant drop in the prices of the primary raw material essential for manufacturing lithium-ion batteries. Oversupply issues have been a prominent factor contributing to the rapid fall in prices throughout the year.

The LC2401 lithium carbonate futures contract, considered the most active on the Guangzhou Futures Exchange, recently concluded at USD14,990 per ton, marking a new record low since the contract's commencement on July 21. Notably, in November alone, LC2401 witnessed a staggering 31 percent plunge. The prevailing oversupply conditions have exerted immense downward pressure on the lithium carbonate market.

The multifaceted downturn in lithium carbonate prices can be attributed not only to oversupply but also to dwindling demand, particularly within the new energy vehicle (NEV) sector. A sustained slowdown in NEV production is anticipated, exerting additional strain on lithium carbonate prices. Industry analysts have highlighted that the financial performances of companies operating in the lithium sector are likely to bear the brunt of these challenges.

Do-Fluoride New Materials, a Chinese manufacturer specializing in inorganic fluoride products, anticipates a significant decline in its net profit for the current year. The company projects a drop primarily attributed to the decline in lithium hexafluorophosphate prices. The impact of falling prices is evident across the lithium industry, affecting both raw material suppliers and manufacturers.

Ganfeng Lithium Group, a leading Chinese supplier of lithium battery raw materials, reported a substantial 59 percent decline in net profit for the third quarter, amounting to USD847 million, compared to the same period last year. The challenging market conditions have significantly impacted the financial performance of key players in the industry.

Similarly, Tibet Mineral Development, a Chinese lithium salt lake developer, witnessed a sharp decline in net profit during the three months ending September 30. The net profit plummeted by as much as 76 percent compared to the corresponding period last year, underscoring the widespread challenges faced by companies operating within the lithium sector.

The ongoing plunge in China's lithium carbonate futures to unprecedented lows underscores the severe challenges posed by oversupply and weakening demand in the industry. The multifaceted impact is reflected not only in futures prices but also in the financial performance of major players across the lithium supply chain. As the industry navigates these turbulent waters, stakeholders closely monitor market dynamics, anticipating potential shifts that could reshape the trajectory of the lithium market in the coming months.