Source to China Times, LCE prices in China have persistently declined, with the average price for battery-grade LCE on the 26th standing at CNY 178,500 per ton (CNY is used throughout, same as above), marking a decrease of CNY 2,000 compared to the previous day. Prices remain below the significant threshold of CNY 200,000 per ton, extending the weakness observed since September. The market suggested that the profit distribution pattern within the industry chain has shifted noticeably from upstream to downstream.

Based on TrendForce’s research, the sluggish demand in the consumer electronics segment in August forced battery cell suppliers to focus on liquidating existing inventories. TrendForce indicates that the ongoing drop in the prices of lithium salts and cobalt [II, III] oxide shows no signs of bottoming out. Manufacturers, therefore, seem hesitant to stock up, opting for a “business as usual” approach to production. A downward trajectory of LCO battery prices seems likely through September. 

Weak demand in both the power and energy storage sectors has put pressure on lithium salt prices, which spiraled down to an average of CNY 230,000/ton in August—a steep QoQ dive of 20%. TrendForce warns that prices may plunge to less than CNY 200,000/ton, making buyers increasingly skittish about making purchases. However, there’s a glimmer of hope: suppliers have initiated production cutbacks, providing a potential floor for lithium salt prices to rebound from as we approach September.

According to TMTPOST, as lithium salt is an upstream component of the lithium battery industry chain, fluctuations in its prices affect the profitability landscape of the entire chain. With the sharp decline in lithium salt prices, the profit margins of lithium salt producers have been notably compressed. Taking the industry leader, Tianqi Lithium, as an example, its revenue for 1H23 increased by 73.64% to CNY 24.823 billion, but its net profit decreased sharply by 37.52% to CNY 6.452 billion. The key driver behind this decline in performance is the fall in lithium prices, which resulted in an 8.9 percentage point year-on-year decrease in the company’s gross profit margin for lithium compounds and derivative products, dropping to 78.64%.

Investors pointed out that as upstream lithium prices decrease, the prices of lithium battery raw materials such as LFP will also correspondingly decrease, thereby reducing the cost of lithium batteries. For automakers, this translates into lower production costs and improved profit margins.

The decline in lithium raw material prices has led to improved profitability for battery manufacturers and automakers. Taking CATL as an example, the revenue growth rate of its power battery systems for 1H23 exceeded the cost growth rate, resulting in a gross profit margin of 20.35%, an increase of 5.31 percentage points year-on-year. (Image credit: Tianqi Lithium)

(Source: https://www.ctee.com.tw/news/20230927700163-439901)

Australian mining company, Liontown Resources Ltd., has just announced it’s agreed to a buyout proposal of AUD 6.6 billion (USD 4.3 billion) by US lithium producer Albemarle Corp (ALB). TrendForce’s latest “2023 Global Li-Ion Battery Industry Chain Market Supply and Demand Report,” indicates that global lithium production in 2022 hit approximately 860,000 tons of Lithium Carbonate Equivalent (LCE). ALB, with its diverse lithium portfolio (spodumene, lithium salt, and tolling), accounted for over 180,000 tons of LCE. Predictions for 2023 spotlight a global lithium production reaching 1.21 million tons LCE, and ALB is set to churn out 200,000 tons of that, holding firmly onto the lead with its 17% market share.

TrendForce reports that ALB has strategically secured the planet’s most abundant, high-quality, and cost-efficient reserves of lithium salt lake and minerals across regions like Chile, Australia, and the US. Moreover, when it comes to lithium refinement, ALB emerges as the global titan with the world’s greatest lithium salt production capacity. As it stands, ALB’s annual production capacity for lithium hydroxide reaches 110,000 tons, accounting for 23% of the world’s entire production.

Liontown, a key supplier of Australia’s battery minerals, holds the reins to two major hard rock lithium deposits: Kathleen Valley and Buldania. These areas boast lithium reserves of 156 million tons (5.4 million tons LCE) and 14.9 million tons (370,000 tons LCE), respectively. As Kathleen Valley gears up for completion by the end of 2023, its inaugural production phase is set to roll out by 2Q24, targeting an annual yield of 500,000 tons of lithium spodumene concentrate. And that’s just the start, with plans to elevate this figure to a whopping 700,000 tons annually. On the other hand, the Buldania project is still in its nascent stage, focused on exploration and surveying.

With ambitions to acquire Australian miner Liontown, ALB set to command the world’s largest lithium resources, TrendForce believes.

Should ALB’s acquisition of Liontown materialize, it would cement its control of global lithium resources and bolster its lithium salt production framework. Yet, ALB isn’t the sole player in this vast industry. Major lithium producers, including SQM, Tianqi Lithium, Ganfeng Lithium, Yahua Industrial, Chengxin Lithium, and Livent, are fervently ramping up their production capabilities in lithium carbonate and lithium hydroxide.

Lithium, the backbone of modern tech, is set to see its global demand skyrocket. TrendForce’s insights reveal a bustling 2022 with around 40 lithium mining projects worldwide. After 2025, the number of projects in production will increase to a staggering 100+. To safeguard their global dominance and sharpen their competitive edge, lithium chemical producers are strategically aligning with upstream lithium miners to secure lithium resources. Case in point: Livent’s recent merger with Allkem in May of this year and ALB’s designs on Liontown. This momentum signifies a trend toward a more consolidated global lithium resource landscape, with mergers and acquisitions becoming the norm in upcoming years.