The lithium carbonate market has seen a pullback after a recent surge, with significant intraday declines observed. This movement is primarily driven by strengthened supply recovery expectations.
Supply expectations have been bolstered by the announced restart of the Bald Hill lithium mine in Australia. The operator, Mineral Resources, stated the decision is based on a significant and sustained rebound in lithium prices. The restart process is scheduled to begin in late May, with mining and crushing operations to commence in June. The first batch of spodumene concentrate is expected in July. The mine has an annual production capacity of 165,000 dry metric tons, equating to approximately 140,000 tons of SC6 lithium concentrate or about 17,500 tons of lithium carbonate equivalent (LCE).
Concurrently, imports, particularly from Chile, have remained at high levels. Customs data shows that Chile exported 30,575 tons of lithium in April, including 29,526 tons of lithium carbonate. Exports of lithium carbonate to China for the month reached 22,957 tons. This influx of lithium salts from South America has significantly narrowed the domestic supply gap in China.
On the demand side, as lithium carbonate prices surpassed 200,000 yuan per ton, the internal rate of return (IRR) for a typical 100MW/200MWh domestic energy storage project has fallen below the 6% investment return threshold for state-owned enterprises. This has raised market concerns about the sustainability of the high growth rate in China's energy storage consumption going forward.
While current production resumptions and demand have not shown signs of weakening, the market is largely trading on future expectations. Consequently, after a rapid price increase, the market has begun to correct.
Looking ahead, the industry remains in a state of monthly supply deficit. Strong fundamentals persist, including a projected shortfall in lithium concentrate shipments from Zimbabwe in May and June, alongside a continued doubling in the growth rate of energy storage consumption. The scale of announced production restarts so far is insufficient to alter the overall tight supply-demand balance for the year. Therefore, significant downside for lithium carbonate prices is expected to be limited. From an operational standpoint, it may be prudent to await a suitable correction before considering long positions.
Comments