Since the current price of lithium carbonate fell below 80000 yuan, the contradiction between supply and demand has further accumulated and intensified, opening up a new downward channel for lithium prices.

As of August 15th, the main contract LC2411 for lithium carbonate has fallen to 72400 yuan/ton, and the recent contract LC2409 has fallen to 71650 yuan/ton. If the decline persists, the above contract prices will all fall below 70000 yuan on the last trading day of this week. Among the remaining 10 lithium carbonate futures contracts, 9 contracts outside LC2508 have closing prices below 80000 yuan/ton.

These three sets of prices on the futures market represent the main force of funds' predictions and judgments on the trend of lithium prices within the year, the market's predictions and judgments on spot prices, and the market's predictions and judgments on distant lithium prices.

From the current market understanding of fundamentals, lithium prices not only have the possibility of falling below 70000 yuan/ton in the short term, but may also be difficult to rise back to 80000 yuan/ton within the next year. For downstream enterprises in the lithium battery industry chain, the continuous decline in lithium prices means that product prices have further lost cost support. The more urgent task now is to find ways to enhance product value.

In terms of spot goods, based on data from different sources, the average price of battery grade lithium carbonate on the same day was reported to be around 75000 yuan/ton, but some institutions have also offered a price of 72000 yuan/ton, which is very close to the latest price of the main contract. The daily decline of spot carbon electricity remains between 1500 yuan/ton and 2100 yuan/ton, with an expanding trend compared to August 14th.

From the news perspective, there is no significant bearish disturbance except for the supply side Blue Science spot auction which sold at 74000 yuan/ton. The continuous decline in lithium prices and reaching the 70000 yuan mark is still the result of the accumulation of supply-demand surplus contradictions.

Previously, the market hoped that the unexpected development of terminal new energy and energy storage demand would boost lithium prices. However, the structural bottleneck of revenue and profit growth has made terminal host factories, downstream battery factories, midstream material factories, and others' expectations and ability to bear the rebound of lithium prices' only decrease and not increase '. In this context, the question raised to the industry has shifted from "when will lithium prices rebound" to "where will lithium prices fall", and the focus of observation has also shifted from emphasizing demand development to emphasizing supply clearing.

Firstly, the concentrated trading in the market in August has raised expectations for stocking up during the peak season of the lithium battery industry chain, while the unobstructed decline in lithium prices indicates that the peak season expectations are gradually falling through.

From the perspective of production scheduling alone, battery and material scheduling has to some extent reflected the demand during the peak season of "Golden September and Silver October". However, the proportion of lithium carbonate customer supply exceeds 80%, coupled with long-term agreements with lithium salt factories and the guarantee of over 30000 tons of raw material inventory, the three major obstacles continue to suppress the demand for material factories to replenish inventory, making it difficult for short-term demand to bring significant price rebounds.

Secondly, as the degree of oversupply intensifies, the demand scale for achieving supply-demand balance is passively raised, and the effectiveness of macro policies such as trade in is yet to be fully fermented. There is still sufficient time for lithium prices to continue to decline.

Oversupply is simultaneously occurring in lithium mines and lithium salts. The overall lithium mining sector is in a period of concentrated capacity release, with significant new supply from top miners and Africa and the Americas. The impact of production cuts and shutdowns in some mines is relatively limited.

On the lithium salt side, the 70000 yuan lithium price has begun to touch the cost line of integrated lithium salt factories such as Yongxing Materials, but it does not mean immediate and large-scale capacity clearance. At present, the operating rates of domestic spodumene and lithium mica smelters exceed 50% and 40% respectively, while the operating rate of salt lake lithium extraction enterprises during peak season is as high as about 80%. Lithium salt factories that have fallen into cost inversion have also shifted to contract processing or relied on previously accumulated cash to alleviate pressure and delay clearance, resulting in a lengthy process of capacity adjustment.

Looking back at the historical cycle, the clearance of scale from the lithium mining end is the first domino sign for the easing of supply and demand contradictions. At present, the overall cost of Australian mines is between 40000 to 60000 yuan/ton LCE, and the 70000 yuan lithium price is only being tested for high cost mines. The latest support for lithium prices in the short term is still waiting for the signal from the lithium mining sector.