Carbonate lithium futures prices have continued to fall recently, dropping to a low of 86,000 yuan/ton on Tuesday, close to the lowest price since listing. As of the close of trading at 3 p.m. today, the main contract for carbonate lithium futures, 2411, fell 1.05% to 94,500 yuan/ton. Prices around 90,000 yuan in the near future may have broken through the cost line of some enterprises.

As the price falls, many investors have said that the current price has already touched the production cost price or is difficult to fall further.

It is understood that the supply of carbonate lithium is mainly distributed in Jiangxi Province in China and Australia, Chile and other countries overseas, and the production costs in different regions are different.

According to a research report from the Huaxia Climate Technology Center, which provides consulting services, real cost, production capacity, output and inventory from Lithium in Zimbabwe, Lithium Mica Enterprises in Jiangxi Province, and South American Salt Lake Lithium projects were obtained from site visits and interviews period from the end of last year.

The report proposed that the bottom area of carbonate lithium price corresponds to cash cost of 60,000 to 73,000 yuan/ton, equivalent to a bottom price including tax of 68,000 to 83,000 yuan/ton. By 2024, 25% of lithium resource companies globally will enter a loss in the bottom area, followed by the high-cost production capacity with cash flow loss steadily clearing out and the industry bottoming out and rebounding.

Lithium companies have suspended production on a large scale, and pessimism spreads in the market.

In response to the falling price of carbonate lithium, many lithium companies have suspended production, and those that are still in operation are also reducing production capacity.

According to earlier reports by Brokerage China, due to the fact that the price of carbonate lithium has already broken through the cost line of the vast majority of enterprises, many lithium-related companies in Yichun have stopped production, and the enterprises that are still open are also drastically reducing production capacity.

In addition, not only small enterprises, but also some listed companies related to lithium production have seen a decline in performance and a drop in stock prices.

As of the close of trading on June 27, lithium mining concept stocks generally fell, with Youngy Co., Ltd. (002192.SZ), Sinomine Resource Group (002738.SZ), Ganfeng Lithium Co., Ltd. (002460.SZ), and Tianqi Lithium Corporation (002466.SZ) all falling more than 3%.

On April 24, lithium mining giant Tianqi Lithium pre-disclosed a huge loss for the first quarter, which also caused a stir in the market. The latest financial report showed that Tianqi Lithium achieved revenue of about 2.585 billion yuan in the first quarter, a year-on-year decrease of 77.42%; the net loss attributable to shareholders of the listed company was about 3.897 billion yuan, and net profit was about 4.875 billion yuan in the same period last year, which turned from profit to loss year on year.

Short-term oversupply, exploring the bottom is still ongoing.

From the fundamentals of carbonate lithium futures, the current maintenance of lithium salt plants has limited impact on the supply of carbonate lithium, domestic production continues to grow rapidly, short-term downstream demand is weak, enterprise procurement is cautious, inventory continues to rise, and momentum to push prices up may still be insufficient.

According to news from SMM on Shanghai Nonferrous Metal Network, after a lithium salt plant in Jiangxi announced its maintenance in July, some lithium salt plants have increased their bid sentiment. At the same time, the price of futures contracts is sensitive to bullish news when prices are close to the bottom, making the price increase larger than on Monday. Overall, upstream sentiment has been boosted this week, but some downstream buyers still closed deals at lower prices.

For the future, Guotai Junan Futures believes that the core reason for the sharp decline in the price of carbonate lithium is still the basic supply-demand surplus and warehouse pressure. Although the maintenance of large factories has reduced supply, it still cannot shake the current oversupply pattern.

Guotai Junan Futures believes that the price of carbonate lithium has returned to a low level and once again tested the cost support below it. Under the background of little inventory outflow, the possibility of further price declines or breaking through the previous low point is relatively limited. The overall trend is expected to remain weak and volatile.