After the news of the suspension of production at Yichun lithium mine, a subsidiary of Contemporary Amperex Technology, was reported on Wednesday (September 11), Jiangxi Jiuling Lithium Industry Co., Ltd. (referred to as 'Jiuling Lithium') announced on the same evening that its mines and concentrator plants will be shut down for maintenance.

The shutdown of Jiuling Lithium is also believed to further push lithium prices to a bottom.

SMM believes that although the total output of lithium carbonate is expected to decrease at present, considering the level of lithium carbonate imports and accumulated inventory in China, there is still a surplus in the domestic lithium carbonate supply and demand, which is difficult to reverse in the short term. Therefore, even in the phase where the demand is increasing at present, which would drive up the spot price of lithium carbonate, it will still face resistance from the pressure of accumulated inventory, forming a certain obstacle to its price increase. In the short term, the spot price of lithium carbonate is expected to show a range-bound fluctuation.

Changjiang Nonferrous Metals Network stated that on the 19th, the price of lithium carbonate continued to rise, and the trend of market recovery remained unchanged.

The news of suspending production by lithium salt companies quickly boosted the rebound of lithium carbonate and also stimulated market confidence. With the gradual arrival of the traditional peak consumption season, downstream markets have shown some vitality. Although there has not been a significant increase in the production of ternary materials, the power and energy storage sectors have shown an incremental trend in September. The production plan for iron phosphate lithium has continued to increase, and some small and medium-sized manufacturers have even achieved a high level of capacity utilization, or even reached full production, which provides strong demand support for the lithium carbonate market.

In the second quarter of 2024, the total production of lithium concentrate by major overseas lithium-mining companies in operation is approximately 1.04 million tons, a 13.2% increase compared to the previous quarter and a 17.7% increase year-on-year.

Among them, the production of lithium concentrate in Greenbushes, Wodgina, Pilbara, Bald Hill, and NAL increased by 19%, 29%, 26%, 17%, and 23% respectively; while the production of lithium minerals in Mt Marion, Mt Cattlin, Finniss, and Sigma decreased by 2%, 22%, 17%, and 10% respectively.

The bottoming out of lithium prices in the second quarter has promoted the smooth release of low-cost lithium mines, but some high-cost lithium mines have shut down or drastically reduced production, resulting in a clear differentiation in lithium mine operation strategies.

According to research reports from Citic Sec, the price of lithium rebounded in Q2 2024, promoting the recovery of overseas lithium mine supply; the production of lithium extraction from salt lakes in South America increased year-on-year in Q2 2024, and performance improved compared to the previous quarter.

In September, the domestic futures price of lithium carbonate fell below 0.07 million yuan/ton, leading to an accelerated clearance of global lithium resources supply. We have lowered our forecast for the supply increment in 2024.

With the decline in domestic lithium salt production in August and the increase in cathode material production, we expect the turning point of lithium salt inventory to be imminent, and the downward space for lithium prices is limited.

Citic Sec predicts that as lithium prices fall to a low point, market expectations for the bottoming out of the lithium industry will increase, and the attention to lithium industry stocks is expected to heat up.

Lithium mining related companies:

Tianqi Lithium Corporation (09696), Ganfeng Lithium (01772)