Half of the four major lithium producers in Yichun, Jiangxi province, nicknamed the “lithium capital of Asia,” have opted to shut down production, according to local media.
Some producers in a Chinese lithium-producing hub are shutting down production as lithium prices have seen a rare streak of several months of declines this year.
With lithium carbonate prices falling by about RMB 10,000 ($1,450) per ton per day in recent days, half of the four major lithium producers in Yichun, Jiangxi province in eastern China, have opted to shut down production, local media The Paper said today, citing a source from a major producer.
Yichun, nicknamed the “lithium capital of Asia,” is one of the world’s largest sources of lithium. Notably, the city’s lithium production was disrupted in late February by regulators investigating noncompliance.
However, these disruptions did not stop lithium carbonate prices from falling, even though many expected so.
Lithium producers in Yichun, who were forced to shut down production some time ago because of government environmental actions, are now voluntarily choosing to do so in the face of the current market, The Paper cited the source as saying.
There are four main companies with mature production lines and lithium mica mines in Yichun, namely Yongxing New Energy, Jiangxi Special Electric Motor, Feiyu New Energy and Nanshi Lithium, which have a total annual capacity of 105,000 tons, according to the report, which does not mention which two lithium producers have stopped production.
Zhicun Lithium, which was founded in 2021 and also has lithium capacity in Yichun, currently has nearly half of its lithium carbonate production line shut down, the report said, citing a person familiar with the matter.
In 2021, Yichun produced 81,000 tons of lithium carbonate, more than a quarter of China’s total lithium carbonate production.
As of July 2022, Yichun’s lithium carbonate capacity of 180,000 tons represents 40 percent of China’s entire lithium carbonate capacity of 450,000 tons, the report noted.
The RMB 250,000 per ton price of lithium carbonate is seen as break-even point for much of Yichun’s production of lithium extracted from mica, according to the report.
At one point in late November last year, battery-grade lithium carbonate was quoted at RMB 590,000 per ton in China, about 14 times the average price of RMB 41,000 per ton in June 2020.
Since then, lithium carbonate prices have continued their downward spiral, and have not seen a single day of gains this year.
Yesterday, battery-grade lithium carbonate prices in China fell RMB 8,500 per ton to an average price of RMB 224,000 per ton, according to Mysteel.
Industrial-grade lithium carbonate fell RMB 6,000 per ton yesterday to an average price of RMB 189,000 per ton.
Today is Tomb Sweeping Day in China and lithium carbonate quotes are not available.
On February 26, Yicai reported that lithium ore processing companies in Yichun have shut down production industry-wide to rectify mining violations.
Yichun produces between 10,000 and 12,000 tons of lithium carbonate each month, and a one-month shutdown would affect about 10 percent of global supply, the report said, citing a lithium battery industry analyst who declined to be named.
That was seen at the time as something that would stop the price of lithium carbonate — then at about 400,000 yuan per ton — from falling, but that expectation did not materialize.
The intensity of lithium carbonate’s decline did decrease in early March, with daily declines of less than 1 percent from March 3 to March 8, according to data monitored by CnEVPost.
After that, lithium carbonate continued to fall sharply, with the price of battery-grade lithium carbonate and industrial-grade lithium carbonate falling 5.10 percent and 4.88 percent, respectively, on April 3, both the largest single-day declines of the year.
In 2022, the supply and demand for lithium carbonate and lithium hydroxide were actually in balance, and there was a lot of hype behind the price surges, said Wang Yu, chairman of battery maker Farasis Energy, in an interview during the China EV 100 Forum held on April 2.
Based on this situation this year, lithium carbonate prices are expected to fall rapidly, Wang said.
Lithium carbonate prices have already fallen to RMB 250,000 per ton and are expected to fall further, with a drop to below RMB 100,000 very likely, he said.
($1 = RMB 6.8798)