June Lithium Prices Hit New Low for the Year; Cell Prices Still Facing Downward Pressure

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TrendForce reports that June saw a significant drop in lithium prices due to a focus on inventory reduction in the downstream battery sector. Weak demand for lithium salts and sluggish shipments of lithium carbonate—compounded by short-term oversupply—drove lithium carbonate prices to a new low for the year. Prices fell from over CNY 100,000 per ton last month to the range of CNY 90,000 per ton.

Battery costs have fallen in line with declining raw material prices, leading to a sustained decrease in EV battery cell prices. TrendForce’s survey indicates that in June, EV battery cell prices fell by 1-2% compared to May. Monthly ASP for square ternary, square LFP, and pouch ternary EV battery cells were CNY 0.49/Wh, 0.42/Wh, 0.51/Wh, respectively.

In the ESS sector, the mid-year peak in grid-connected installations in China has ended, leading to a decline in ESS cell orders. Additionally, the drop in lithium carbonate prices has not provided stable support for ESS cell prices, resulting in a price decrease. In June, the average price for LFP ESS cells was CNY 0.41/Wh—down 4.2% from May.

TrendForce analysis indicates that competition in ESS cell pricing remains intense, with cell and system makers adopting low-price strategies to secure orders. This has pushed current prices of ESS cells and systems below the cost range for most cells makers and poses a significant challenge to cost control. Major cell makers are now competing in the 300 Ah+ large-capacity cell product segment and by 2Q24, most mainstream suppliers are expected to begin mass production of 300 Ah+ cells, potentially leading to further cost reductions.

TrendForce notes that the lithium battery market experienced a peak season from March to May. However, post-June, demand for raw materials for battery cells has weakened due to sufficient pre-stocking by downstream sectors. Lithium prices are under pressure given current market conditions with relatively loose supply. In July, market demand is expected to remain weak, with lithium prices falling to the sensitive range of CNY 80,000–90,000 per ton. Despite some supply-side contraction, overall supply will still exceed demand as the weak price trend persists. 

Consequently, the cost support for EV and ESS cells will continue to weaken and cell prices expected to face downward pressure at the beginning of the third quarter. Stability or a rebound in prices will depend on restocking demand during the peak season at the end of the third quarter.