Industrial-grade lithium carbonate prices in China today fell below 400,000 yuan ($58,000) per ton, a pullback of more than 30 percent from the November peak.

The price of lithium carbonate, a key raw material for batteries, continues to fall, a reversal from where it was just a few months ago.

Industrial-grade lithium carbonate prices in China fell below RMB 400,000 yuan ($58,000) per ton today, a pullback of more than 30 percent from the November peak.

Quotes for industrial-grade lithium carbonate fell by RMB 5,000 per ton today, with the average price at RMB 395,000 per ton, back to early 2022 levels, according to data from My Steel.

Battery-grade lithium carbonate was quoted down RMB 6,500 per ton today, with an average price of RMB 422,500 per ton.

For comparison, at one point in November 2022, battery-grade lithium carbonate prices in China rose to around RMB 600,000 per ton. This was about 14 times the June 2020 average price of RMB 41,000 per ton and up about 55 percent from RMB 364,000 per ton in early February 2022.

The rapid growth in global demand for new energy vehicles (NEVs) is seen as a key reason for the sharp rise in lithium carbonate prices over the past two years.

But the NEV industry in China has been showing signs of weaker demand since the second half of last year, leaving the momentum for rising lithium carbonate prices weakened.

In a November 28 research note, Morgan Stanley argued that lithium prices are likely to see a material correction in 2023 as headwinds from demand growth allow supply to catch up.

Morgan Stanley saw Chinese lithium carbonate prices at $67,500 per ton in the first half of 2023, falling to $47,500 per ton in the second half of 2023.

Ouyang Minggao, a member of the Chinese Academy of Sciences, said at a February 17 electric vehicle industry conference that he expects lithium carbonate prices in China to drop to RMB 350,000 to 400,000 per ton in the second half of this year.

China's lithium-ion battery shipments are expected to be about 1 billion kWh this year, with growth rates set to drop sharply, Ouyang said.

The reason behind this is lower growth rates in the NEV industry and lower demand for power batteries in lower-capacity models such as plug-in hybrids.

This will ease the market pressure on lithium-ion battery demand, but to ensure the development of the battery recycling industry, a more reasonable equilibrium price range is RMB 300,000 to RMB 400,000 per ton, Ouyang said.

Lithium carbonate's previous continued price hikes have sparked complaints from several auto industry executives.

William Li, founder, chairman and CEO of (NYSE: NIO), said in an analyst call in November last year that he does not believe the continued rise in lithium carbonate prices was due to a supply-demand imbalance, but rather to speculation.

NIO expects the price of lithium carbonate to fall back to RMB 300,000 to 400,000 per ton in 2023, Li said at the time.

Each RMB 100,000 increase in lithium carbonate prices will have a 2 percentage point impact on NIO's gross margin, Li said.

The world's largest power battery maker appears to be betting that the price of lithium carbonate will fall further.

has launched a program for a few strategic customers, including NIO, , and , with core terms including settling a portion of its power battery supply at a price of RMB 200,000 per ton of lithium carbonate over the next three years, according to a February 17 report by 36kr.

Car companies that sign this partnership will need to commit about 80 percent of their battery purchases to CATL, according to the report.

(1 $= RMB 6.8968)

CATL reportedly cutting battery costs significantly for some clients including NIO, Li Auto