Many predict that the battery-grade lithium carbonate price will eventually return to about CNY 200,000 ($28,960.05)/tonne in 2024, especially after CATL's "new price mechanism" was disclosed, Kallanish learns. 

In China, the average market price of battery-grade lithium carbonate dropped from CNY 424,000/t to CNY 401,000/t, a 5.42% reduction during the past week. 

According to the current trend, the price of lithium carbonate will likely drop to CNY 300,000-350,000/t in 2023 and then further decline. 

The cost of producing lithium carbonate varies partly due to different extraction methods. Salt lake lithium extraction is the method with the lowest cost. The production cost is only CNY 35,000-40,000/t, followed by companies that own equity mines. This also means that when the market price of lithium carbonate drops to CNY 200,000/t, those companies extracting lithium from spodumene will have a difficult time because the production cost is likely to be higher than CNY 300,000/t. 

International Chamber of Commerce analyst Qian Yi contends that the supply of lithium carbonate is slightly greater than the demand.

"In the first quarter, the demand is relatively sluggish, which is normal because it is not the traditional peak season. I believe it will gradually resume in the second quarter, especially given that in the past few days China has continuously released favourable policies for new energy vehicles. The recovery of new energy vehicles is better than expected, and the recovery in foreign countries is faster than in China."

Everbright Securities thinks at present cathode material companies have basically turned losses into profits, and lithium carbonate inventories are at low levels. Lithium prices have reached the supporting line in stages. It is expected that production will rebound in April, but after the release of lithium supply in the second half of the year, the contradiction between supply and demand will appear again.