[Bulk Commodities] Has the price of lithium carbonate bottomed out?
How crazy has the lithium carbonate market been this year? In May it briefly surged to around 200,000 yuan per ton, and now it's fallen back to around 100,000. In less than half a year, the price has roughly halved. Imagine you run a mine: you used to get 200,000 yuan per ton, now only 100,000, but equipment depreciation, wages, and mine construction costs don't get cut in half along with it. So corporate profits take a hit, and the stock price naturally suffers too.
It's not that demand for lithium carbonate is disappearing. Energy storage and new energy vehicles are still consuming huge amounts of lithium resources, and after this price swing, profitability among upstream mines will clearly diverge. Companies with low-cost mines may still make money. Those processing firms that rely on buying expensive ore externally could see their profits squeezed. Only when prices fall low enough that some high-cost capacity stops making money, companies start cutting production and delaying expansion, and downstream demand recovers—only then might supply and demand truly improve.
That's the logic behind my interest in lithium carbonate. It's not seeing it drop a lot and assuming it must rebound, but studying when this downturn will force the industry to readjust supply.
As for those two individual stocks, I wouldn't recommend ordinary people touch them. Right now the whole A-share market is a mess, and you'd also need to assess future profitability. Semiconductors and others have already been beaten into value territory—why insist on clinging to these two?
I wouldn't suggest beginners jump into lithium carbonate futures. Commodity futures have margin and leverage; even if you get the long-term direction right, short-term violent swings can force you to stop out. Stocks are relatively easier to understand, but Tianqi and Ganfeng can't simply be treated as proxies for the lithium carbonate price. Even if you choose an industry ETF, you need to check exactly which companies it holds—don't assume that because 'lithium battery' is in the name, you're buying lithium mines.
The biggest difference between futures and stocks isn't that you can go long or short, but that leverage can turn a correct medium-term judgment into a failed short-term trade.
One lithium carbonate futures contract is one ton; at 100,000 yuan per ton, one contract represents 100,000 yuan of goods value.
Suppose you hold two contracts and the price moves against you by 1,000 yuan/ton—that's a 2,000 yuan paper loss, before fees.
Position size must be worked backward from how much you can afford to lose, not from how much margin is left in your account.
Comments
0