Gasgoo Munich- On October 12, the main lithium carbonate contract (LC2701) on the Guangzhou Futures Exchange closed at 108,890 yuan per ton — a daily plunge of 14,000 yuan, or 11.79%. It was the first time this year the price slipped below the 110,000-yuan threshold.
What does this figure mean in the context of six months ago?
In mid-May of this year, the main contract was still trading above 200,000 yuan per ton. In less than six months, the price has nearly been cut in half.
For auto industry insiders, the real takeaway is this: this isn't an isolated market fluctuation. It's a signal that the profit distribution across the supply chain is undergoing a profound shift.
On the Day of the Plunge: Three Pressures Hit at Once
Looking back at today's trading session, lithium carbonate left bulls with almost no room to breathe.
It opened at 115,500 yuan per ton, gapping lower immediately. By just past 9 a.m., losses had widened to 5%. At midday, it settled at 108,800 yuan per ton, officially breaching the 110,000-yuan mark. Bears piled on in the afternoon, pushing the price to a low of 104,680 yuan before a modest pullback to a close of 108,890 yuan. Volume for the day hit 405,600 lots.
Behind a single-day drop of 11.79% lay the simultaneous release of three distinct pressures.
First, a bearish report from a foreign investment bank crushed sentiment. Before Monday's open, Goldman Sachs released its latest downbeat assessment of lithium carbonate, acting as the direct fuse for the gap lower. The market read the report as a sign that expectations of long-term oversupply are shifting from industry consensus to a pricing basis for investment banks.
Second, demand expectations continue to weaken. According to analysis by Shanghai Metals Market (SMM), weak demand expectations have dominated the spot market, where prices also fell below the 110,000-yuan mark today. Procurement by end-market power battery makers remains cautious; downstream players are heavy on wait-and-see sentiment, with no signs of bottom-fishing or restocking.
Third, expectations of new supply are gaining traction. On October 11, Jiangte Electric announced progress on the Qiankeng lithium mine, a major project slated to enter the construction phase with a planned capacity of 3 million tons per year. The company has dubbed it its "Number One Project." The news deepened market concerns about a surge in supply next year.
With these three pressures compounding a technical breakdown, stop-loss orders and algorithmic selling flooded in during the afternoon session, ultimately triggering the steepest single-day decline of the year.
After the Halving: Where Is the Profit Flowing From Battery Makers?
Looking only at the futures crash, many might assume: raw materials are getting cheaper, so battery makers and automakers should be celebrating, right?
But a senior lithium industry executive, who spoke anonymously, told Gasgoo Automotive the exact opposite. Operational data from the first half of the year, which he provided, reveals the core contradiction of this cycle:
In the first half of this year, revenue from China's salt lake lithium products hit 5.601 billion yuan — a 255.53% year-on-year jump. Gross margins reached a staggering 83.46%, up 29.28 percentage points. On the cost side, production costs for lithium carbonate dropped to 24,000 yuan per ton, a 21.5% annual decline.
This data reveals two critical signals.
First, the cost advantage at the upstream resource level is becoming increasingly extreme. With lithium carbonate futures currently around 109,000 yuan per ton, the cost to extract lithium from salt lakes has fallen to just 24,000 yuan per ton. Even if prices were to halve again, salt lake extraction would still retain a gross margin of tens of thousands of yuan per ton. This cost disparity is structural, not cyclical.
Second, the industry insider offered a clear price forecast: lithium carbonate prices will return to the 50,000 to 80,000 yuan range next year.
If that prediction holds, today's 109,000 yuan is not the bottom. For upstream salt lake companies, a price of 50,000 to 80,000 yuan still implies a gross margin of 30,000 to 50,000 yuan per ton — far higher than most manufacturing sectors. But for midstream battery makers, the situation is far more complicated.
"It will be even harder for battery companies to make a profit next year," the insider stated bluntly.
Why? Because the benefits of lower lithium prices won't stay entirely with battery makers. Automakers are facing fierce competition in the retail market; as raw material costs fall, OEMs will logically demand corresponding price cuts from battery suppliers. Battery makers are caught in a pincer movement: "concessions from upstream are generous, but price pressure from downstream is even harsher."
In other words, as lithium carbonate fell from 200,000 to 100,000 yuan, battery makers' unit costs did drop — but their product prices fell even faster. Profits across the supply chain are shifting away from the high-cost midstream manufacturing sector and concentrating at the low-cost upstream resource end.
That is the true industrial implication of today's crash: it is not merely a signal of a cyclical bottom, but the beginning of a profit redistribution.
In Conclusion
The halving of lithium carbonate prices appears, on the surface, to be a normal correction in the commodity cycle. Yet, set against the broader backdrop of the EV supply chain, it reveals a harsher reality: when commodities shift from scarcity to surplus, profits concentrate at the resource end with the lowest costs. Meanwhile, midstream manufacturers — be they battery or material producers — are entering a more difficult phase of de-stocking and de-marginization.
A lithium carbonate price of 50,000 to 80,000 yuan next year means cheaper electric vehicles for consumers. But for companies in the middle of the supply chain, it could herald a prolonged winter.
