(Yicai) Oct. 13 -- Chinese lithium carbonate futures prices have fallen to the lowest level in nearly 10 months because of increasingly pessimistic expectations about the long-term supply and demand balance.

The most active contract for lithium carbonate, a main raw material for lithium batteries, on the Guangzhou Futures Exchange dropped below CNY110,000 (USD16,430) per ton yesterday, down about 50 percent from its peak in mid-May and more than 37 percent since September. Today, it continued to decline, down 3.12 percent, with a settlement price of CNY 105,480 per ton.

“This season is a peak demand period for lithium carbonate, and the supply-demand balance remains tight,” Wang Meidan, analyst at Citic Futures, told Yicai. “But the main factor affecting lithium carbonate prices has gradually shifted toward expectations of supply and demand for next year.”

The global lithium market will switch from a supply shortage of 404,000 tons of lithium carbonate equivalent this year to a supply surplus of 444,000 tons of lithium carbonate equivalent in 2028, according to a recent report by the Goldman Sachs Global Metals and Mining Research Team.

As a result, Goldman Sachs expects the average spot price of lithium carbonate in China to drop to around CNY100,000 per ton in 2027 and to around CNY84,000 (USD12,545) per ton in 2028.

For lithium salt companies with self-sufficient lithium mineral resources, the current lithium carbonate price is still within an acceptable range, an industry insider told Yicai. However, for some high-cost producers that rely on purchasing lithium ore to make lithium carbonate, the price has already fallen below the break-even point, as their production cost is around CNY140,000 per ton, the insider noted.

If the price of lithium carbonate continues to decline, some high-cost production lines may be forced to reduce output or even shut down, the insider predicted.

The production and shipping volumes of overseas lithium mining projects are generally on the rise, according to industry experts. With a significant increase in the volume of lithium ore arriving from Zimbabwe and Australia, the supply of raw materials is expected to gradually improve in the fourth quarter.

Although factors such as the decline in spot inventory can provide some support for lithium carbonate futures prices in short term, they are expected to continue to face downward pressure as more African ores arrive at ports, Wei Chaoming, chief researcher for new energy at Founder Cifco Futures, told Yicai.

Editors: Tang Shihua, Futura Costaglione