In Q1 2023, lithium product prices have significantly dropped compared to the same period last year, leading to a sharp decline in net profit for companies such as Jintai Motor. According to recent financial reports from lithium-ion industry chain businesses, lithium mining enterprises that previously enjoyed high profits due to surging lithium carbonate prices now face shrinking profits.
Jintai Motor’s Q1 financial statement reveals a total revenue of CNY 700 million ($105 million), down 48.32% year-on-year. The net profit attributable to shareholders of the listed company reached CNY 50.65 million ($7.6 million), a 92.39% decrease compared to the same period in 2022. The company cited reduced sales volume and falling lithium salt product prices as the primary reasons for the decline in revenue and net profit.
The stark contrast between the company’s stellar 2022 performance, with a net profit of approximately CNY 2.33 billion ($349.5 million) – a 503.05% increase year-on-year – and its Q1 2023 results highlights the impact of falling lithium salt prices on its financial performance.
Domestic battery-grade lithium carbonate spot prices have plunged to CNY 238,000 per ton ($35,700) as of March 31st, 2023, a 53.51% decrease from CNY 512,000 per ton ($76,800) at the end of 2022. In comparison, prices rose from CNY 278,000 per ton ($41,700) at the beginning of 2022 to CNY 502,500 per ton ($75,375) by March 31st of the same year.
The falling prices and weakened demand in the downstream sector have inevitably impacted the revenue and net profit levels of lithium mining companies in China. Other businesses, such as Tianli Lithium, have also experienced net profit declines of over 90% in Q1 2023. Reports suggest that over half of the 30 lithium mining companies that have disclosed their Q1 financial results have seen a decrease in net profit, with five firms transitioning from profit to loss.
Despite the poor Q1 performance, market enthusiasm for lithium mining remains high. Foreign governments are reportedly strengthening their control over lithium resources, and Chinese media have emphasized the need for continuous development of lithium resources as essential elements for electric vehicle production.
As the world’s largest importer of lithium resources, China faces potential supply chain risks and must strive for self-sufficiency and control over lithium resources to maintain its position as the leading electric vehicle market. Industry leaders are calling for a more stable pricing environment to ensure a fair distribution of value along the supply chain and avoid the negative impact of drastic price fluctuations.
As of April 27th, domestic battery-grade lithium carbonate spot prices have stabilized at CNY 168,000 to 190,000 per ton ($25,200 to $28,500), with an average price of CNY 179,000 per ton ($26,850).
