Lithium salt prices soften amid volatility as cell transaction prices edge lower

Lithium ore and lithium salt

Over the past week, prices for spodumene concentrate and battery-grade lithium carbonate have softened amid volatility.

• Battery-grade lithium carbonate (spot)
  Price range: RMB 150,000–154,000/MT
  Average price: RMB 152,000/MT
  Down 5.0% WoW
• Spodumene concentrate (SC6, CIF)
  Price range: USD 2,180–2,220/MT
  Average price: USD 2,200/MT
  Down 4.3% WoW

This round of price declines has been driven primarily by incremental supply and a repricing of the longer-term demand outlook. The Jianxiawo lithium mine has obtained its work safety permit and entered the production-restart phase, shifting market attention from whether production can resume to the actual pace of the ramp-up and its contribution to supply. Meanwhile, feedback from some leading companies has been somewhat cautious regarding the pace of demand going forward, while financial-market participants have increasingly traded on expectations of a looser medium- to long-term supply-demand balance. Together, these factors have put lithium salt prices under pressure in the near term.

On the mining side, following the restart of the Jianxiawo mine, the market generally assumes a production ramp-up in July, with output gradually stabilizing and increasing from August onward. If recovery proceeds smoothly, expectations of increased supply are likely to weigh on prices in Q3. However, other mines in Jiangxi remain at various stages of suspension while renewing their permits, and progress at some projects originally scheduled to restart has yet to fully materialize, resulting in differing rates of supply recovery across the region.

Outside China, following concentrated shipments of Australian lithium ore in June, the corresponding cargoes have been arriving in recent weeks, lifting China’s domestic lithium ore inventories. Overall inventories, however, remain relatively tight, and suppliers continue to defend prices. Lithium salt processing fees are therefore expected to hold at around RMB 17,500–18,500/MT in the near term. Arrivals of Zimbabwean feedstock have fallen short of expectations, while maintenance at some lithium salt plants may still lead to temporary output reductions in July and August.

Demand continues to provide some support to lithium prices. Midstream production schedules remain elevated, with demand from LFP cathode materials, energy storage cells, and EV battery cells providing firm underlying support for lithium carbonate consumption. If peak-season inventory building materializes as expected after September, inventory drawdowns are likely to continue.

On the inventory side, market inventories have declined recently, while a strengthening spot basis also indicates that near-term trading activity has not weakened materially. Overall, the market’s near-term focus remains on the pace of supply release following the restart of the Jianxiawo mine. Lithium carbonate prices are expected to remain range-bound with a downside bias. However, temporary reductions in lithium salt output, elevated midstream production schedules, and expectations for the Q4 peak season should limit further downside.

If prices move closer to their previous lows, downstream buyers’ willingness to restock may improve at the margin, but expectations of longer-term oversupply will cap the extent of any rebound.

Energy storage cells in China

Over the past week, transaction prices for China’s LFP energy storage cells have slightly declined. Prices are as follows:

• 100 Ah: RMB 0.420–0.485/Wh, averaging RMB 0.453/Wh (down 0.5% WoW)

• 280 Ah: RMB 0.340–0.400/Wh, averaging RMB 0.370/Wh (down 0.7% WoW)

• 314 Ah: RMB 0.340–0.400/Wh, averaging RMB 0.370/Wh (down 0.7% WoW)

As lithium carbonate prices have fallen to around RMB 150,000/MT, cost pressure on cell manufacturers has eased from earlier levels. Moreover, the market has tempered its earlier expectations that demand would exceed forecasts in the coming months, prompting actual transaction prices at some manufacturers to continue skewing toward lower levels. Negotiating room has widened particularly for supplies to major customers and newly signed orders, driving slight declines in the average prices of mainstream 280 Ah and 314 Ah utility-scale storage cells.

From the perspective of competitive dynamics, while the cell segment has not become materially looser, price support has weakened from earlier levels. On the one hand, energy storage demand remains elevated, supporting orders and production schedules at leading manufacturers. The 314 Ah cell remains the mainstream specification for utility-scale storage project deliveries, while products above 500 Ah, still under validation and market introduction, are unlikely to fully replace existing specifications in the near term.

On the other hand, as 280 Ah and 314 Ah cells are supplied by a relatively large number of manufacturers, project buyers still have ample room to negotiate. To maintain shipment volumes and customer share, cell manufacturers have become more willing to accept lower prices. Prices for 100 Ah cells and certain other small-capacity products remain more resilient than those for medium- and large-capacity products, supported by demand from residential storage and non-China user-side applications.

In the near term, transaction prices for cells are expected to edge lower within a narrow range. While Q4 peak-season demand should continue to support the price floor, upside potential will remain relatively limited amid ample competition and declining raw material prices.

Energy storage system (ESS) in China

Transaction prices for electrochemical ESS in China have held steady for the past week. Prices are as follows:

• DC-side liquid-cooled containerized ESS (2h): RMB 0.46–0.53/Wh, averaging RMB 0.50/Wh (flat)

• AC-side liquid-cooled containerized ESS (1h): RMB 0.81-0.87/Wh, averaging RMB 0.84/Wh (flat)

• AC-side liquid-cooled containerized ESS (2h): RMB 0.52-0.63/Wh, averaging RMB 0.58/Wh (flat)

• AC-side liquid-cooled containerized ESS (4h): RMB 0.50-0.55/Wh, averaging RMB 0.53/Wh (flat)

Although cell transaction prices have continued to edge lower, system-level prices have not declined in tandem. This is mainly because system integration involves costs beyond cells, including PCS, thermal management, fire protection, EMS, grid-connection testing and commissioning, warranties, and delivery. In addition, utility-scale projects are imposing increasingly stringent requirements for safety, project track records, and execution capabilities. System prices have therefore largely stabilized at low levels, with relatively limited room for further downside in the near term.

Bid prices for recently tendered ESS projects continue to reflect intense competition, but the price floor has not moved notably lower. In early July, bids were open for two PV-plus-storage projects at the Gansu Tengger Desert Hexi New Energy Base, with a combined energy storage capacity of 900 MW/1.8 GWh. Overall bid prices ranged from around RMB 0.530–0.625/Wh. The Huanghuatan project includes 480 MW/960 MWh of energy storage, while the Hongsagang project includes 420 MW/840 MWh, with average bid prices for both projects at approximately RMB 0.56/Wh.

Projects of this type impose stringent requirements for suppliers’ track records in delivering complete generation- and grid-side ESS, experience with large-capacity project deliveries, and ability to supply the full equipment package. This indicates that while competition at the system level remains intense, technical configurations, project experience, and delivery certainty are becoming important selection criteria alongside price.

Cost pressures in the PCS and power electronics segments also warrant continued attention. Recently, some leading PCS manufacturers have signaled product price adjustments across multiple business lines, including not only energy storage microgrids, but also power quality, EV charging and battery swapping, residential storage, and testing equipment. These adjustments are driven primarily by rising upstream costs for power semiconductors, magnetic components, PCBs, relays, and non-ferrous metals.

PCS accounts for a smaller share of total ESS costs than cells, meaning that higher PCS prices are unlikely to drive a rapid increase in system transaction prices directly. For system integrators, however, rising prices for PCS, transformers, and power components will squeeze project margins and raise the floor for future quotes. If project owners continue to advance projects based on low equipment-price assumptions and existing return models, they may face risks from rising equipment costs, lower-than-expected actual returns, or pressure on project execution quality.

Overall, while ESS transaction prices are expected to remain largely stable in the near term, the rebalancing among declining cell prices, rising PCS prices, and project economics will be an important factor to watch in the system price outlook.