Caixin Financial News on August 23 (Editor Feng Yi): Today, the lithium battery sector in Hong Kong stocks ended its rebound and weakened again. As of the time of publication, Tianqi Lithium Corporation (09696.HK) fell by over 4%, hitting a new low since its listing, Ganfeng Lithium (01772.HK) fell by over 3%, Honbridge Group (08137.HK), and Tsaker Ne (01986.HK) followed the decline.

On the news front, due to market concerns about ongoing excess capacity, domestic lithium carbonate futures have fallen by more than 7% in the past two days, almost erasing the rebound gains since the beginning of this week.

Recently, the Chilean National Copper Commission stated that Chile expects global lithium oversupply to increase further by 2025. Chile is expected to produce 0.275 million tons of lithium in 2024, and production will further increase to 0.285 million tons in 2025.

Additionally, with the cooling down of the hype around the solid-state battery concept in A-shares today, the sentiment towards lithium battery stocks is also suppressed.

Futures analyst Wu Kunjin from Minmetals pointed out in a recent report that lithium prices continue to fall, hitting new lows since listing. Slow supply-side clearance, coupled with slowing demand growth at the terminal, high inventories, and depressed expectations for peak season realization.

Data shows that as of August 17, weekly domestic stocks reported 132,036 tons, an increase of 1.1% week-on-week. As of August 16, there were 36,620 registered warehouse receipts on the Guangzhou Futures Exchange, up 10.3% week-over-week.

From a medium to long-term perspective, the surplus capacity in the lithium battery upstream sector is continuously increasing inventory pressure along the industry chain. Inventory data shows continuous accumulation of lithium carbonate stocks since early April, with accumulated stocks of 0.0053 million, 0.0075 million, 0.0148 million, and 0.0206 million tons in April, May, June, and July respectively.

What is more noteworthy is that from the perspective of downstream demand, the era of rapid growth in the new energy vehicle industry is over, and how to absorb a large amount of new capacity in the future has become a major problem that continues to plague the lithium battery industry.

According to data from the China Association of Automobile Manufacturers, it is estimated that the sales volume of new energy vehicles in 2024 is expected to reach around 11.5 million vehicles, an increase of about 21% compared to the previous year, and the growth rate will slow significantly compared to 2023. Cui Dongshu, Secretary-General of the China Passenger Car Association, also pointed out that the new energy vehicle market in 2024 is facing certain structural pressure from the demand group.

Mineral Futures also stated that globally, automobile sales in the first half of the year increased by about 24%, mainly driven by domestic demand. The new energy market in Europe and the United States has recently shown weak growth, and the year-on-year growth rate of sales has been consistently weak. In the first seven months of the year, the sales volume in major European countries was nearly flat compared to last year, and the United States only increased by about 10%.

Analysts Xiao Suo and Du Yushu from Shanxi Securities analyzed in a report on August 20th that there are no clear signs of a rebound in downstream demand, and the boosting effect of the traditional peak season in September and October is difficult to predict, which further restricts the rebound space for lithium carbonate prices. The lithium carbonate market is expected to maintain its downward trend.