Ganfeng Lithium Group’s shares tumbled after the major Chinese supplier of battery raw materials reported a 98 percent drop in third-quarter profit from a year ago as overcapacity in the industry squashed the price of lithium salt, its main product.

Ganfeng [HKG: 1772] sank 12.2 percent to close at HKD28.05 (USD3.56) a share in Hong Kong today. Its Shenzhen-listed stock [SHE: 002460] ended 3.2 percent lower at CNY44.28 (USD6.06). The stock has been in downward spiral since September of last year when it peaked at its historic high, it has lost about 80 percent in value in Hong Kong, 70 percent in Shenzhen since then.

Net profit was CNY160 million (USD21.9 million) in the three months ended Sept. 30, the Xinyu-based firm said in a financial report published late yesterday. Revenue sank almost 43 percent to CNY7.5 billion. Nine-month profit slid 59 percent to CNY6 billion on a 7 percent drop in revenue.

The earnings of lithium salt producers such as Gangfeng have been deflated by tumbling prices of lithium carbonate, the main raw material for lithium batteries. Prices have sunk by more than 70 percent to about CNY173,000 (USD23,660) a ton from an all-time high of CNY600,000 (USD82,050) a ton late last year.

Ganfeng is seeking to put its excess supply of raw materials to use, as the company released a new downstream plan yesterday. It intends to build a battery production base in Nanchang, China. The project’s initial CNY2 billion phase will have an annual capacity to turn out five gigawatt-hours of energy storage batteries, with trial production due to begin in June 2025.

Since January, Ganfeng has unveiled a number of lithium battery projects across China, including for Chongqing, Dongguan, Suzhou, Xiangyang, and Hohhot, to expand downstream. These could partly offset the adverse effect of product price volatility on its bottom line.

（Picture: Veer）