Booming battery prices in Asia to continue amid choked global supply chains

Battery raw materials prices are likely to continue to boom in Asia this year due to chokepoints in global supply chains, sources told Fastmarkets

Lithium

China’s lithium prices have increased more than six-fold since the beginning of 2021 due to the surge in demand in the electric vehicle (EV) sector and limited availability of spot units.

The supply of lithium salts has failed to keep up with record demand for EVs, supporting lithium prices in China.

Fastmarkets’ price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 350,000-370,000 yuan ($55,166-58,319) per tonne on January 20, up by 10,000-20,000 yuan per tonne from 330,000-360,000 yuan per tonne a week earlier, and up by 300,000-312,000 yuan per tonne (566.67%) from 50,000-58,000 yuan per tonne on January 7, 2021.

Fastmarkets’ assessment of the lithium hydroxide monohydrate, LiOH.H2O 56.5% LiOH min, battery grade, spot price range, exw domestic China was 290,000-310,000 yuan per tonne on January 20, up by 25,000-30,000 yuan per tonne from 265,000-280,000 yuan per tonne a week earlier, and up by 249,000-264,000 yuan per tonne (589.66%) from 41,000-46,000 yuan per tonne on January 7, 2021.

“The supply of lithium salts has failed to keep up due to limited spodumene supply. Lithium salt lakes in China’s Qinghai province also saw seasonal production cuts of brine in winter, affecting lithium carbonate production,” a Chinese lithium producer source said.

The scarcity of spodumene – the feedstock used to produce lithium salts – and the resulting high prices have also supported China’s lithium prices.

China depends heavily on spodumene imports from Western Australia, and the shutdown of Altura Lithium’s Pilgangoora project for care and maintenance due to low global lithium prices, at the time, constrained spodumene supply in China.

Fastmarkets’ price assessment for spodumene 6% Li2O min, cif China was at $2,500-2,750 per tonne on January 21, up by $100-150 from $2,400-2,600 per tonne two weeks earlier, and $2,050-2,290 per kg (476.92%) up by from $450-460 per kg on January 27, 2021.

High prices could remain

China’s high lithium prices are not set to go away soon, sources said, even if subsidies for consumers are reduced and battery and automotive makers bemoan the high prices.

This is largely due to a positive outlook for the EV sector, as well as limited alternatives for battery makers.

“Battery producers don’t have any other options than to accept lithium prices at such high levels. There are currently very limited alternatives to lithium salts in terms of Lithium Iron Phosphate (LFP) or NCM battery production,” a Chinese lithium trader said.

Demand for lithium salts remains strong and buyers have already accepted that lithium prices will remain high.

Some have locked in long-term supply of lithium salts, including three-to-five year term contracts for the supply of battery-grade lithium carbonate, a Chinese lithium producer source told Fastmarkets.

Tesla recently secured a three-year lithium supply contract with Ganfeng Lithium, the world’s largest producer of battery-grade lithium.

China’s lithium prices have posted strong gains every week since November 25, 2021, with buyers actively restocking to prepare for production during the Lunar New Year holidays from January 31 to February 6.

Spot units of lithium salts have also gradually dried up due to the continuous appetite.

Market participants told Fastmarkets that such an uptrend was likely to continue after Chinese New Year, since the imbalance between supply and demand will not ease soon.

Cobalt

The price of cobalt sulfate in China, another key raw material for batteries, has also kept its upward momentum due to the optimism caused by the EV boom and delays in cobalt hydroxide shipments from South Africa to China.

Fastmarkets’ price assessment for cobalt sulfate, 20.5% Co basis, exw China was 106,000-107,000 yuan per tonne on January 21, up by 2,000 yuan per tonne from 104,000-105,000 yuan per tonne on January 19, and up by 80.51% from 58,000-60,000 yuan per tonne on January 6, 2021.

“Buyers from the NCM precursor materials sector are still cautious in purchasing materials due to the higher prices. But considering the rising prices for raw material cobalt hydroxide, and the reduced supply caused by delayed shipments from South Africa to China, we have no choice but to increase our offers,” a cobalt sulfate producer source said.

A slower-than-expected recovery in cobalt hydroxide shipments from South Africa to China continues to constrain spot supply, causing cobalt hydroxide prices to remain elevated.

Fastmarkets’ calculation of cobalt hydroxide index, 30% Co min, cif China stood at $29.75 per lb on January 21, up by $0.04 per lb from $26.01 per lb a week earlier. The price stood at $13.77 per lb on January 8, 2021.

What to read next
Financial incentives for companies developing silicon-based anodes in Europe are helping to support the sector, but the focus on innovation, not scale, risks them falling behind North America, experts told Fastmarkets.
Graphite companies Nouveau Monde Graphite, Novonix and Westwater have all announced offtake agreements in a developing US anode supply chain to comply with that country’s generous subsidy scheme under the Inflation Reduction Act and to ease the current dependence on China for material, Fastmarkets heard on Thursday February 15
Traders have built up their presence in the lithium market in recent years; they see an opportunity in lower prices – after record highs set in 2022 – while the lithium industry aims to take advantage of an expected growth in demand spurred by the global energy transition
Fastmarkets’ proposal follows initial feedback from market participants who are interested in seeing regional price references for lithium in the US and Canada that reflect the evolving battery supply chain in the region, and new market dynamics arising from the US’ enactment of the Inflation Reduction Act (IRA) legislation. The landmark IRA legislation, which was […]
A group of major automotive manufacturers including Tesla and General Motors sent a joint letter with mining companies and electric vehicle (EV) battery companies on Monday February 5 urging the Biden administration to allow a 10% tax credit to apply to both mineral extraction and mineral processing in the US
India’s burgeoning electric vehicle (EV) battery-making industry could mean the country becomes a significant importer and a reduced exporter of black mass in the coming years, Rajat Verma, founder and chief executive officer of Indian battery recycler Lohum, told Fastmarkets in an interview