Global lithium prices up on tight supply; no impact from Russian invasion of Ukraine yet

Chinese lithium prices continued to rise in the week to Thursday February 24 amid an ongoing scarcity of spot units, which boost other markets outside China as well. Russia’s invasion of Ukraine is having limited effect on the global lithium market for the time being, according to market participants.

• Chinese lithium prices continue uptrend amid lingering tightness
• Seaborne lithium prices rise on tight supply, Chinese strength.
• Europe, US lithium prices trend upward due to a prolonged scarcity of spot units, strong Asian markets

China’s lithium prices experienced strong gains for a third consecutive week after the January 31-February 6 Chinese New Year holiday, with spot supply showing no signs of improvement.

With Chinese demand for lithium largely met through domestic production, market participants are not expecting any major impact on prices in the country from the invasion of Ukraine by Russia for now.

Fastmarkets’ price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 450,000-490,000 yuan ($71,174-77,500) per tonne on Thursday, up by 10,000-20,000 yuan per tonne from 440,000-470,000 yuan per tonne a week earlier.

Fastmarkets’ assessment of the lithium hydroxide monohydrate, LiOH.H2O 56.5% LiOH min, battery grade, spot price range, exw domestic China was 400,000-450,000 yuan per tonne on Thursday, up by 10,000-40,000 yuan per tonne, from 390,000-410,000 yuan per tonne a week earlier.

“The market is still extremely undersupplied, and there is no sign of any improvement so far. Chinese lithium consumers have to scramble for any spot units,” a Chinese lithium trader said.

Multiple market participants referred to the current Chinese spot lithium market as a “seller’s market.” As soon as there is any offer of lithium salts in the spot market, it is immediately secured at a price to the seller’s satisfaction, Fastmarkets has learned.

“The current headache for all Chinese lithium consumers is still the scarcity of spot units, and I don’t know when it will be eased,” a Chinese lithium consumer source said.

East Asian lithium prices move up on Chinese strength, tight availability
Spot lithium prices in the East Asian seaborne market continued to trend upward during the week, underpinned by the strength in China as well as a sustained tightness in regional supply.

Fastmarkets’ assessment of the lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price cif China, Japan and Korea was at $63-65 per kg on Thursday, unchanged since Tuesday but up by $1-3 per kg from $60-64 per kg on Monday.

Fastmarkets’ assessment of the lithium hydroxide monohydrate, LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $59-62 per kg on Thursday, unchanged from a day earlier. The price started this week at $57-59 per kg before rising by $1 per kg to $58-60 per kg on Tuesday.

Many Chinese lithium sellers made offers to the East Asian market at the same price level as those in China’s domestic market due to Chinese lithium prices still holding a premium over seaborne prices, and due to a global shortage of spot lithium units, sources said.

“But many seaborne East Asian buyers are hesitant to accept prices at parity with Chinese levels, because they think those prices are too high. But if they refuse to secure spot units at these levels, we can easily sell those units to Chinese buyers at the same price,” a Chinese lithium producer source said.

Multiple market participants agreed that amid current shortage, those with an urgent need of material would have no choice but to meet the asking price of sellers.

If lithium consumers halted production due to a shortage of raw materials, they will incur penalties for failing to fulfil the contracts entered into with their downstream buyers. The penalties are much higher than the cost of purchasing lithium salts at current spot prices, according to multiple market participants.

“In addition, some sellers are holding on to the units they have in hand in expectation of higher prices. This also pushes up lithium prices in the seaborne market,” a Chinese lithium consumer source said.

Russia’s invasion of Ukraine has yet to affect the East Asian lithium market. But a lithium trader based in Asia said it was too early to tell if deliveries from Russian lithium sellers would be affected.

Europe, US lithium prices continue uptrend amid specter of Russian invasion
A sustained tightness in spot supply and ongoing the strength of the lithium markets in Asia gave support to new increases in Europe and the United States.

The Russian invasion of Ukraine is also a concern for lithium buyers in Europe because industrial buyers of lithium compounds source some of their lithium salts from Russian suppliers.

A seller of lithium hydroxide compounds based in Russia told Fastmarkets that for the time being, he did not see any impact on business and that he was still able to ship trucks loaded with material toward Europe on Thursday February 24.

But he acknowledged that a number of long-term customers based in Europe were concerned about his company’s ability to deliver if the situation deteriorated.

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price, ddp Europe and US was $59-62 per kg on Thursday February 24, up by $1-2 per kg from $58-60 per kg a week earlier.

The assessment of the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price, ddp Europe and US was at $62.00-64.00 per kg on the same day, up by $2.00-3.50 per kg from $58.50-62.00 per kg a week earlier.

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