GLOBAL LITHIUM WRAP: Battery-grade lithium carbonate prices dip on ample supply and lack of buyer interest

Battery-grade lithium carbonate prices continued to slip in China this week, with no respite in the availability of cheap, locally produced units.

  • China lithium carbonate price edged down amid ample supply and limited spot demand
  • Optimistic producers outside China eye slowing production over winter months
  • Lithium hydroxide prices stabilized, but still vulnerable to downsides

Metal Bulletin’s battery-grade lithium carbonate index, ex-works China, fell to 82,747 yuan ($12,106) per tonne on Thursday September 6, down 3% from 85,298 yuan per tonne previously. Prices were assessed in a range of 80,000-86,000 yuan per tonne on the same basis, narrowing from 80,000-90,000 yuan per tonne a week ago.

The availability of material with cheaper production costs continues to drag prices down, with business concluded across the new range, and sellers no longer pushing for the higher end of the previous price range.

Uncertainties on the price outlook continued to dent buyer interest and keep spot prices under pressure.

In addition, some consumers have been acting cautiously about building up stocks and relying on minimal procurement on an as-needed basis.

“There might be different strategies for big and small consumers. In our case, we intend not to build up stocks unless we have exhausted current feedstock,” one small consumer said.

Meanwhile, sales and offers were steady at and above the previous low of 80,000 yuan per tonne hit on August 30, hinting that the market may be close to bottoming out.

“The market seems to have hit the floor price as producers would lose money [if the price dropped any further],” a trader said.

“[The market is] down a bit, but not significantly and I think the market might have just touched it’s lowest point for 2018,” a distributor said.

Sellers outside China remain optimistic that Chinese production will fall back in the coming months, providing relief to the down-trending market.

“Cheap production will fall back during the winter – that’s what we’re hoping for,” a second distributor told Metal Bulletin.

“There’s excess carbonate, and from what we hear, that’s set to continue through the winter,” a second consumer said.

But some customers said they had heard production will not be reduced in the coming months.

Other battery-grade lithium prices held stable this week, amid still thin trade as market participants returned from their summer break. 

Battery grade hydroxide prices held at 115,000-130,000 yuan per tonne this week, under less pressure from cheap supplies. However, market participants continued to comment on the widening gap between carbonate and hydroxide, which, in theory, leaves hydroxide prices vulnerable to a fall if carbonate prices do not rise.

The gap between the lithium carbonate index and the mid-point of the domestic battery-grade hydroxide price stands at 39,753 yuan per tonne, versus 13,791 yuan per tonne three months ago.

“The supply of lithium hydroxide is quite ample, and lithium hydroxide prices have been excessively higher than those of carbonate,” a third consumer said.

“The price differential is likely to push down lithium hydroxide prices – after all, the lithium content in both compounds isn’t that different,” he added.

In the seaborne market, carbonate and hydroxide prices held at $15.50-17.50/kg and $19-20/kg respectively, amid thin trading and sellers’ reluctance to cut their offers any further.

Seaborne prices for both carbonate and hydroxide do remain vulnerable, however, given the availability of cheap units from China.

“The seaborne price is flattening out and there’s definitely a feeling that it can’t go much lower, although the cheap units and offers are spilling over into Japan and Korea,” the first consumer said.

Battery-grade lithium prices also held in Europe and the United States this week. Market participants said that the spot lithium markets ultimately face the same downward pressure in the near-term, although early fourth quarter 2018 indications from producers to consumers have hinted at price hikes.

Metal Bulletin assessed carbonate and hydroxide prices at $16-18/kg and $18.50-20/kg respectively, ddp Europe and US, on September 6.

“There’s a bit of [idle] capacity still around,” a second consumer said.