GLOBAL LITHIUM WRAP: Chinese domestic battery-grade lithium carbonate prices dip further on cheaper material availability, consumption slowdown

Chinese battery-grade lithium carbonate spot prices softened for the third consecutive week after cathode makers shifted their attention to preparing for high power and density production, reducing consumption for the lithium compounds.

  • Battery-grade lithium carbonate spot prices fall 
  • Cheaper lithium carbonate from Qinghai province said to be major factor 
  • Downstream Chinese cathode makers adapt processes for producing high power and density cathode due to the 2018 subsidy policy, pushing down demand for lithium compounds, although the effect is thought to be temporary 
  • There is more availability of lithium units in China from the processing of Australian hard rock

Lithium carbonate battery-grade spot prices in China moved down again on Thursday May 3 after the national holidays on April 30-May1, continuing their three-week descent due to fall in consumption, cheaper material availability and a shift in cathode makers’ production plans to benefit from the 2018 electric vehicle subsidy policy. 

Metal Bulletin assessed Chinese domestic spot battery-grade lithium carbonate prices (min 99.5% Li2CO3) at 135,000-140,000 yuan ($21,209-21,995) per tonne, on Thursday, down from 138,000-143,000 yuan per tonne last week.

“Lithium carbonate [technical and industrial grade] production from Qinghai province in China has been sold at quite low prices over recent weeks – as low as 120,000 yuan per tonne – which is dragging the rest of the market down,” a Chinese trader told Metal Bulletin.

Technical and industrial grade lithium carbonate can be refined to battery-grade purity to be used in the production of cathodes materials, meaning some buyers have bid more aggressively for lithium compounds in the spot market.

“Adding to that, some low-power and energy density cathode producers have reduced their consumption of lithium compounds to adjust their production and technology to produce high-power and density cathode for batteries to benefit from the 2018 governmental subsidies,” he added.

The 2018 governmental subsidies in China aim to promote the production of high-power and high-energy density cathodes for new energy vehicle (NEV) batteries, such as nickel manganese cobalt (NMC) 622, 811 and nickel cobalt aluminium (NCA). These batteries support the production of cars with longer driving ranges and superior overall performance, which forms part of the Chinese government’s plans to improve the standard of EVs in the country.

Yet China remains predominantly a producer of low-power and energy density cathodes, such as lithium iron phosphate (LFP), accounting for over 50% of the country’s total cathode production. Therefore, most market participants view the deceleration in consumption of lithium compounds as a temporary shift while traditional LFP producers in China look to adjust production to produce high power and energy density cathodes.

Meanwhile, lithium supply in China extracted from Australian hard rock continues to be high, further highlighted by the reduced consumption in the domestic market. China has been importing Australian hard rock with lithium content for several months to convert the material into lithium compounds, such as carbonate and hydroxide. However, market participants do not view the hard rock-derived supply as evidence of a market oversupply at present.

“We have noted more availability of material in the Chinese spot market over past weeks and we believe this has been the main reason for lower prices seen over the past four weeks,” a cathode producer in China told Metal Bulletin. 

Battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H2O) prices softened by 1% week on week to 148,000-150,000 yuan per tonne on Thursday, giving way to the dip in lithium carbonate prices.

“The battery-grade lithium hydroxide market had been resisting the dip in lithium carbonate prices over previous weeks,” a Chinese lithium producer told Metal Bulletin.

“Although the battery-grade lithium hydroxide price has softened slightly this week, this lithium compound will be the most in demand in the market moving forward due to the rush in China to produce high power and density cathodes and batteries which typically use lithium hydroxide. Therefore, we do not anticipate prices to fall further in the coming weeks,” he added.

Another factor in the slowdown in lithium procurement is the high cobalt prices. Battery cathode consumers use lithium and cobalt together to produce batteries and some consumers have held back from procuring lithium while they negotiate more favorable cobalt prices.

Low-grade cobalt free market prices, in-warehouse, were assessed at $43.50-44.25 per lb on May 2, compared with $35.50-37 per lb at the start of the year. Metal Bulletin assessed the cobalt sulfate Co 20.5% min, China ex-works price at a discount of 51-82 cents per lb to the low-grade low-end price on May 2.

Seaborne market sees small price adjustment
The cif China, Japan and Korea lithium carbonate spot market also fell week on week due to a drop in demand in the region alongside new market expectations for lower prices as a consequence of recent softer prices in the Chinese spot market. 

Battery-grade lithium carbonate (min 99.5% Li2CO3) spot prices moved down to $18-21 per kg on Thursday from $19-21 per kg previously on a cif China, Japan and Korea basis.

“The lithium carbonate prices in China have soften for several weeks now and this has reinforced market expectations for cheaper prices [in the cif China, Japan and Korea markets],” a second trader told Metal Bulletin.

“Although we see this downtrend in prices, demand is anticipated to pick up soon as this price decrease is just a temporary effect of the deceleration in consumption in China,” he added.

Meanwhile, battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H2O) spot prices were unchanged week on week at $20-22 per kg on a cif China, Japan and Korea.

Europe, US steady
The European and the United States spot markets have remained stable the week, largely unaffected by the softening prices in the Chinese domestic and cif markets.

Battery-grade lithium carbonate and hydroxide monohydrate spot prices were unchanged week on week at $18-20.50 per kg and $19-21.50 per kg on a delivered, duty-paid Europe and US basis respectively, according to the Metal Bulletin market assessment on Thursday.

“The market remains tight in Europe and US and we are mostly sold out,” a second lithium producer told Metal Bulletin.