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Global Li: Prices in China resume ascent after holiday

Oct 15, 2021 | 09:50 AM | London, Shanghai | Susan Zou, Dalila Ouerghi

Tags  lithium prices, battery-grade lithium carbonate price, battery-grade lithium hydroxide price


Lithium prices in China resumed their ascent in the week to Thursday October 14 on active trading after the end of a week-long holiday over October 1-7 to mark the country’s National Day, with the seaborne Asian market following suit.

  • Domestic lithium prices in China rose on post-holiday pick-up in spot market activity.
  • Seaborne lithium market also strengthens on buoyed sentiment amid aggressive offers.
  • European, US markets steady with participants focusing on long-term contracts.

Prices for battery-grade lithium in China generated upward momentum after stabilizing for the preceding two weeks amid the National Day break and the period preceding it.

Shrugging off concerns of traders taking profit, prices for domestic battery-grade lithium carbonate in the country still managed to go a nudge higher, but the momentum was not as strong as that in September amid higher supply from traders.

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range, ex-works domestic China was at 190,00-200,000 yuan ($29,488-31,040) per tonne on Thursday, up by 10,000-15,000 yuan per tonne (6.85%) from 175,000-190,000 yuan per tonne a week earlier. Prior to the holiday, the price had been mostly experiencing weekly increases of two-digit percentages in September.

Market participants broadly reported more offers from traders who were previously reluctant to sell and are now seeking to take profit following September’s rally. The battery-grade lithium carbonate price rose by nearly 66% in September, outperforming its rally in the entire first quarter.

“More traders have been willing to sell in the spot market after the holiday,” a trader in China noted. “Previously we barely saw any offers for decent volumes from them, but more of them are making 100-200 tonnes of sales this week.”

The same trader noted that more offers were made by producers in Qinghai province, where the majority of technical-grade brine-fed lithium carbonate is produced.

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, technical and industrial grade, spot price range, ex-works domestic China was 180,000-190,000 yuan per tonne on Thursday, narrowing upward by 5,000 yuan per tonne from 175,000-190,000 yuan per tonne a week earlier. The price only registered a 1.37% gain in the past week, compared with an average weekly rally of over 10% in September.

In addition, quite a few old units that were bought by traders around the middle of the year from financers who had them as security were released to the spot market in the past few days and offered at comparatively lower prices, market sources told Fastmarkets.

“There are some carbonate units that were produced in 2019 offered in the spot market,” a second trader in China said. “But they can’t be used directly in the battery supply chain since they have all caked.”

The battery-grade lithium hydroxide price in China also climbed while different consumer purchasing strategies led to a wide range of transactions, according to data collected by Fastmarkets.

Fastmarkets’ assessment of the lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price range, exw domestic China was 175,000-205,000 yuan per tonne on Thursday, up by 5,000-25,000 yuan per tonne from 170,000-180,000 yuan per tonne a week earlier.

Several large-tonnage deals were either concluded at 175,000-180,000 yuan per tonne or as high as 205,000 yuan per tonne, according to data collected by Fastmarkets.

Compared with the consistent buying in September, consumers’ procurement attitudes diverged after the holiday in China. Some large consumers are either holding back from purchasing or restocking only on a hand-to-mouth basis.

“Only marginal consumers are accepting the higher offers since they don’t have the security of units from long-term contracts,” a consumer source in China said.

But he also acknowledged that some big consumers had also bought small quantities of expensive units after the holiday because they were able to even out their overall procurement cost with units supplied via long-term contracts whose prices are much lower than those in the spot market.

Meanwhile, hydroxide producers continued to test the market with milder increases in their offers since they do not have any urgency to sell amid persistently tight supply.

Seaborne Asian market
Battery-grade lithium prices in Asia’s seaborne market also edged up with suppliers managing to achieve higher sales amid a generally thin spot market where the majority of consumers in Japan and South Korea rely on long-term contracts for supply.

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price, cif China, Japan & Korea was $22-23 per kg on Thursday, up by $2 per kg from $20-21 per kg a week earlier.

Fastmarkets’ weekly assessment of the lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price, cif China, Japan & Korea was $23-25 per kg on the same day, up by $2-3 per kg from $21-22 per kg a week earlier.

Some offers for lithium hydroxide were heard in the high $20s when suppliers looked to mirror the prices in Asia’s seaborne market with those in China’s domestic market.

While consumers and distributors in both South Korea and Japan have pointed out that the acceptance of increasingly higher offers in the region would be slower than in China since most have entered into long-term supply contracts, concerns over a failure to secure as many units needed for prompt operations in 2022 have escalated, according to market participants.

“[It seems] no one can get sufficient quantities via the contracts, but the shortage needs to be made up for. There is no other way but [to find] it in the spot market,” a distributor source in Asia said.

“Major consumers might think [it] is now expensive [to buy units at] $25 per kg. However, in three months, they [will] feel it [is a] reasonable [price],” he added.

Europe, US focus on contract negotiations
Spot lithium hydroxide prices in Europe and the United States stabilized in the week to October 14 after increasing in previous weeks while lithium carbonate prices remained supported by a very tight spot market with strength across both technical and battery-grade compounds.

With long-term contract negotiations in full swing at this time of the year, most sources are expecting lithium prices to move higher at the beginning of next year, with supply tightness in the global market expected to continue at least until the first half of 2022.

A source at a producer of lithium hydroxide active in both Europe and Asia said that he had been able to conclude some contracts with buyers and that others would be finalized in November. He said that demand had improved year on year due to better visibility of a post-Covid-19 world.

“We are seeing more demand year on year and we are receiving a lot of inquiries not only for 2022 but also for 2023,” the same source said.

But he said logistical issues continued to be a problem.

“For our production, we buy most of our lithium carbonate on a long-term basis from South America and we continue to experience logistical delays,” he said.

Spot prices for technical-grade lithium carbonate continued to trend higher in the seven days to Thursday on tight spot market and aggressive offers for all grades of lithium carbonate compounds.

“The market [for lithium carbonate] is so tight that even low-quality material is sold above $20 per kg and I do not see a premium for battery-grade carbonate in the current environment,” a buyer of technical-grade lithium carbonate said.

Fastmarkets assessed the lithium carbonate 99% Li2CO3 min, technical and industrial grades, spot price ddp Europe and US at $21.00-22.00 per kg on Thursday, narrowing upward by $0.50 per kg from $20.50-22.00 per kg the previous week.

The lithium carbonate 99.5% Li2CO3 min, battery grade, spot price ddp Europe and US held steady at $21-22 per kg on Thursday, after moving up a week earlier from $20-21 per kg at the end of September.

The parity between the technical-grade and the battery-grade lithium carbonate compounds in Europe and the US tracks a similar dynamic in the more liquid seaborne Asia market.



Learn more about Fastmarkets’ lithium pricing methodology here, and read the latest lithium price spotlight here.

Fastmarkets’ trade log for battery-grade lithium hydroxide, spot price cif China, Japan & Korea, includes all trades, bids and offers reported to Fastmarkets.

All lithium carbonate, hydroxide and spodumene prices are available in our Battery Raw Materials Market Tracker. Get a sample of the report here.


 

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