SMM News on February 21st: On February 21st, after three consecutive trading days of declines, the main lithium carbonate futures contract surged abruptly near midday, at one point reaching the daily limit before experiencing fluctuations and a pullback, with gains narrowing to around 5%. Other contracts of the same variety also followed suit, with gains ranging from 2% to 9.7%. As of the midday close, the main lithium carbonate contract reported at 96,900 yuan/ton, up 3.47%. In terms of news, the capital market today is rampant with rumors about "recent environmental issues re-emerging in the Yichun area, which will limit production for companies that cannot properly handle lithium slag. Also, there are plans to conduct environmental inspections in Yichun after the Two Sessions," stimulating the main lithium carbonate futures contract to touch the daily limit in the early morning. SMM promptly investigated and verified this news, and according to the survey, the core lithium salt companies in Jiangxi are still producing according to normal plans (those originally planned for maintenance are still proceeding as scheduled), with no actual impact on their operations due to this event. Meanwhile, Cailian Press also issued news saying that the rumors circulating on the internet such as "the total of Yichun area's slag accounts not matching the actual figure by several million tons" and "all lithium salt factories with slag output are not allowed to start production" were verified by reporters from core sources to be false.
Recently, rumors regarding Yichun have been frequent. Around February 19th, there was news that CATL might have stopped mining operations at its Jianxiaowo lithium mine in Yichun, China. However, subsequent interviews with local informants in Yichun by reporters from The Paper revealed that although CATL's Jianxiaowo lithium-bearing clay mine processing plant is indeed not operating, it is due to the normal Chinese New Year holiday, and mining activities were proceeding normally before the holiday. Nevertheless, the accuracy of this information has not been officially confirmed by CATL. It is well known that Yichun in Jiangxi, known as the "Lithium Capital of Asia," is rich in lithium resources. According to the Department of Natural Resources in 2021, Yichun city has about 9 million tons of lithium oxide reserves, equivalent to more than 20 million tons of lithium carbonate, which could produce 30,000 GWh of batteries, capable of equipping 600 million electric vehicles. The city's lithium mica mine production is also a significant part of the national lithium mica reserves, making the dynamics of Yichun's lithium mines a constant focal point in the market.
In terms of lithium mica-derived lithium carbonate production, according to SMM data, the expected production in February is 7,750 tons, a 33% decrease compared to January, mainly due to the effects of the Chinese New Year holiday and annual maintenance. The expected lithium carbonate production in China in February is 32,005 tons, a 17% decrease compared to January. After March, the expected lithium carbonate production from lithium mica is predicted to be 12,730 tons, a 64% increase, and the total expected lithium carbonate production in China for March is 44,048 tons, a 30% increase. Turning to the current lithium carbonate market situation, according to SMM's research, less than half of the lithium salt companies that ceased production during the Chinese New Year period and underwent maintenance have resumed production, and their short-term production is in a state of gradual recovery. However, the market sentiment for lithium salt companies selling lithium carbonate remains subdued, with most companies continuing to insist on selling in small batches as before, and a few lithium salt companies gradually lowering their quotes. Nevertheless, some cathode and other downstream companies have reported that they have procured raw materials from the market at lower prices recently to replenish their inventories, leading to a downward shift in the overall spot transaction prices of the lithium carbonate market. As of February 21st, the spot prices for domestic battery-grade lithium carbonate have dropped to a range of 93,300 to 99,000 yuan/ton, with an average quote of 96,150 yuan/ton. This is after three consecutive trading days of declines following the return from the Chinese New Year holiday, accumulating a total decrease of 900 yuan/ton since February 8th, a decline of 0.93%. As for the future performance of the lithium carbonate market, it will be important to pay attention to changes in lithium mine prices, the progress of lithium salt companies resuming production after purchasing lithium mines, and the extent of recovery in downstream demand.
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