As the impact of long order pricing is eliminated, the price of lithium compounds exported by China to Japan and South Korea will accelerate.
In the context of global lithium price resonance upward, it is expected that integrated lithium producers will fully benefit from the advantages of guaranteed supply and low cost.
The export price of lithium hydroxide accelerated.
In 2020, China's lithium carbonate exports declined, with the annual export volume of 7488 tons, down 42.1 percent from the same period last year. In 2021, China exported 7841 tons of lithium carbonate, an increase of 4.7 per cent over the same period last year. Thanks to the growing demand for lithium hydroxide products from Japan, South Korea and other countries, China's lithium hydroxide exports have grown rapidly since 2016. In 2021, China's exports of lithium hydroxide reached 73627 tons, an increase of 30.1 percent over the same period last year, continuing a high growth trend.
According to the General Administration of Customs, in 2021, about 61% of China's total lithium carbonate exports went to South Korea, 25% went to Japan, and Japan and South Korea accounted for 86% of the total. Other major exporters were Turkey and the United States. In 2021, lithium hydroxide exports to South Korea accounted for 59% of total exports, 38% to Japan, and 97% to Japan and South Korea. As the main producers of cathode materials and batteries in the world, Japan and South Korea are highly dependent on the import of lithium compounds from China.
The export price of lithium carbonate rose rapidly in the fourth quarter of 2021. According to the General Administration of Customs, the average export price of lithium carbonate in China was 12841 US dollars per ton in 2021, up 59.4 per cent from the average export price in 2020. Among them, the average export price in December 2021 was 24010 US dollars / ton, up 221.7% from the same period last year and 206.2% higher than at the beginning of the year. In the fourth quarter of 2021, the export price of lithium carbonate in China showed an accelerating upward trend, approaching 25000 US dollars / ton at the end of the year.
In 2021, the average export price of lithium hydroxide rose slightly compared with the same period last year, which was lower than that of lithium carbonate. In 2021, the average export price of lithium hydroxide in China was 10170 US dollars per ton, up 4.4% from the average export price in 2020, which is much lower than the export price of lithium carbonate. Among them, the average export price in December was 15631 US dollars / tonne, up 92.1 per cent from the same period last year and 81.9 per cent higher than at the beginning of last year.
Since 2021, the spot market price and export price of lithium carbonate in China have shown a rapid upward trend. in December, the spot price and the average export price of lithium carbonate closed at US $43543 / ton and US $24010 / ton respectively, up 442.4% and 221.7% over the same period last year. The change of export price of lithium carbonate shows a strong correlation with the spot market price, but the price increase is lower.
The changing trend of China's lithium hydroxide export price deviates greatly from the spot price. In 2018, when the spot price continues to decline, the export price shows a fluctuating upward trend. From 2019 to 2020, both the spot price and the export price of lithium hydroxide showed a downward trend, but the export price fell more slowly. as of the first quarter of 2021, the export price was always higher than the spot market price. Since the second half of 2021, with the rapid rise in the spot price of lithium hydroxide in China, export prices have risen accordingly. In December 2021, the spot price and the average export price of lithium hydroxide closed at US $30990 / ton and US $15631 / ton, respectively, up 374.1% and 92.1% from the same period last year. The increase in export prices is significantly lower than that in the spot market. This difference is mainly due to the fact that most of China's lithium hydroxide exports are priced in long orders, resulting in price changes that are not as dramatic as those in the spot market.
The price of imported lithium carbonate will rise
In 2021, China's lithium carbonate imports reached 81018 tons, an increase of 61.7 percent over the same period last year, and the average import price was 6937 US dollars per ton, an increase of 33.2 percent over 2020. In 2021, China's imports of lithium hydroxide increased significantly, with a total of 3599 tons of lithium hydroxide imported in the whole year, an increase of 583.9% over the same period last year. The average import price was US $9277 / ton, up 54.9% from 2020. Compared with the export volume, China's import volume of lithium hydroxide is lower.
Since 2020, with the great increase of China's lithium carbonate imports, the imports show certain seasonal characteristics, among which the imports from March to May and August to October are relatively large. This feature reflects the seasonal changes in lithium carbonate production in South America and is also affected by logistics. Due to the low price of imported lithium carbonate, the domestic lithium price will be suppressed to a certain extent in the month with high import volume, and the impact of imported low-cost lithium carbonate products on domestic lithium price is expected to continue in 2022.
In December 2021, the spot price and the average import price of lithium carbonate in China closed at US $43543 / ton and US $11638 / ton respectively, which was nearly four times the import price. The price difference mainly comes from two aspects: one is that imported lithium carbonate contains some industrial or crude lithium carbonate, and the price is lower than that of domestic battery-grade lithium carbonate; second, imported products are mostly priced by long orders, and the price increase has not yet been transmitted. Since November 2021, the price rise of imported lithium carbonate has accelerated. With the completion of the implementation of the long order signed before 2021, the price of imported lithium carbonate is expected to rise significantly in 2022.
Integrated production enterprises will benefit
The rapid rise in the price of lithium salt in China since 2021 has triggered concerns about resource supply and cost control in the lower reaches of the industrial chain. The traditional supply mode of "Australian lithium mine + Chinese lithium salt" has encountered challenges. Downstream customers, represented by Ningde era, Guoxuan Hi-Tech and Yiwei Lithium Energy, have arranged upstream resources in order to strengthen resource control. The direct participation of consumer enterprises in the production of lithium raw materials will have a far-reaching impact on the pricing of existing lithium products. Under the traditional mode, the rapid price rise and fall due to the dispersion of the industrial chain is expected to be restrained to a certain extent, and the phenomenon of obvious premium in the Chinese market compared with the overseas market is also expected to be alleviated.
In the traditional electric vehicle industry chain, under the mode of "lithium ore raw material-lithium production enterprise-cathode material enterprise-power battery enterprise-vehicle manufacturing enterprise", profits are distributed in all aspects of the industrial chain. As the supply of lithium raw materials has become the focus of the industry, downstream power batteries and vehicle enterprises began to purchase lithium raw materials directly, and the status of lithium production enterprises has been strengthened. At the same time, due to the "out of control" of lithium mine price management, integrated lithium producers with mine resources not only have the advantage of guaranteed supply, but also have the advantage of low cost, which has become the focus of downstream customers. The author predicts that the status of integrated producer in the lithium industry will be continuously strengthened in the future, and the profits of the industrial chain will be gradually concentrated to it.
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