Lithium Carbonate Shortages Expanded, Price Gains to Accelerate in December

SHANGHAI, Dec 15 (SMM) - The lithium carbonate was in deficit of 5,251 mt in November. China’s lithium carbonate output was 20,448 mt in November, a month-on-month increase of 3%. The output in Sichuan and Jiangxi increased. The output in Qinghai has decreased significantly compared with the previous month due to the restrictions on the use of natural gas and the suspension of some production lines. Major domestic lithium carbonate manufacturers will undertake maintenance in December ahead of the Chinese New Year holiday, and the output is expected to decline. On the demand side, the significant output growth at lithium iron phosphate and ternary materials plants as well as raw material stockpiling before the Chinese New Year holiday have expanded the supply shortage. The prices are expected to rise rapidly.

The domestic cobalt sulphate saw a surplus of 62 mt in metal content in November. China's cobalt sulphate output declined 1% month-on-month in November. The prices of raw materials were higher than cobalt salts, generating pressures toward cobalt salt plants. Due to the COVID-19 pandemic and power rationing imposed against some manufacturers, the supply of cobalt sulphate is expected to be 5,557 mt in metal content in December, a decrease of 3.1% from the previous month.

On the demand side, the precursors lacked buying interest due to the limited increase in terminal demand in November. The demand for cobalt sulphate is expected to rise in December. The smelters raised their quotations of cobalt sulphate as rising refined cobalt prices overseas have pushed up cobalt raw material costs. Despite the pressure from the supply and demand side as well as the year-end liquidation of raw material inventories, the pressure on the cobalt sulphate prices will ease on the year-end stockpiling by the digital market, the improving demand and the commissioning of some new capacity by precursor plants.

The domestic nickel sulphate supply surplus was 2,057 mt in November, down 37% on the month. The output of nickel sulphate fell month-on-month in November, but demand remained relatively stable. The surplus of nickel sulphate narrowed due to the overhaul of some manufacturers in November. The output of battery-grade nickel sulphate will continue to fall in December from November due to the cost pressure. However, the output of precursors will not follow the downside trend. Therefore, the nickel sulphate surplus in December will be further eased.