[SMM Analysis] Demand Recovery Not As Expected, Lithium Hydroxide Prices Continue To Fall

SHANGHAI, Aug 8 (SMM) –
In July 2023, the SMM battery-grade lithium carbonate index reached 275,938 yuan/mt, a decrease of 6.64% YoY. The index of battery grade lithium hydroxide (coarse particles) was 276,738 yuan/mt, a decrease of 6.81% YoY and that of battery grade lithium hydroxide (CIF)dropped to $43/kg, a decrease of 9.85% compared to the previous month.

From the supply side, due to the continued downturn in the lithium hydroxide market and the decline in overseas orders, the demand market was mainly dominated by long-term delivery orders while bulk orders were less. With the stable production of salt plants and the continued downturn trend of the demand market, the inventory was squeezed, leading to adequate circulation in the spot market.

From the demand side, since the recovery of high-grade NPI didn’t meet expectations and the continuous decline in spot prices, the overall market procurement was subdued. At the same time, influenced by the mentality of “buying when the price is high rather than buying when the price is low” also triggered the continuous decline, resulting in sustained low demand.

From the cost side, the arrival of overseas ores to Hong Kong increased the amount of lithium resources. Meanwhile, the continuous decline in lithium prices plus the price cut by the saltworks further forced prices down. Therefore, the lithium ore price is falling under pressure, and the cost of lithium salt is down accordingly.

Overall, the current market is in a situation of oversupply, and major orders are delivered in the long term. It is expected that under inventory pressure, the price of bulk orders may fall further.