Analysis: Production cuts, expanded capacity depress lithium carbonate prices

SHANGHAI, Jan 22 (SMM)－As battery plants cut production and lithium salt plants expand capacity, prices of lithium carbonate have dropped 5% from 164,000 yuan/mt to 155,500 yuan/mt through this month. 

Anode material companies are also cutting output in line with production cuts at battery plants while supplies of raw materials increase along with expanded capacity at lithium salt plants.

In the first half of 2018, prices will be dependent on the supply of brine aided by the rainy season overseas as well as the operating rates of lithium salt companies and anode material plants, SMM believes. The progress of new capacity at lithium salt plants and operating rates at battery plants will determine prices in the second half of the year. 

SMM believes lithium carbonate turns a desirable profit when prices reach 168,000 yuan/mt, which was once the highest trading price. As anode material companies expanded their capacity in second half of 2017 and the uptick in demand exceeded lithium salt production, prices of lithium carbonate rose above 160,000 yuan/mt.

Average prices of lithium carbonate will fluctuate around 140,000 yuan/mt in 2018, SMM predicts. 

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