Lithium carbonate prices to face downward pressure end-Apr

SHANGHAI, Apr 2 (SMM) – Prices of lithium carbonate are likely to stabilise through April but may drop at the end of the month as capacity additions drive supplies to exceed demand, SMM forecasts. 

Supplies could grow significantly in May, and this will expand downward room in prices in the second quarter. 

The release of new energy vehicles (NEVs) subsidy cuts on March 26 grew caution across downstream consumers in purchasing raw materials. Cash flow issues may also weigh on prices of high-grade lithium salt in the weeks ahead. 

As of Tuesday April 2, lower supplies and expanded demand kept prices of lithium carbonate stabilising for half of a year. 

Severe weather in Qinghai province lowered the local production of battery-grade lithium carbonate by around 10% in the fourth quarter of 2018, compared with the third quarter. Downstream processors and lithium manganese oxide (LMO) cathode material producers in the nearby areas reported that they failed to easily purchase battery-grade lithium carbonate in the spot market. 

Month-long maintenance at a major producer of lithium carbonate in Jiangxi province in February, together with CNY breaks at some lithium salt producers, lowered local production of battery-grade lithium carbonate by nearly 30% in February. This firmed up prices of high-grade battery-grade lithium carbonate.

Late recovery of upstream producers and slow commissioning of new capacity also dragged on output of lithium carbonate in March. 

After CNY, news of subsidy cuts for NEVs drove carmakers to more cost-effective lithium iron phosphate (LFP) batteries, and this bolstered demand for lithium carbonate as raw materials. 

Large producers of LFP operated close to full capacity post-CNY, and medium-sized producers also reported brisk orders, SMM learned. 

In the fourth quarter of 2018, downstream battery mills stockpiled and accelerated operation to meet annual targets, which also underpinned prices of lithium carbonate.