[SMM Analysis] the price decline has begun, whether lithium hydroxide will be the first step forward in lithium carbonate.

SMM11 14 news: since the beginning of October, lithium hydroxide prices all the way down. Among them, the price of industrial grade lithium hydroxide fell significantly, while the price of battery grade lithium hydroxide fell more slowly. Among them, the price of industrial grade lithium hydroxide fell from an average weekly price of 112000 yuan per ton in early October to an average weekly price of 93000 yuan per ton in recent days. The average weekly price of battery grade lithium hydroxide is 130000 yuan / ton in early October, while the latest SMM quoted price of battery grade lithium hydroxide is 122000 yuan / ton.

SMM research shows that 40% of lithium hydroxide is currently used in industrial fields, such as grease and medicine, of which grease is the main downstream application. The application of lithium hydroxide in grease is lithium-based grease, accounting for about 60% to 70% of grease. In the past two years, due to the sharp rise in the price of lithium hydroxide, grease manufacturers have to look for alternatives because of cost considerations. However, lithium-based grease has the advantages of good water resistance, rust resistance and long life, so when the price of lithium hydroxide returns to rationality, its industrial grease application still has an annual demand growth of 2% to 3%.

Although the demand for battery-grade lithium hydroxide has increased steadily, the growth rate of demand is still slightly slower than the release of new capacity upstream. In addition, next year will be a year of rapid development of high nickel, upstream lithium salt plants are eager to seize the downstream market share, would rather reduce profits and sell at reduced prices.

SMM expects that with the release of new production capacity this year and next, the price of lithium hydroxide will have downside risks in the medium to short term. Because the factory capacity release is often dominated by industrial grade lithium hydroxide, and the demand for industrial grade application is stable, the price decline of industrial grade lithium hydroxide will be earlier than that of battery grade lithium hydroxide. At the same time, the price difference between lithium hydroxide and lithium carbonate will be further reduced, and gradually return to the reasonable price range of 12, 000 yuan / ton.

SMM Cobalt Lithium Research team

Hu Yan 021 51666809

Hong Lu 021 51666814

Ning Ziwei 021 51666780