[SMM News] what happened to lithium prices in the two years from 168000 to 78000? what happened in the lithium market?!

SMM12, 19 March: since 2017, the price of lithium carbonate has been happy and sad. Taking battery-grade lithium carbonate as an example, the overall situation of up and down has tended to be stable in the past two years. Lithium carbonate reached a peak of nearly 168000 tons per ton in November 2017 and fell to a low of nearly 78000 yuan per ton in October this year, more than twice the difference between the two.

Lithium carbonate (99.5% battery grade / domestic) unit: 10,000 yuan / ton:

So what caused the price of lithium carbonate to rise and fall like a roller coaster in the past two years? SMM summarized the market and price changes of lithium carbonate over the past two years.

Stable demand for prudent lithium carbonate production in enterprises with unclear policies

Time: January to February 2017

On January 8, 2017, the State issued the Circular on the Adjustment of the recommended Model catalogue for the Popularization and Application of New Energy vehicles. The "recommended Model catalogue for the Popularization and Application of New Energy vehicles" issued by the State in 2016 has been re-approved in one to five batches, and enterprises are required to declare it according to new technical requirements.

Throughout 2016, the catalogue released five batches one after another, with a total of 2193 new energy models selected, each of which will affect the nerves of automobile enterprises after each batch of "catalogue" is released, because only when the models are selected, can enterprises feel at ease to schedule production and sales. Until the end of the subsidy funds, on the contrary can not enter the market sales, subsidies are even more impossible to talk about. Entrusted by the Ministry of Industry and Information Technology, at the beginning of the new year, the China aircraft Center has undertaken the acceptance and examination of the new "catalogue" declaration materials.

According to the relevant notice published on the official website of the China aircraft Center, The declared enterprises and products of new energy vehicles shall meet the following relevant requirements: including the relevant technical requirements of documents such as the Circular on the Adjustment of Financial subsidy Policy for the Popularization and Application of New Energy vehicles; Non-fast charge pure electric bus, fast charge pure electric bus and fuel cell vehicle should meet the requirements of "system energy density", "fast charge rate", "rated power of fuel cell system" and "pure electric mileage of fuel cell vehicle" respectively. New energy vehicle enterprises should build and perfect the monitoring platform in accordance with the requirements of "notice on further popularizing and applying Safety Supervision of New Energy vehicles", and bus products should meet the "Safety Technical conditions of Electric passenger cars" and so on.

In the new subsidy policy, the most important requirement for pure electric passenger vehicles is that the energy density of the power battery should reach 90hg / kg. The energy density of the battery system of the non-fast charging pure electric bus is higher than 85Whg / kg, and the energy density of the power battery system of the special vehicle is not lower than that of 90Wh/kg. According to the product indicators in the previous five batches of catalogues, some models have been unable to meet the requirements of the new rules. As the country's policy during this period is not yet clear, car companies are worried that new cars will not be overhauled, production attitude is cautious, wait-and-see sentiment spreads upstream, demand for lithium carbonate is stable, and prices remain stable.

With the advent of subsidies, the price of lithium carbonate is rising with less supply and more demand.

Time: March to August 2017

In April, the third batch of the recommended catalogue of new energy vehicles was released, and the number of models that can be subsidized has increased in multiples. This catalogue includes a total of 634 models from 87 enterprises. Among them, 85 enterprises have 505 models of pure electric products, 128 models of plug-in hybrid power products and 1 model of fuel cell products.

Under the benefit of policy, a large amount of capital has entered the field of new energy vehicles. In addition to companies that have obtained license plates for pure electric passenger cars, a series of brands created by Internet dreamers, such as Letv Super cars, Weilai cars, cars and homes, have also entered the field of new energy vehicles.

In the past, barriers to entry in the automotive industry, such as engines and gearboxes, left outsiders "scared". But for new energy vehicles, except for the battery and other core components, the rest is not the core technical barrier. According to UBS Securities, the break-even point of fuel car companies was 2 million, while the break-even point of electric vehicles was only 200000, or even 100000. With broad market prospects and relatively low barriers to entry, a large number of enterprises flocked to it.

Car companies expand production capacity, lithium carbonate demand doubled, and supply, lithium carbonate leading enterprise, Tianqi lithium Zhangjiagang base maintenance, supply and demand caused lithium carbonate prices to rise.

Lithium carbonate one vote is difficult to get the highest price in history

Time: September to October 2017

From the end of the third quarter to the beginning of the fourth quarter of 2017, new energy vehicle companies began to impulse. From January to October, the production and sales of new energy vehicles were 517000 and 490000, respectively, according to the China Automobile Association. They increased by 45.7% and 45.4% respectively over the same period last year. Among them, the production and sales of pure electric vehicles were 427000 and 402000 respectively, an increase of 54.7% and 55.9% respectively over the same period last year. Production and sales of plug-in hybrid vehicles were 90, 000 and 88000, up 14 per cent and 11.2 per cent, respectively, compared with the same period last year. As the market is widely expected that the second year of new energy vehicle subsidies may decline, car companies began to provide a lot of capacity.

(source: CAAC)

In the case of the continuous blowout of the new energy vehicle market, the upstream cathode material manufacturers are worried about the insufficient supply of lithium carbonate and have increased the procurement of lithium carbonate. At the same time, the treatment of waste water and waste gas in the whole country has been carried out. It has affected the production of lithium carbonate in Jiangxi, Sichuan, Qinghai and other places. The contradiction that supply falls short of demand is acute, lithium carbonate becomes "one vote is difficult to demand", the price reaches the highest 171000 yuan / ton.

Adequate supply of lithium carbonate prices began to pull back

Time: November 2017 to January 2018

Towards the end of the year, the production and sales of new energy vehicles are still running high. By 2017, the production and sales of new energy vehicles in China have reached 794000 and 777000 respectively, an increase of 53.8 per cent and 53.3 per cent respectively over the same period last year. The cumulative number of new energy vehicles has reached 1.8 million, accounting for more than 50 per cent of the global market.

Lithium batteries are expected to grow well in the next few years, and lithium salt plants and cathode material factories are scrambling to expand production. However, the prospects for the release of domestic lithium resources are unknown. In order to ensure the demand for raw materials, domestic enterprises have stepped up their efforts to lock in overseas resources. SMM combed the important overseas lithium resources investment events in the second half of 2017:

After a large increase in production, the inventory of downstream power battery enterprises has reached a high level, and has officially entered the stage of production reduction and de-inventory. Positive material factory also to sell inventory, collection of accounts-based, reduce the operating rate, the demand for lithium carbonate is weak. On the supply side, salt lake lithium extraction manufacturers benefited from the filling and filling project to maintain normal production. In addition, there is an adequate supply of raw lithium ore and lithium concentrate in Australia, the release of new smelters nationwide has increased supply, the contradiction between supply and demand has been alleviated, and the price of lithium carbonate has begun to fall back.

In January of the new year, lithium carbonate prices continued a rational correction, mainly because downstream battery plants are still actively inventory, demand is not strong, while the smelter supply side to maintain full production without reducing supply. The fundamental gap in lithium carbonate no longer exists, and mainstream manufacturers are starting to cut prices. At the end of the month, the price of lithium carbonate fell to an average price of 153500 yuan per ton.

SMM believes that lithium carbonate has reached the highest transaction price of 168000 yuan per ton, and the gross profit of lithium carbonate is very considerable at the price node of 168000 yuan. The driving force for pushing up the price of lithium carbonate to more than 160000 yuan lies in the huge increase in production and expansion of cathode material manufacturers in the second half of 2017. The increase in direct demand contradicts the limited release of lithium salt production capacity (lithium salt plants put into production on new production lines in the second half of the year will go through a commissioning period of more than three months, and the quantity and quality of products produced are not optimistic, and the increment of effective supply is limited). At one point, it caused a difficult to obtain spot market situation. Although from the lithium battery installed capacity data, lithium carbonate supply and demand gap is not tight, but the battery and cathode materials, the excess supply of lithium carbonate superimposed by the excess supply, still lasted for some time.

In January, the production of battery plants has been reduced, and the production of positive materials plants has been reduced accordingly, and the excess supply of the two links is gradually being eliminated. In addition, the production capacity of the newly put-in lithium salt plant has been gradually debugged, the supply has increased, and the imbalance between structural supply and demand has been repaired. Lithium carbonate prices fell into a rational consolidation period.

Smooth transition of Reserve Price of Lithium Salt Plant during Spring Festival

Time: February to March 2018

As the Spring Festival approaches, lithium salt plants prepare goods, lithium carbonate prices transition smoothly, and post-holiday positive material factories trade lightly. At the same time, manufacturers are pessimistic about the follow-up trend of lithium carbonate prices. Even if the major lithium salt supply plants actively create a "lithium carbonate price will rise" trend, lithium carbonate prices have not been able to rebound.

According to SMM research at the end of January, mainstream cathode material manufacturers fill the demand with a "long order + a small amount of on-demand" mode. Although the two major lithium salt suppliers have not yet adjusted their quotations, other lithium salt suppliers and traders are actively shipping. The material factory purchases at a low price, and the stock is basically completed.

The price of lithium carbonate has been falling all the way down

Time: April to October 2018

Since April, the price of lithium carbonate has been falling, "falling endlessly." by the end of October, the price of lithium carbonate was down 72000 yuan, or nearly 50 per cent, from 150000 yuan per ton in early April to 78000 yuan per ton.

SMM believes that due to the oversupply of industrial grade lithium carbonate in Qinghai in April, the fall in the price of industrial grade lithium carbonate "dragged down" the price of battery grade lithium carbonate, while the production of lithium iron phosphate was very low due to the Waterma incident.

On May 30 this year, the parent company of Waterma issued a notice on the progress of asset restructuring. The announcement showed that the company had already overdue its debt and faced the claims of its creditors. The company raised its own funds to solve the difficulties. Waterma, a wholly owned subsidiary of Camrion, once among the top three in the power battery industry, has fallen sharply since 2018 and is in a slightly awkward position.

In such an environment, Watma's production has basically stalled, only to maintain a very low operating rate, in order to get the cash back as soon as possible, Watma began to sell batteries at a low price. However, the Watma battery mainly uses the lithium iron phosphate route, the energy density is low, after the subsidy retrogression, its power battery is very difficult to meet the subsidy requirements, it is understood that in 2017 Watma sales of power batteries, Only 14.3% of lithium iron phosphate batteries have an energy density of 115 Whg / kg, and a significant number of batteries do not meet the New deal subsidy standards, which has had a fatal impact on Watma's inventory. As the country's policy on high energy density batteries tilts, the proportion of ternary batteries is rising rapidly, and the market share of lithium iron phosphate materials, which are not resistant to low temperature and relatively low energy density, is declining. Watma, which specializes in lithium iron phosphate batteries, has gradually fallen short of expectations in the market, and the demand for lithium iron phosphate has shrunk sharply.

In addition, the market share of 6-series and 8-series ternary materials this year is significantly higher than that of the same period last year, with less than 60% of the market share of 3-series and 5-series. Affected by this, part of the lithium carbonate demand is replaced by lithium hydroxide. During this period, the shutdown and maintenance of a listed lithium salt plant in Sichuan also failed to stop the decline in the price of lithium carbonate. Downstream demand has not improved significantly, and there is a strong sense of decline, competing with each other for the supply of low-priced goods, manufacturers have to reduce prices in order to maintain customers and maintain inventories at a reasonable level. Battery-grade lithium carbonate prices all the way down, from the average daily price of 103500 yuan / ton in early August to the lowest daily average price of 78000 yuan / ton after the price hit bottom.

The price of lithium carbonate tends to stabilize after a small rebound.

Time: October to December 2018

Since the beginning of October, domestic lithium carbonate has finally put an end to the previous "falling" state, prices have stabilized. Back after the 11th quarter, the price of industrial grade lithium carbonate produced by salt lake lithium began to rise slightly, followed by a rise in the price of battery grade lithium carbonate, which remained stable until now after the average daily price rose to 79500 yuan / ton, and the trend remained stable.

According to a recent study by SMM, the production of lithium carbonate in Qinghai salt lake has been slightly reduced due to the winter weather, and the inventory of industrial lithium carbonate producers in salt lake has reached a low level since October and has not been sold at a low price in December. At the same time, the current processing of battery-grade lithium carbonate is basically close to the cost line for some ore smelters, while for downstream manufacturers, the current transaction price of lithium carbonate is in line with the expected affordable price, and the two sides have reached a self-evident tacit understanding. Lithium carbonate prices naturally remain stable. According to SMM research, production plants and downstream positive material factories on the short-term future price trend is stable. Under the condition that the price of lithium mine has not yet been determined and the production of lithium extraction from salt lake in Qinghai area has been slightly reduced by season, both smelters and cathode material manufacturers are cautious about price changes.

Prediction of lithium carbonate in 2019

According to SMM statistics, China is expected to produce 117900 tons of lithium carbonate this year, while China's total demand for lithium carbonate is 87600 tons. China imports 28800 tons of lithium carbonate, exports 10200 tons of lithium carbonate, and exceeds demand by 48200 tons. This year's severe oversupply is at the heart of the decline in lithium carbonate prices, which we predict will ease slightly next year, when lithium carbonate is expected to oversupply by 30300 tons in 2019. Although the surplus is slightly lower than in 2018, given that there is still a serious imbalance between supply and demand, the price of lithium carbonate will continue to bear the risk of downward pressure in the second half of next year. The downward price of lithium carbonate this year also has an impact on the pricing of lithium mines next year-more and more lithium salt companies are beginning to use "formula pricing" to determine the prices of lithium mines. That is, according to the lithium carbonate quotation of the third party website multiplied by the correlation coefficient to determine the price of lithium ore. We predict that, with the lithium carbonate price trend, lithium mine prices will also show a slow downward trend in the future. The supply of lithium carbonate exceeds demand, and the balance between supply and demand of lithium raw materials in China is not optimistic.

According to SMM statistics, the total supply of lithium raw materials in China this year (including 38800 tons of lithium carbonate in salt lakes, 1 LCE million tons of lithium mica concentrate in China, and 1.104 LCE million tons of lithium recovered in China) is expected to be 5.984 LCE million tons. The amount of imported lithium raw materials (spodumene concentrate, spodumene raw ore and lithium chloride) is expected to be 21.93 LCE000 tons, and the amount of exported lithium raw materials (spodumene concentrate, spodumene raw ore and lithium chloride) is expected to be 0.02 LCE000 tons. The corresponding downstream demand (the demand for lithium carbonate, lithium hydroxide and metal lithium in the lower reaches of China) is 12.19 LCE ten thousand tons, with a surplus of 157100 tons. Among them, the direct inventory in the form of ore exceeds 100000 tons of LCE. Although the surplus of raw materials and lithium salt makes smelters feel anxious, the competition for high-quality resources is the first strategic choice for smelters at any time. As shown in the figure below, SMM summarizes the situation of Chinese enterprises investing in cobalt and lithium mines overseas. It is expected that with the continued surplus of raw materials and lithium salt, the progress of lithium mine development with weak cost advantage may be delayed or terminated.

Global Cobalt supply and demand balance sheet:

Global lithium supply and demand balance sheet:

(for an overview of some of the data, please subscribe to the Research report on the Cobalt Lithium New Energy Industry chain in China from 2018 to 2021.)

However, the surplus of lithium ore does not affect the strategic layout of upstream resources of Chinese smelting enterprises. As shown in the figure below, SMM statistics and summary of overseas investment in cobalt and lithium mines by Chinese enterprises:

A list of Chinese enterprises investing in cobalt and lithium mines overseas:

(data source: "Research report on Cobalt Lithium New Energy Industry chain in China from 2018 to 2021")

With the change of the subsidy policy for new energy vehicles, the lithium industry has fluctuated in recent years. In order to give the industry and investors a better understanding of the cobalt lithium new energy industry chain, SMM has gone through detailed research. The Research report on Cobalt Lithium New Energy Industry chain in China from 2018 to 2021 will be released.

In particular, the report studies the list of overseas cobalt and lithium resources development projects of Chinese enterprises in 2018, the analysis of the impact of China's new energy vehicle subsidy policy on the lithium power industry in 2018, and the analysis of the amount of lithium extraction projects in China's salt lakes from 2018 to 2021. At the same time, the product has two parts: data package and report, which makes a detailed analysis of the industrial chain of cobalt lithium new energy industry from 2016 to 2021.

Packet directory:

Report Catalog:

Welcome to subscribe, please contact SMM Cobalt Lithium Research team!

SMM Cobalt Lithium Research team

Hu Yan 021 51666809

Scan QR code, apply to join SMM metal exchange group, please indicate company + name + main business