SMM7, March 5: 2019 has been more than half, the new energy industry is gradually shuffling off the flashy, facing the dilemma of reshuffle. At this special time, the SMM New Energy Analysis team investigates and integrates the production data of China's core battery materials, summarizes the trend characteristics of the price trend, and makes a judgment and forecast of the price trend in the second half of the year.

This is the second part of a series of analysis reports, which describes the conclusions and forecasts of the core data of the lithium industry:

From January to June 2019, China's total production of lithium carbonate was 67500 tons, an increase of 29 per cent over the same period last year and 5 per cent over the second half of 2018. SMM expects lithium carbonate production to be 81000 tons in the second half of the year, up 23 per cent year-on-year.

From January to June 2019, the total output of lithium hydroxide in China was 38800 tons, an increase of 84 per cent over the same period last year and 31 per cent over the second half of 2018. SMM expects to produce 42000 tons of lithium hydroxide in the second half of the year, an increase of 58 per cent year-on-year.

In the first half of 2019, the average price of SMM battery grade lithium carbonate was 77300 yuan / ton, down from the same period last year. The average price of SMM battery grade lithium hydroxide is 98000 yuan / ton, compared with the same period last year. We expect the prices of battery-grade lithium carbonate and battery-grade lithium hydroxide to continue to fall in the second half of 2019, with the price decline concentrated in the third quarter. The average price of battery-grade lithium carbonate will be 70000 yuan / ton for the whole year. The premium between battery-grade lithium hydroxide and battery-grade lithium carbonate will shrink, but should remain, with a price difference of about 5000 yuan per ton.

Lithium carbonate production in China since January 2018

From January to June 2019, China's total production of lithium carbonate was 67500 tons, an increase of 29 per cent over the same period last year and 5 per cent over the second half of 2018. In the first half of 2019, the growth of lithium carbonate supply mainly came from Ganfeng lithium industry, Sichuan Nengsheng, Nanshi lithium power and Minmetals Salt Lake.

In fact, although China's lithium carbonate production increased in the first half of the year compared with the same period last year, the growth rate was lower than we expected. There are two main reasons: first, for lithium carbonate production enterprises with spodumene as raw materials, the conversion ability of raw materials is limited. Market research understanding, for some of the new production capacity of enterprises, lithium ore and production line adaptation and commissioning to produce stable quality products twists and turns. Second, for the lithium carbonate production enterprises with salt lake as raw material, the production cycle of the new project is long. From the original halogen to the old halogen drying system, and then to the production of stable batches of products that can be verified, it will take longer for new manufacturers. And affected by the season in the first half of the year, it is often not as good as the second half of the summer to have the natural advantage of mass production.

We expect that the growth of lithium carbonate in the second half of this year will mainly come from the production of new production capacity in Qinghai and the whole country. However, considering the end of the subsidy retrogression transition period, cathode material manufacturers are pessimistic about upstream demand expectations in the third quarter. For example, for June single-month output, there has been a negative growth. We believe that the growth of lithium carbonate production in China from July to December is limited and is expected to be about 81000 tons.

Lithium hydroxide production in China since January 2018

From January to June 2019, the total output of lithium hydroxide in China was 38800 tons, an increase of 84 per cent over the same period last year and 31 per cent over the second half of 2018. In 2019, the growth of lithium hydroxide production in China mainly came from the Jiangxi plant of Albemarle, Sichuan Nengsheng Lithium Industry and Jiujiang General Lithium Industry.

Similarly, such as lithium carbonate, the growth rate of lithium hydroxide production is still slightly weaker than we expected. The raw material source of lithium hydroxide is more single than lithium carbonate-spodumene concentrate as raw material, and the concentration of manufacturers is higher. We believe that the key reason for this slow growth is that downstream demand is not driving upstream production growth.

We expect that the capacity growth of lithium hydroxide in the second half of this year may come from Shengtun Group, more inclined to maintain stable production. Focus on the time point can be in the middle of the fourth quarter of 2019, to see whether the development of high nickel ternary cathode materials and the mass production after the structural adjustment of the production line, whether it can boost the supply of lithium hydroxide in the second half of the year. We estimate that the increment of lithium hydroxide in the second half of 2019 will mainly come from the new projects of Yahua Group, with a total output of 42000 tons.

January 2018 premium of lithium hydroxide to lithium carbonate in China

In the first half of 2019, the price of battery-grade lithium carbonate remained relatively stable, the price of battery-grade lithium hydroxide continued to fall, and the premium between the two decreased gradually.

For battery-grade lithium carbonate, we believe that there are two keys to price stability in the first half of the year: 1. The supply release was less than expected, as mentioned above. two。 In terms of demand, the demand for subsidized retrogression and lithium iron phosphate is good, which plays a positive role in the demand for lithium carbonate. For battery-grade lithium hydroxide prices fell, mainly due to slow demand growth, coupled with the battery-grade lithium carbonate price difference is too large, in view of cost considerations, ternary cathode materials enterprises use battery-grade lithium carbonate to replace it.

We believe that the prices of battery-grade lithium carbonate and battery-grade lithium hydroxide will continue to fall in the second half of 2019. At present, the price of SMM battery grade lithium carbonate is 7.1-74000 yuan / ton, and the price of battery grade lithium hydroxide is 8.1-83000 yuan / ton. It is estimated that the average price of battery-grade lithium carbonate is 66000 yuan / ton in the second half of 2019 and 70, 000 yuan / ton for the whole year. The premium between battery-grade lithium hydroxide and battery-grade lithium carbonate will shrink, but it should continue to exist, with a price difference of about 5000 yuan per ton.

To better serve people in the industry, SMM will add a new price point for spodumene concentrate on July 8 (detailed announcement: https://news.smm.cn/news/100943636), SMM aims to provide fair, scientific and valuable information for the industry to facilitate the development of the industry.

SMM Cobalt Lithium Research team

Hong Lu 021 51666814

Ning Ziwei 021 51666780

Qin Jingjing 021 51666828