Lithium carbonate prices to stop declines in mid-Sep on NEV market recovery 

SHANGHAI, Aug 28 (SMM) – Prices of lithium carbonate in China may stem declines in mid-September as a recovery in the new energy vehicle (NEV) market will stimulate stockpiling at power battery mills and cathode material producers, SMM expects. 

Domestic NEV makers are expected to ramp up production at the end of October, considering further subsidy cuts next year before a complete subsidy phase-out after 2020. SMM learned that some cathode materials producers have already started to restock lithium carbonate on expectations of a demand rally in the digital battery market in September. 

SMM data showed that there remained about 16,000 mt of lithium carbonate inventories in July, able to meet production needs for around a month and a half. Current in-plant stocks across downstream producers stand at lows. 

Prices of lithium hydroxide could face further downward pressure in the short term if major producers resume production and demand from high-nickel batteries fail to expand significantly. This is expected to narrow its price spread with battery-grade lithium carbonate.

Cumulative inventories of lithium hydroxide stood at around 1,500 mt in July, SMM assessed. 

Oversupply began to drag on domestic prices of lithium carbonate at the start of 2018, and a steep fall was seen from this June on wakening downstream demand.  

SMM assessment indicated that prices of battery-grade lithium carbonate declined over 18.2% from the beginning of June, to 62,500 yuan/mt as of Wednesday August 28, and prices of industrial-grade slipped 19.6% to stand at 54,500 yuan/mt. 

Supply glut also accelerated declines in prices of battery-grade lithium hydroxide since June, as prices lost some 17% and came in at 73,000 yuan/mt as of August 28. 

Demand for lithium salts from the new energy sector faded in the third quarter. As the release of 2019 subsidy policy for NEVs came later than expected, frontloading between the end of last year and the start of this year already depleted downstream demand. This, together with the end of the grace period for subsidy cuts in late-June, sent consumption to a bottom. 

In major consumption areas of Beijing, Shanghai, Guangzhou, and Shenzhen, NEV demand was also squeezed by selloffs of traditional vehicles with lower emission standards, before the stricter, new emission requirements took effect on July 1.