[SMM Analysis] High inventory Competition intensifies Lithium Carbonate Price pressure

SMM, 31 March:

SMM battery grade and industrial grade lithium carbonate quotation today showed a small downgrade. According to the latest quotation of SMM on March 30, the battery grade lithium carbonate quoted 45500-48500 yuan / ton, the average price decreased by 750RMB / ton compared with last week, and the industrial grade lithium carbonate quoted 38000-410 million yuan / ton, the average price decreased by 500RMB / ton compared with last week.

From the supply side,

At present, domestic lithium salt enterprises have basically returned to work smoothly, and the operating rate of mica lithium has gradually returned to the current 50% from less than 10% in February; the operating rate of pyroxene lithium has returned to 50% from 30% in February; and the operating rate of lithium in salt lake is still climbing due to the production capacity of some enterprises. The operating rate is currently maintained at about 40%.

Before this, some Qinghai industrial and carbon enterprises signed long orders, and some enterprises still can not maintain the shipping state, compared with electric carbon, the spot circulation of industrial carbon market is less, the price is relatively strong. With the recovery of upstream supply and the weakening of superimposed downstream demand, the shortage of spot circulation in the market is gradually alleviated; at the same time, due to the increasing difficulty of shipping in the electric carbon market, the downward pressure on the price increases, forcing part of the electric carbon production to give up the high price and transfer to the industrial carbon market, and the market supply and demand structure changes, and the prices of electric carbon and industrial carbon are now in a downward trend.

From the demand side:

In the power market, domestic power market demand remains weak, a number of companies told SMM that orders in March were lower than expected, and the operating rate did not rise smoothly.

In the consumer market, the consumer market recovered well after the year and played a certain supporting role in the price of industrial lithium carbonate, but with the development of the overseas epidemic, the export of terminal products in the digital market was blocked, affecting overseas orders for upstream consumer batteries. Lithium manganate material factory said that in order to avoid excessive inventory accumulation in the event of a sharp drop in demand, it has begun to control the level of operating rate.

In addition, demand expectations for the second quarter remain bleak as overseas carmakers, power battery plants and 3C terminal plants shut down (for a summary of the news at the end of the article). From the point of view of the degree of industrial globalization, the current new energy industry chains are distributed all over the world, and the resumption time depends on each link. The electric vehicle terminal market is dominated by China and Europe, and the upstream raw material smelting capacity is basically concentrated in China, Japan and South Korea. Consumer market is more obvious, its end product factories are concentrated in labor-intensive countries, at the same time, a large number of core parts and components are distributed in many countries, affected by the epidemic, the uncertainty of the time to return to work in the later stage is greater.

Lithium carbonate prices are currently facing the following pressures:

1. The inventory of a number of enterprises is high.

In the aspect of battery grade lithium carbonate, the operating rate of each enterprise is relatively high before and after the Spring Festival, and the return speed of pyroxene lithium enterprises is faster after the Spring Festival. However, the downstream power demand is lower than expected, and some enterprises choose other low-cost raw materials because of cost pressure. Enterprise inventory pressure appears gradually. At present, some enterprises choose to switch the focus of their products to reduce the operating rate of battery-grade lithium carbonate, and some enterprises choose to further reduce the price in order to make up the price and reduce the inventory pressure.

In the aspect of industrial lithium carbonate, some enterprises in Qinghai are in a state of non-shipment due to multiple factors. However, as the production of enterprises is still continuing, inventory accumulates passively.

According to SMM, the current inventory level of a number of lithium carbonate enterprises has been more than 2 months.

2. Overseas salt lakes intensify market competition

As the overseas salt lake gradually shifts the sales center to the Chinese market, the competition of lithium carbonate will be more fierce under the condition of limited domestic demand, which will restrain the price trend in the future.

To sum up, the challenge of battery-grade lithium carbonate is greater than that of industrial-grade lithium carbonate. However, due to the current CIF price of spodumene has reached about US $450 / ton, which provides some cost support for battery grade lithium carbonate, the room for price downward exploration is already very limited. At the same time, because mica lithium currently has the technology to produce battery-grade lithium carbonate, the price difference between industrial-grade lithium carbonate and battery-grade lithium carbonate may be reduced to 3000-5000 yuan / ton in the case of limited demand in the power market and no significant improvement in the quality of lithium in salt lakes.

SMM Battery Materials Research team

Hu Yan 021-51666809

Qin Jingjing 021-51666828

Mei Wangqin 021-51666759

Huo Yuan 021-51666898

Wuyang 021-51666818

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