China’s Yahua commissioned 20,000 mt lithium hydroxide project

Rising price of lithium hydroxide has left downstream material factories struggling.

Tianqi Lithium's share prices had surged from April 2020 amid development of new energy vehicles (NEVs), but dropped rapidly after the Chinese New Year (CNY) holiday. 

Ganfeng Lithium, a top lithium producer in China, has said it is stepping up efforts to construct a lithium hydroxide expansion project, with an annualised capacity of 50,000 mt, to catch up with the schedule delayed by the coronavirus outbreak. The project is slated to come online in Q4 this year.

The short-term supply tightness of cobalt raw materials lifted cobalt salt prices last week, but limited trades and continued weakness in consumption may cap any rebound in the near-term prices. Prices of lithium carbonate will unlikely to extend declines given the raw materials costs and the trade prospects in Q2 this year. 

China’s spodumene concentrate inventories saw an addition of 3,343 mt of lithium carbonate equivalent (LCE) in the first quarter, which together with an inventory draw of 1,765 mt of LCE in overseas stocks, led to a build of 1,578 mt of LCE in the global spodumene inventories in Q1, showed SMM calculations. 

Full resumption of industrial production is expected across China on March 15, including producers in Hubei, the epicentre of the coronavirus, the latest SMM survey showed. Companies in Hubei are currently in preparation for the recovery. The operating rates of Chinese cobalt salts plants are expected to rise to normal levels in March, from only 30-40% in February. As of March 11, the rates stood at 50-60% for most cobalt salts mills.

Japan’s Panasonic and PEVE, South Korea’s LG Chem, Samsung SDI and SKI were among the world’s top 10 EV battery producers in terms of shipments in 2019, according to data from SNE. The two countries are also home to many cathode materials producers.

SMM assessed industrial-grade lithium carbonate at 38,000-42,000 yuan/mt as of Thursday March 5, up 3.9% from multi-year lows of 37,000-40,000 yuan/mt.

Major downstream producers will continue to purchase feedstock to fulfil orders received pre-holiday, and this will support cobalt salts prices in the second half of February. 

The upward trend in overseas prices of refined cobalt will support bullish prospects for domestic prices