SMM August 18: recently, many enterprises in various industries have released their performance reports for the first half of 2021. Among them, the lithium industry is recognized as a high-prosperity industry in 2021, and the financial results of its enterprises are "competing for wonder and fighting for beauty". They are very bright-eyed. The results of a number of companies, including Jant Motor and Nord shares, soared by more than 1000% in the first half of the year.
The reason for this is naturally inextricably linked to the rising lithium price in 2021. According to the historical price of SMM, the price of lithium has remained unchanged until now. As of August 18, the average spot price of domestic lithium metal was 695000 yuan / ton, up 210000 yuan / ton from the end of 2020, or 43.3% this year. The price of spodumene concentrate has also seen a rise since the end of June. as of August 18, the average price of spodumene concentrate (6% last CIF China) was $875 / ton, up $457.5 / ton from the end of last year and 109.6% this year.
"Click to view the historical price of SMM Metals.
For the reasons for the rise in lithium prices some time ago, SMM analysis said that the market was mainly affected by expected hype, contract stimulation, rising mineral prices and demand-side production capacity, and the quotation rose significantly. The increase in hoarding sentiment may lead to market imbalance, and the increased influence of the seller's market will lead to an upward price.
As we all know, China is a big demand for lithium resources, but most of the domestic lithium mines rely on overseas imports, so the domestic lithium price is closely related to the dynamics of overseas lithium mining giants. In July, Pilbara, Australia's main lithium mine, auctioned spodumene concentrate for the first time, and the price of spodumene reached an all-time high with a transaction price of US $1250 per ton. This price is obviously far from the profit return under the ultra-long agreement pricing mechanism. therefore, the market speculates that with the continuous increase of the number of high-priced buyers in the spodumene spot market, the pricing model of spodumene may change in the future.
Pilbara also hinted that the company will adopt a more flexible pricing mechanism in the future. Some industry insiders commented that while the new pricing mechanism can more effectively match demand information and reflect the real-time market pricing of spodumene concentrate, it may cause strong fluctuations in lithium prices and increase the pressure on downstream enterprises.
However, as Huaxi Securities has previously predicted, some processing plants in China may still have spodumene concentrate reserved in 2020 for temporary replenishment in the first half of 2021, but with the arrival of the peak consumption season in the lower reaches of the second half of the year, when the original spodumene concentrate inventory is gradually exhausted, the market will inevitably be in a tight supply of lithium concentrate.
Pilbara also said at its second-quarter results meeting that Chinese companies were still speeding up the construction of lithium smelters against the backdrop of falling lithium salt and spodumene concentrate prices and the bankruptcy of many overseas mines. With the continuous production of these capacity, the demand for spodumene will continue to rise, so spodumene will face a shortage in the future. Huaxi Securities predicts that the tight supply of lithium concentrate will continue until mid-2022.
Galaxy is also deeply touched by the strong demand for spodumene from domestic enterprises. In a conference call on its second-quarter results, Galaxy Resources said that at present, the demand for spodumene from battery cathode and battery manufacturers is very strong, and due to the high profit level of metallurgical plants, most manufacturers in China's positive electrode industry and battery manufacturers also accept high-price spodumene. At present, the CIF price of Galaxy resource spodumene is less than 900 US dollars / ton.
And prior to this, Galaxy Resources also held an auction of spodumene concentrate, with downstream bids as high as $900 / ton. Therefore, from the above situation, due to the urgent demand for spodumene concentrate, under the premise of high downstream profits, enterprises generally accept high-priced spodumene.
However, with the rapid development of the field of lithium power, in the context of lithium prices "rising", many enterprises have also begun the layout of lithium mines. The rich salt lake resources in China have also been repeatedly mentioned by the industry because of the rising price of lithium ore. On August 17, Lanke Lithium Industry, China's largest lithium extraction project from brine, officially entered the trial production stage of the battery-grade lithium carbonate project with an annual capacity of 20,000 tons, which was talked about by countless people in the industry.
It is reported that after the completion of the project, it can achieve an annual production capacity of 20,000 tons of battery-grade lithium carbonate, reaching an annual production capacity of 30,000 tons of lithium carbonate. According to the recent research of SMM, the price of lithium carbonate has risen recently, and considering that the downstream inventory is in a period of consumption, it is expected that the transaction price of lithium carbonate will still have an upward trend in the future.
As for lithium hydroxide, lithium hydroxide has been in short supply since the end of 2020. However, recent sales of high-nickel models have fallen short of expectations, and demand for lithium hydroxide is expected to slow, but given the small increments on the supply side in the second half of the year, SMM believes that the price of lithium hydroxide will continue to rise, but at a slower pace.
According to the spot quotation of SMM, as of August 18, the average price of battery-grade lithium carbonate in China was 97500 yuan / ton, up 89.3% this year, while the average price of battery-grade lithium hydroxide was 112500 yuan / ton, up 129.5% this year.
"Click to view the spot market of SMM metal.
So on the whole, when the new energy vehicle industry continues to be hot, SMM expects that the domestic demand for lithium ore will continue to heat up in the second half of the year, while the overseas supply is limited, the domestic spodumene concentrate is expected to continue to go to the warehouse, and the price upward trend is still there.
