SMM Overview of Lithium Salt Market

SHANGHAI, Mar 14 (SMM) - Since the middle of 2021, lithium salt prices have continued to soar. According to the transaction data two weeks ago, the mainstream transaction prices of battery-grade lithium carbonate reached around 500,000 yuan/mt, and that of battery-grade lithium hydroxide stood at 460,000-480,000 yuan/mt, which was 79% and 106.5% higher respectively than on January 1, 2022, and the price spread between the two narrowed further.

From the current supply and demand of lithium carbonate: (1) Supply: In March, lithium salt manufacturers resumed the production from the maintenance, and the overall supply picked up. However, due to previous maintenance, many lithium salt plants still produced for long-term orders first and the spot supply was still tight. (2) Demand: It will be split into ternary cathode material and LFP material. In terms of ternary cathode material, there was a small increase in orders from downstream power battery sector in March. In terms of lithium salt inventory, most leading manufacturers can maintain the production of 15-30 days. However, the high prices of lithium salt posed a great challenge to the capital turnovers of manufacturers, while the demand from non- power battery sectors continued to be weak. Most small factories and non- power battery manufacturers may not be able to purchase high-priced lithium salt, and coupled with the weak demand in the market, they had increased tolling or reduced the operating rates, which had eased the previous shortage of lithium carbonate spots. Overall, the demand for lithium salt from ternary cathode materials remained relatively stable. In terms of LFP, a number of LFP factories showed resistance to the purchase of high-priced lithium salt. Some of them had refused to buy, thus it became the centre of game between the upstream and downstream. In addition, in terms of production schedules, some LFP manufacturers curtailed their production. Overall, demand for lithium salts declined. In terms of prices, although overall lithium carbonate demand declined, spot supply were relatively tight. In addition, some manufacturers restocked for production in March two weeks ago, so lithium carbonate still showed fast growth in spite of relatively fewer transactions two weeks ago.

The market was wresting last week, and most manufacturers had completed the restocking of lithium salt for production in March. The growth rate of prices may decline.

Lithium hydroxide: (1) Cost: Under the continuous upward trend of ore and lithium carbonate prices, the manufacturing costs of lithium hydroxide was still on the rise. (2) Supply: In March, many lithium salt plants were still under maintenance and the overall supply was expected to remain at a low level. On the other hand, most lithium hydroxide was taken by long-term orders, and the spot supply was scarce. In addition, nearly 70% of lithium hydroxide will be exported overseas, which may further exacerbate the structural shortage of lithium hydroxide. (3) Demand: In March, considering the future prics increase of lithium hydroxide and the price advantage at present, some leading battery factories placed the orders of high nickel products in advance, which would increase the demand for lithium hydroxide.

In terms of prices, with the current low supply and rising downstream purchasing demand, lithium hydroxide prices showed greater increase two weeks ago. In terms of market forecast, based on the supply and demand, the prices of lithium hydroxide may rise faster than battery-grade lithium carbonate, and the price spread between the two would narrow further.