Lithium Carbonate Prices on the Rise, Net Profit of a Lithium Giant up 100 Times in First Half!

SHANGHAI, Aug 31 (SMM) - After stabilising briefly in the previous trading day, the SMM Price showed that the prices of domestic lithium carbonate and lithium hydroxide were again on the upward track today. As of August 31, the spot price of domestic industrial-grade lithium carbonate stood at 473,000-479,000 yua/mt, with an average price of 476,000 yuan/mt, and a single day increase of 3,000 yuan/mt.

The spot price of domestic battery-grade lithium carbonate added 2,000 yuan/mt today to 485,000-495,000 yuan/mt, an average of 490,000 yuan/mt.

The prices of lithium hydroxide also tracked the growth of lithium carbonate. The spot price of domestic industrial-grade lithium hydroxide stood at 455,000-467,000 yua/mt, with an average of 461,000 yuan/mt, and a single day gain of 2,000 yuan/mt.

The spot price of domestic battery-grade lithium hydroxide (coarse powder) stood at 470,000-482,000 yua/mt, with an average of 476,000 yuan/mt, and a single day gain of 2,000 yuan/mt. In addition, the spot price of battery-grade lithium hydroxide (micro powder) also climbed to 478,000-490,000 yuan/mt, an average of 484,000 yuan/mt. 

In addition to the above-mentioned lithium salt products, the spot price of spodumene concentrate (6%, CIF China) also maintained an upward trend, with an increase of $30/mt to $5,010-5,210/mt.

According to SMM research, the recent growth in lithium carbonate prices is mostly due to the lack of spot circulation in the market due to power cuts and the pandemic lockdown in Qinghai province, and the upstream players were heavily bullish. Looking ahead to September, as the power rationing in Sichuan province and other places gradually subsides, SMM expects that the subsequent supply of lithium carbonate will rise by approximately 7% considering that a few smelters will still be restricted by ore supply. On the demand side, supported by the expected improvement in terminal demand, new LFP capacities will ramp up the production, and the demand for lithium carbonate is expected to add 11% MoM, aggravating the supply tightness in September. 

However, the expected additional supply from Qinghai is likely to slightly ease the supply shortage after the local pandemic situation is brought under control. On the whole, the supply shortage of lithium carbonate will be slightly exacerbated, but the overall price growth rate may remain stable or slow slightly. At the same time, it is still necessary to look to the possibilities of disappointing pandemic control results in Qinghai, as well as contracting demand in other regions due to the pandemic or power cuts. 

In Sichuan, SMM learned that since August 26, with the cooling weather and returning rainfall across the province, the electricity supply shortage has eased. According to the Sichuan State Grid Electric Power Co., as of 12:00 on August 28, general industrial and commercial power consumption in Sichuan has been fully restored. Except for extremely large electricity consumers, large-scale industrial power consumption is gradually recovering. If the subsequent hydropower supply continues to improve, the large industries will all resume normal electricity consumption.

According to media reports, since August 26, many lithium salt factories in Sichuan have resumed the production one after another after the power supply normalised. Tianyi Lithium, which had previously reduced its production due to power cuts, also mentioned on the social media that the company has fully resumed the production on August 25.

As is known to all, the prices of lithium salts, led by lithium carbonate and lithium hydroxide, rose rapidly in the first half of the year, which attracted much market attention. Although the prices declined in mid-to-late March due to the pandemic and high inventories, they were still at a high level. As such, domestic lithium battery industry chain companies have all reported exciting earnings results in the first half of the year. Among them, the performance of lithium mining companies is the most eye-catching. Yesterday, Tianqi Lithium and Ganfeng Lithium both released their earnings report. Among them, Tianqi Lithium achieved a net profit of 10.328 billion yuan attributable to shareholders of listed companies in the first half of the year, a year-on-year increase of 11,937.16%. In addition, according to SMM statistics on the performance of lithium battery industry chain companies in the first half of 2022, the net profit of Youngy Group soared 4,000% year-on-year in the first half of 2022, while Youngy and Tibet Mining also had net profits growing more than 1,000% in the same period.