SMM, November 20: Yesterday afternoon, the energy metals sector saw a rapid rise, with the index's intraday gain exceeding 8%. Among individual stocks, Canmax rose over 13%, while Tianqi Lithium, YOUNGY, Ganfeng Lithium, Sinomine Resource Group all hit the daily limit. Other stocks like Hanrui Cobalt, Tengyuan Cobalt, and Huayou Cobalt also followed suit. By yesterday's close, the energy metals index led all industry sectors with an 8.71% gain.
In terms of news, lithium carbonate futures also rose in the afternoon yesterday, with intraday gains nearing 5%. By yesterday's daytime close, the most active lithium carbonate futures contract reported a 3.96% increase, closing at 82,650 yuan/mt.
On the spot market, according to SMM spot prices, as of November 19, battery-grade lithium carbonate spot prices rose to 77,200-80,300 yuan/mt, with an average price of 78,750 yuan/mt, up 5,450 yuan/mt from the low of 73,300 yuan/mt on October 25, marking a 7.44% increase.
SMM survey shows that current demand stimulation, coupled with news of production cuts at an overseas mine, has driven lithium carbonate prices up. Upstream lithium chemical smelters are mainly holding firm on quotes during this demand peak period. On the downstream demand side, due to uncertainty about future demand and frequent price fluctuations, downstream material plants are cautious and reluctant to stockpile. Overall, SMM expects lithium carbonate spot prices to continue fluctuating within a range. With favorable downstream demand, lithium chemical companies may maintain firm quotes for future long-term contracts. SMM will closely monitor market dynamics.
Notably, last week's significant rise in lithium carbonate futures and spot prices was driven by multiple factors, including sentiment and fundamentals. On the sentiment side, the boost from overseas auction prices and announcements from several high-cost lithium miners announcing maintenance or suspension of their resource projects, along with delays in new projects in Argentina, have provided support for spot and futures prices, despite having a minimal immediate impact on resource supply.
On the actual supply and demand front, November's end-use demand exceeded expectations, significantly increasing battery cell and cathode active materials production schedules, thereby boosting lithium carbonate spot procurement demand. On the supply side, despite increased production due to demand stimulation, domestic supply still struggled to meet the rising demand. November saw continued significant destocking, with strong sentiment to stand firm on quotes from upstream smelters during this peak period, significantly raising quotes and supporting lithium carbonate price increases.
It is important to note that on November 15, the Ministry of Finance and the State Administration of Taxation announced that from November 2024, the export tax rebate rate for lithium batteries will be reduced from 13% to 9%. This policy adjustment aims to guide domestic price correction by lowering export tax rebates, alleviate international trade criticisms, and encourage the development of internationally competitive products.
Regarding the impact of the export tax rebate reduction on the lithium battery industry, SMM believes it will mainly manifest in three ways: increased export costs for lithium battery companies, higher export prices for lithium battery products, and potential declines in international market competitiveness and industry capacity reduction. The first two points are relatively straightforward. The third point, the reduction in export tax rebates, is also seen as a means to accelerate industry capacity reduction. By lowering rebates, the government aims to eliminate companies that rely on price wars for survival, encouraging mid-to-high-end manufacturing to move away from excessive price competition and towards healthy competition based on technological innovation and product upgrades. This will help reduce excess capacity and promote the healthy development of the industry.
