[SMM analysis] the price of lithium metal has been falling one after another, and the shutdown of pharmaceutical intermediate enterprises has a significant impact.

SMM6 13: since the beginning of 2019, the price of metal lithium (industrial grade, battery grade) in China has continued to decline, from the average price of 805000 yuan / ton at the beginning of the year to the most recent 725000 yuan / ton. Recently, the quotation of SMM metal lithium is 71-740000 yuan / ton (low range industrial grade, high amplitude battery grade). It is understood that some of the market lithium metal trading price has even been less than 700000 yuan / ton, and there is a further downward trend.

In this regard, we have sorted out the price trend of lithium metal since 2019 as shown in the following figure:

Source: SMM

According to the market, there are two main reasons for the decline in the price of lithium metal: 1) the lower price of lithium salt has a linkage effect on the price of lithium metal. Since the end of 2018, the price of lithium hydroxide has fallen, and the price of lithium carbonate has remained stable. Lithium chloride prices have been lower since the start of the year, down nearly 20 per cent. Lower raw material prices have led downstream manufacturers to put pressure on upstream lithium producers to cut prices. 2) as we mentioned earlier, the demand for industrial grade lithium has been reduced as a result of the rectification and shutdown of pharmaceutical intermediate manufacturers. In order to obtain guaranteed orders, lithium metal manufacturers have to use the strategy of selling at a reduced price.

According to the latest understanding, the pharmaceutical intermediate enterprises closed a few months ago still have no signs of starting, and can not give a definite resumption of production time. In response, we expect lithium metal production to fall by about 6 per cent to 3000 tons this year. And given the downward trend in the price of lithium salt in the second half of the year, we believe that the price of lithium metal will continue to decline.

SMM Cobalt Lithium Research team

Hu Yan 021 51666809

Hong Lu 021 51666814

Ning Ziwei 021 51666780

Qin Jingjing 021 51666828