Lithium prices continue to rise forcing new energy vehicle price increases letter frequently issued by the Ministry of Industry and Information Technology where to go after the lithium price?

SMM March 21: recently, the news about the sharp rise in lithium prices, the discussion between the Ministry of Industry and Information Technology and some lithium salt enterprises, guiding the price of lithium salt to return to rationality and so on has been spread very loudly. On March 18, the lithium carbonate 2204 contract closed down about 5% on the futures market, which once triggered a heated discussion in the market, which was contrary to the trend of spot prices, which brought some panic to the market.

However, some industry insiders said that lithium carbonate futures fell in intraday trading, but the spot price was normal, mainly because there were customers selling goods in the market. SMM also believes that in view of the small overall transaction size of this futures market and limited feedback on the actual situation of the spot market, the current price is more emotional feedback for the market, which reminds the majority of readers to refer to it cautiously.

On the face of the news, in order to ensure the supply and stabilize the price of lithium resource products and promote the healthy development of new energy vehicles and power batteries, the Department of Raw Materials Industry and the first Department of equipment Industry of the Ministry of Industry and Information Technology, together with the Price Department of the Development and Reform Commission, the General Administration of Market Supervision and Inspection, and the Bureau of Anti-unfair Competition, organized a symposium on the operation of the lithium industry and the price increase of upstream materials for power batteries on March 16 and March 17. Responsible persons of key enterprises in the upstream and downstream of the industrial chain, such as lithium resources development, lithium salt production, cathode materials, power batteries, also participated in the meeting.

The meeting demanded that enterprises in the upper and lower reaches of the industrial chain strengthen the docking of supply and demand, work together to form a long-term and stable strategic cooperative relationship, jointly guide the rational return of lithium salt prices, and step up efforts to ensure market supply. better support the healthy development of China's new energy vehicles and other strategic emerging industries.

This is not the first time that the Ministry of Industry and Information Technology and other departments have mentioned the issue of price stability of resource-related products. Xin Guobin, vice minister of the Ministry of Industry and Information Technology, has publicly mentioned that it is necessary to focus on meeting the production needs of power batteries, appropriately speed up the development of domestic lithium, nickel and other resources, and crack down on unfair competition such as hoarding and driving up prices.

In addition, during the two sessions this year, a number of responsible persons of lithium enterprises also submitted relevant proposals. Zeng Yuqun, chairman of Ningde Times, submitted a proposal on taking effective measures to promote domestic lithium resources to guarantee supply and stabilize prices as soon as possible. He said that the current supply and demand situation of lithium resources is grim, so we should speed up the exploration and development of domestic lithium resources to ensure the security of the supply chain. At the same time, independent innovation and tackling key scientific and technological problems should be strengthened to improve the level of recycling and efficient utilization of resources.

Affected by the sharp rise in the price of lithium-related products, the cost pressure of power battery enterprises has increased. For some enterprises that do not have sufficient lithium reserves and sources of supply, the continued upward price of lithium salts such as lithium carbonate makes it "difficult to bear its weight". When announcing its 2021 results, KuaiBao mentioned that although the company locked in a certain amount of raw material supply by price locking, it was still unable to hedge the cost pressure caused by rising raw material prices, resulting in a lower gross profit margin for lithium batteries than in the same period last year. Funeng Technology also mentioned in the 2021 results that the raw material prices of the company's main products rose sharply and the material costs increased, while due to the lag in price adjustment, the product prices failed to rise in time with the rising trend of power battery material prices during the year, which once put pressure on the company's performance. At present, however, the prices of most customers' products have been adjusted.

In addition to power batteries, there are also more and more new energy car companies to start a round of "price hikes". Tesla also set a brilliant record of seven days of "three consecutive gains", and recently, in response to the rise in the price of upstream raw materials, Xiaopeng Automobile, Weimar Automobile, Euler Automobile and other models have all opened a new round of price increases. Some institutions believe that the price increases of the first batch of new energy vehicles after 2000 are mainly in response to the decline of subsidies for new energy vehicles, while the second round of price increases is in response to cost pressure.

It is against this background that four departments, including the Ministry of Industry and Information Technology, have launched a heavy attack, re-emphasizing the issue of ensuring the supply and price of lithium resources. Recently, in the context of high lithium prices, the price rise of lithium salts such as lithium carbonate has also begun to moderate. On the spot side, according to the spot price of SMM, as of March 21, the spot price of domestic battery-grade lithium carbonate was 503000 yuan / ton, up 30, 000 yuan / ton from the beginning of the month.

"Click to order to view the spot historical price of SMM new energy products.

From a fundamental point of view, according to the latest research by SMM, most lithium salt factories on the supply side maintain high operating rates, while the new production capacity of some manufacturers is still in the climbing stage, superimposed by the rise in temperature in Qinghai, and the overall domestic supply of lithium carbonate has risen. SMM expects lithium carbonate production to grow by 26% in March. In accordance with the previous rules, lithium carbonate imports will gradually recover from the impact of overseas Christmas holidays and Chinese Spring Festival after March to April and concentrate to Hong Kong to a certain extent, and the domestic lithium carbonate supply situation will be effectively alleviated.

On the demand side, the downstream ternary end is affected by the nickel price black swan event, the material factory is still hesitant about the status of the follow-up order, the wait-and-see mood is aggravated, the game state between iron and lithium and the battery factory continues, and there are many wait-and-see stages in the follow-up preparation. The overall demand for lithium carbonate showed only a small increase, with a growth rate of only 4%.

Spot, the recent market transactions are less, some traders due to long-term price stagflation and the emergence of dumping behavior, leading to the widening of the market price range, the emergence of some low-price transactions. For the future price trend of lithium carbonate, SMM expects the price of lithium carbonate to maintain stability or a slight correction. "View details