[SMM Outlook] the price of battery-grade lithium carbonate soared by 17% in December. Can the price continue to be strong under the overhaul of big factories in the first quarter?

SMM12 March 31: looking back in 2020, the price of battery-grade lithium carbonate showed an overall trend of first suppressing and then rising. Since mid-late March, the price of battery-grade lithium carbonate has been falling, reaching a record low of 39750 yuan / ton. Since the end of August, prices have been rising. As of today, the average price of battery-grade lithium carbonate is 51500 yuan / ton, up 11750 yuan / ton from the lowest level since the beginning of the year, rebounding 29.6%.

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As the new energy vehicle industry continues to release heavy good news, driving the demand for upstream raw materials. In December, the price of battery-grade lithium carbonate continued to rise. As of today, the average price of battery-grade lithium carbonate was 51500 yuan / ton, up 7500 yuan / ton from December 1, rebounding 17%.

On the supply side, according to SMM research, since 2018, some purification enterprises have used industrial-grade lithium carbonate causticizing method to produce battery-grade lithium hydroxide. therefore, the actual lithium carbonate inventory in the market is about 50000 tons, and the current lithium salt factory inventory accounts for only about 7%. Overall, the supply is tight.

On the demand side, towards the end of the year, downstream manufacturers prepare the usual stock, and the procurement demand is relatively large, and the demand for upstream raw materials is expected to slow down. The demand for lithium carbonate is expected to be 20005 tons in December, an increase of 0.34% from the previous month, and a year-on-year increase of 107.74% to maintain a high level.

SMM believes that the output of some lithium salt plants declined slightly in December due to power cuts, superimposed by the overhaul of large factories in the first quarter, and the supply decreased significantly in the first quarter of next year.

On the demand side, under the guidance of Spring Festival stock preparation and bullish sentiment, there has been over-purchasing in some of the lower reaches, but the purchasing mood will gradually slow down in January, with only a small replenishment in the material factory, and the mainstream transaction price of lithium carbonate is expected to rise only slightly. With logistics restrictions approaching the Spring Festival and procurement demand slowing, prices are likely to remain stable from the end of January to March.

There is obvious overcapacity on the supply side of lithium carbonate in 2021, but as material factories step up their efforts to put into production and stock, it is expected that a tight balance will be formed at the end of the year as in the fourth quarter of this year, the price of lithium raw materials will continue to rise, and the price of lithium carbonate may still be bullish at the end of the year.