Demand weakened slightly in Q2, with lockdown in Chile likely to support lithium carbonate prices

SHANGHAI, Apr 7 (SMM) – China's lithium carbonate output in March 2021 totalled 17,720 mt, up 49.8% month-on-month and 33.6% year-on-year. The increase mainly contributed by Jiangxi and Qinghai. Sources of the increase in supply in Q2: 1) imports of lithium carbonate rose sharply. Some downstream producers that have to cut output amid the difficulty in restocking raw materials have raised orders for overseas industrial-grade products. Imports of lithium carbonate have soared since February. Imports are expected to be high in H1 2021 2) Supply of domestic smelters continued to increase. Although spodumene ore tightened, the impact is not obvious, compared with expansion and capacity increment.

3C digital equipment is in the low season in H1, and the demand for LCO fell sharply; in the cost-cutting season, battery factories still maintain a bullish outlook on LFP while the proportion of 5 and 6-series ternary materials fell which is replaced by LFP. The demand for lithium carbonate was muted.

Lockdown in Chile will cause delays in shipping schedules, affecting 20%-25% of the overall domestic lithium carbonate supply in May-June, and there will be a supply gap. Prices of lithium carbonate are expected to continue to rise in Q2.

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