Lithium Carbonate Surged More Than 190,000 yuan/mt in the First Half of 2022

SHANGHAI, Jun 30 (SMM) – When we look back to lithium salt market in the past six months, the market, led by battery-grade lithium carbonate, posted fierce growth in the first quarter. Battery-grade lithium carbonate prices, for example, surged from 278,000 yuan/mt at the beginning of the year to a year-to-date high of 503,000 yuan/mt in late March, a gain of 80.94%.

After the lithium carbonate price soared, the high pressure of raw material prices brought great pressure to a number of midstream and downstream enterprises, when the Ministry of Industry and Information Technology, together with some other ministries, held a symposium on March 16 and 17 concerning lithium industry operation, power battery industry chain. It was required at the symposium that upstream and downstream enterprises in the industry chain should enhance the supply and demand relationship, cooperate to form a long-term, stable strategic partnership, and jointly guide the rational return of lithium salt prices, and strengthen efforts to protect market supply, in order to better support the healthy development of new energy vehicles and other strategic emerging industries in China.

Under the Ministry of Industry's strict regulation, coupled with rising temperatures that raised the production of lithium carbonate in Qinghai as well as the outbreak of the pandemic at the end of March which resulted in weak downstream demand, the spot price of battery-grade lithium carbonate began to enter the downward channel and once hit a low of 461,500 yuan/mt, down 41,500 yuan/mt from the previous high.

However, since May 27, with the improvement of the pandemic situation in Jiangsu and Zhejiang, downstream demand has picked up. In addition, lithium carbonate prices also gained support in terms of cost and confidence from Australian lithium miner Pilbara and the auction of 54.2857% stake in Sinuowei Mining in Yajiang County, Sichuan province. Since then, lithium carbonate prices rose slowly and recorded 469,000 yuan/mt for battery-grade lithium carbonate as of June 29, up 191,000 yuan/mt from beginning of the year.

But even if the price of lithium carbonate fell in April, it is still at a high level. To this end, it is reiterated on June 27 the proposal by the Ministry of Industry and Information to do a good job in securing the supply of power battery resources and materials.

It is reported that the main lithium carbonate producing provinces include Qinghai, Sichuan and Jiangxi. The Qinghai region, because of its high altitude and high latitude, has a high probability of production cuts from November to March each year due to low temperatures. And lithium carbonate production in January and February is expected to be about 30% less than in October. Companies in Jiangxi and Sichuan also tend to choose to overhaul in the winter or the first quarter, which generally affects 10% to 15% of production capacity.

So overall, lithium carbonate production will experience obvious reductions in January, February and November, December in the following year, with the greatest production cuts of about 30%-40%. But the demand side, including the new energy vehicles, will often rush to produce at the end of the year to polish their annual performance. Hence amid supply reduction and demand outbreak, supply shortage will be serious at the end and beginning of the year. Therefore, SMM believes that the supply of lithium carbonate will be quite tight in the fourth quarter.