Lithium carbonate prices fall and demand remains strong

Lithium salt

The price of lithium carbonate has continued to fall recently. In terms of electricity and carbon, the psychologically expected price given by large lithium salt enterprises has been lowered, and a small amount of spot transactions have been made, but there are still some manufacturers who are more willing to stand up for prices and say they have no inventory.

In terms of industrial carbon, the continued weakening of electric carbon prices directly affects the profits of industrial carbon processing companies, and based on the consideration of the processing cycle, some companies began to sell industrial carbon at low prices, and traders panicked to sell goods, and industrial carbon prices continued to weaken . On the demand side, the purchasing willingness of downstream ternary and iron-lithium plants is not high, mainly in a small number of bulk orders, and both the transaction price and willing purchase price have been lowered.

Recently, the price of battery-grade lithium hydroxide has remained stable, while the price of industrial-grade lithium hydroxide has fallen. The polarization trend of lithium hydroxide is becoming more and more obvious. Due to the large global price difference, first-tier manufacturers still mainly export, while second-tier manufacturers cannot export, so they mainly supply internal demand.

Overseas lithium hydroxide demand is stable, and the overseas price change of lithium hydroxide has a certain lag, so it will be stable in the short term. The output of lithium hydroxide in China is expected to be stable in the short term, and the demand may drop somewhat, but the price of hydrogen for first-tier manufacturers in China is still relatively high. However, affected by the fall in the price of lithium carbonate, it is expected that the price of electric hydrogen will remain stable, and the price of industrial hydrogen may continue to fall.

Cobalt

The price of electrolytic cobalt has dropped recently. The demand of magnetic material manufacturers in downstream alloy factories of electric cobalt is weak, and it is difficult for traders to ship goods. The prices of various brands of electric cobalt have been lowered. However, near the end of the year, downstream orders are unstable, and there are few downstream stocks to replenish warehouses when prices are falling. The price of electric cobalt is still weak in the near future, and the transaction is light.

Recently, the price of cobalt sulfate has continued to decline, and the current market quotations are concentrated at around 49,000 to 50,000 RMB. The downward phase of the price of cobalt sulfate has led to a heavy pessimism in the cobalt industry, and the downstream precursor factories have less bidding and procurement, because the price is in a downward space, which also lowers the expected price. The demand for cobalt sulfate continues to be sluggish, and the market is bearish, so it is difficult to have price support in the short term.

Ternary materials

The price of ternary materials has dropped slightly recently. As the prices of upstream main materials such as lithium carbonate, lithium hydroxide, cobalt sulfate, nickel sulfate, and manganese sulfate continue to decline slowly, the price of ternary precursors is also slowly falling. Driven by the drop in raw material prices, the price of ternary materials in ternary lithium battery dropped slightly.

The power end basically maintains monthly settlement, and the settlement mode is mostly M-1 month. Most of the digital small power market is single-handed, and some of them will be linked with the price of raw materials. Therefore, the price competition in the digital small power market is fierce. During the peak period of ternary material negotiations, the price is expected to fall further.

Lithium iron phosphate

Recently, the price of lithium iron phosphate continues to fall. On the demand side, due to the large backlog of inventory in the early stage, the current battery cell factories have entered the stage of destocking one after another, reducing production schedules to cope with the current relatively deserted market. Driven by weakening demand, iron and lithium enterprises have reduced production and started to reduce their inventory.

On the raw material side, although major lithium salt manufacturers are willing to raise prices, traders are still selling goods in a panic, adding to the serious wait-and-see sentiment of regular-priced material factories, the prices of electric carbon and industrial carbon continue to decline, and the cost of lithium iron phosphate has dropped.

At this point in time, the end of the year is approaching, and the overall market is relatively pessimistic about the first half of next year. Under the influence of weak demand, it is expected that the price of lithium iron phosphate will still drop slightly in the market outlook.

Downstream markets and terminals

Tesla has reportedly suspended production at its Shanghai plant, ahead of schedule to suspend most work at the plant in the last week of December. In fact, as early as mid-to-early December, there were rumors in the market that due to the current sharp decline in new orders, Tesla had previously formulated a plan to reduce production by 30%. The production of Model Y electric vehicles will be suspended from January 1st to January 1st, and the inventory level will be reduced to cope with the upcoming cold winter of demand.

Considering Tesla’s rare continuous price cuts and promotions in recent years, and there is no practice of stopping production in previous years, this suspension of production does not rule out the possibility that due to the new demand falling short of expectations, it will reduce its inventory and speed to avoid risks.

Lithium carbonate price inflection point has not yet appeared, demand is still strong

At present, there is still a certain amount of lithium carbonate inventory in the downstream. Due to factors such as the off-season of consumption, the overall purchasing enthusiasm of downstream manufacturers is not high, and the price of lithium salt may continue to drop. The fluctuation of lithium salt price this time belongs to the normal fluctuation accompanying the peak season of the industry, not an inflection point.

In the context of delays in the production of many upstream projects and the slow release of lithium resource supply, the price of lithium salt is expected to remain high for a long period of time. The new supply and demand of lithium resources in each quarter of 2023 will still maintain tight supply and demand in the first half of the year, and may usher in excess supply in the second half of the year. It is expected that the marginal supply of lithium resources will exceed demand in the second half of 2023.

At the same time, due to capacity climbing factors, most of the new production will be in the second half of the year, and the price of lithium carbonate may remain at a high level in the first half of 2023. After more lithium production is produced in the second half of the year, there will be a slight decline, but the support of demand also makes the decline of lithium carbonate limited.

On the whole, the current contradictory lithium carbonate manufacturers market is not contradictory. After all, lithium carbonate, as one of the important raw materials for lithium batteries, accounts for about 15% of the cost of batteries. The latest data predicts that sales of new energy vehicles in China will reach 9 million in 2023, a year-on-year increase of 35%. With the outbreak of demand for new energy vehicles, the market demand for battery grade lithium carbonate is still strong.