Lithium carbonate production decreased and prices rose continuously

Lithium prices rise for 6 consecutive days

It is understood that the continuous rise in lithium prices this time is mainly due to supply-side disturbances. Sichuan, one of the main producing areas of lithium salt, has limited production in some enterprises. In Qinghai’s main production area for lithium extraction from salt lakes, shipments and logistics have also been affected to some extent.

Since the second half of 2021, the price of lithium carbonate has risen rapidly, breaking through 500,000 RMB/ton in February this year, setting a record high. Affected by factors such as increased supply, the price of lithium carbonate declined after March, once falling to 460,000 RMB/ton. Prices have resumed their slow gains since June.

As the peak season for lithium salt stocking is approaching, many institutions believe that the price of lithium carbonate may reach a new high in the third and fourth quarters. However, some industry experts are cautious about the rise in lithium prices, and believe that in the context of the industry dominated by long-term agreement prices, the spot price of lithium salts cannot reflect the real supply and demand relationship.

The supply of lithium salts in some areas has decreased

Recently, the production of the lithium battery industry chain in some regions has been affected, which has strengthened the market’s expectation of a reduction in the supply of lithium salts. According to statistics, the output of lithium carbonate in Sichuan dropped by 70% month-on-month last week.

Tianhua Chaojing announced on August 23 that Sichuan started the first-level emergency response to provincial emergency energy supply guarantee at 00:00 on August 21. The production line of Tianyi Lithium is reduced to a safe load for operation as required. The output of Tianyi Lithium products will be affected to a certain extent, and the company has taken countermeasures to sell inventory products to make up for it, and it is not expected to have a significant adverse impact on the company’s overall operating performance this year.

One of top 10 lithium salt enterprises in China Shengxin Lithium Energy said on August 22 that the recent temporary and orderly electricity consumption measures in Sichuan Province have not had a significant adverse impact on the company’s production and operation. The company will pay close attention to the orderly electricity consumption policy, and actively prepare for the resumption of production by adjusting the maintenance plan to reduce the impact on production and operation.

A senior analyst at the New Energy Business Department of Beijing Antaike Information Co., Ltd. said that Sichuan Province is a gathering area for the upstream and downstream industries of lithium batteries in China. Lithium salts, cathode materials, and anode materials (graphitization) account for 27.9%, 11.8%, and 17%.

Sichuan Province is also a concentration area for new lithium battery production capacity. The current production is represented by the Sichuan era, but its proportion in the country is relatively small. It will affect lithium battery companies, specifically top 100 lithium ion battery manufacturers. The impact this time is that the upstream of the lithium industry is greater than the middle and downstream. Here are top 10 anode material manufacturers for reference.

The data shows that in August, the production of lithium carbonate was reduced by 1,250 tons, the production of lithium hydroxide was reduced by 3,050 tons, the production of ternary materials was reduced by 2,500 tons, the production of lithium iron phosphate was reduced by 9,750 tons, and the output of graphitization was reduced by about 3,180 tons. This round of cathode material production reduction has led to a decline in the demand for lithium salts, and the reduction in lithium salt demand is higher than the reduction in the production of lithium salt companies themselves.

Can lithium salt prices break through to new highs

Under the influence of emergencies, the price increase of lithium carbonate has accelerated significantly recently. As the stocking season is getting closer, the industry has a big difference in the future trend.

The Secretary-General of the National Passenger Vehicle Market Information Joint Association issued a document on August 22, saying that with the effect of the Fed’s interest rate hike, the price of lithium will roughly be between 470,000 RMB/ton and 500,000 RMB/ton. It is unlikely that it will exceed 500,000 RMB/ton.

He said that the current high price of lithium carbonate does not reflect the real supply and demand. Most of the supply and demand sides execute long-term agreement prices, and only a few of them are traded at high spot prices. There is a mismatch in the actual supply of lithium mines, resulting in a shortage of supply in some periods, pushing up lithium prices.

Several institutions are optimistic about rising lithium prices

Some institutions believe that the production of lithium salts has been reduced recently, and the downstream is about to enter the procurement and stocking period. It is expected that the disturbance on the supply side will still exist this week, the demand is expected to remain high, and there is still room for lithium salt prices to rise.

Entering the third and fourth quarters, the output of Qinghai Salt Lake has declined due to the weather, downstream manufacturers are willing to rush to work, the demand may continue to release, and the supply and demand structure of lithium salt may be further tight.
The price of lithium salt is expected to maintain an upward trend, and it cannot be ruled out that the price of lithium salt will reach a new high during the stocking period in the future peak season.

The bottleneck of the incremental supply of lithium ore resources may still be difficult to overcome. The relevant person in charge of a lithium salt production enterprise in Haixi, Qinghai previously stated that the current expansion of lithium mine capacity cannot keep up with the expansion of battery terminal demand. He expects that the price of lithium salt will remain high next year, at least there will be no major decline.