Mysteel believes that lithium carbonate prices will keep falling in August considering the falling production scheduling of LFP materials and steady production of lithium carbonate.
The prices of battery-grade lithium carbonate dropped Yuan 18,000/tonne from Friday August 4 at Yuan 244,000/t as of August 11, a weekly decrease of 6.87%. Lithium hydroxide prices also presented a weekly fall of 8.08% or Yuan 21,000/t at Yuan 239,000 Yuan/t.
Figure 1-1. Lithium carbonate and hydroxide price chart (yuan/tonne)
Source: Mysteel
With regard to the end-market, the new energy vehicles (NEVs) sales in July were flat as the momentum was unleashed in advance in June when the carmakers rushed to promote the sales by mid-year reporting. It is expected that the NEV sales volume would rise MoM in August.
The production of NEVs stood at 762,000 units in July, a gain of 3.6% from June and up 31.2% year on year (YoY), according to China Passenger Car Association (CPCA). Specifically, BEV (battery electric vehicle) and PHEV (plug-in hybrid electric vehicle) showed a monthly growth of 2% and 7% respectively at 510,000 units and 252,000 units, up 16.5% and 76.2% YoY.
The wholesale volume of new energy passenger vehicles, on the other hand, lost 3.1% month on month (MoM) but jumped 30.7% YoY at 737,000 units in July. Among them, the volume of BEVs fell 6.1% MoM but climbed 15.3% YoY at 496,000 units, against PHEV's wholesale volume rising 3.8% MoM and 80% YoY at 242,000 units in July.
For batteries, China's power battery production was 61 GWh in July, rising 1.5% MoM and 28.9% YoY. The ternary batteries' production was up 15.2% MoM and 17.2% YoY at 20.4 GWh in July, while that of LFP batteries fell 4.1% MoM while rose 35.6% YoY at 40.5 GWh.
The installed capacity of power batteries, however, edged down 2% MoM at 32.2 GWh in July, up 33.3% YoY. In detail, the capacity of LFP batteries lost 4.7% MoM at 21.7 GWh in July, with ternary batteries growing 4.8% MoM and 7.4% YoY at 10.6 GWh.
The sales volume of energy storage batteries recorded 4.3 GWh in July, almost all of which was contributed by LFP batteries.
In terms of inventory, both the inventory of ternary and LFP batteries was on the rise.
It is expected that the demand for LFP batteries would wane slightly in August, while ternary batteries could see an improvement.
Figure 1-2. Power battery installed capacity (GWh)
Sources: China Automotive Power Battery Industry Innovation Alliance, Mysteel
According to Mysteel's recent reporting on the cathode material sector, the production of ternary and LFP cathode materials stood at 53,000 t and 146,200 t respectively in July, marking a monthly gain of 8.83% and 3.03%.
The August production scheduling, however, shows different tendencies towards ternary and LFP cathode materials, which rises 3.58% MoM and falls 4.24% MoM respectively. The production of LFP is primarily weighed on by battery cell factories and carmakers' demand falling short of expectations.
Table 1-1. Production and production scheduling of cathode material factories (tonne)
Source: Mysteel
Based on the available production scheduling of cathode materials, the supply-demand gap of lithium carbonate will narrow in August on the backdrop of anticipated fall in LFP production and on-going de-stocking of smelters.
Figure 1-3. Lithium carbonate supply-demand gap (Jan 2020 = 1)
Source: Mysteel
In July, the production of lithium carbonate and lithium hydroxide totaled 44,000 t and 25,800 t respectively, up 11.68% and 3.2%. It is estimated that the production will add up to 45,000 t and 26,000 t respectively in August, a slight increase of 2.27% and 0.78%.
Table 1-2. Production and production scheduling of lithium carbonate and hydroxide (tonne)
Source: Mysteel
Mysteel believes that lithium carbonate prices will keep falling in August considering the falling production scheduling of LFP materials and steady production of lithium carbonate. In this case, the market players take different strategies to tackle the situation.
Smelters with cost advantages allow their clients to adopt a floating pricing method, while the small-sized smelters would prioritize de-stocking.
It is projected that lithium carbonate prices will range Yuan 220,000-260,000/t through August, with small fluctuations expected by the end of the month.
Written by Aggie Hu, huchenying@mysteel.com
