Lithium carbonate prices to remain capped through Aug
The prices of lithium carbonate are expected to stay on the downward trajectory through August as the demand side is unable to overturn the downtrend.
Battery-grade lithium carbonate and lithium hydroxide prices averaged Yuan 262,000/t and Yuan 260,000/t respectively over July 31-August 4, a drop of 5.59% and 5.45% compared with the previous session.
Figure 1-1. Lithium carbonate and hydroxide price chart
Source: Mysteel
The downward trend of lithium carbonate prices began briefly on July 11 when it broke the previous range, and moved all the way down after the lithium carbonate futures contract hit limit down for two days in a row trailing its debut on July 21.
At present, both the suppliers and buyers have reached a consensus that the recent transactions will be driven mainly by rigid demand, which is far from enough the initiate a rally in lithium carbonate prices.
Mysteel will try to take a deeper look at the ground for such common understanding through the entire industry chain.
For the end-market, the sales of new energy vehicles (NEVs) in China may have reached 757,000 units in July, a mild drop of 0.5% MoM based on the available sales result of key NEV brands following the sales rush around the mid-year reporting. Specifically, the sales volume of NIO showed a monthly surge of 91.6% thanks to its promotion package including a price cut and broadening access to battery swapping serves for its clients.
Table 1-1. Sales of key NEV brands of estimated total sales
Sources: NEV brands' official websites, Mysteel
The installed capacity of BYD's power and energy storage batteries totaled 12.4 GWh in July, marking a gain of 5% from June mainly thanks to the flourishing energy storage sector. As such, the demand growth for LFP batteries outperformed ternary batteries. It is expected that the combined installed capacity of power batteries could add up to 33.9 GWh in July, rising 3% month on month.
According to Mysteel survey, the production of LFP cathode materials is estimated at 169,500 t in July, up 19.46% MoM, against a projected production of 51,000 t for ternary cathode materials, which gained 4.71% from June. This would equal to a monthly consumption of lithium carbonate at 53,000-54,000 t (on the ground that some 6-series NCM consumes lithium carbonate).
On the inventory front, the smelters together held 15,000 t of lithium carbonate by the end of July, which is likely to fall to 10,000 t in August. The lithium carbonate smelters in Sichuan Province currently focus on delivering their long-term orders smoothly with their in-plant inventory showing no signs of accumulating.
Looking at August, the production scheduling of batteries is likely to grow 10% MoM learned by Mysteel, but the cathode material sector may not be able to benefit from such momentum as material factories would prioritize destocking.
Nevertheless, the production scheduling of ternary cathode materials may rise fractionally in August amidst falling lithium carbonate prices and rising market enquiries. The production of LFP, on the other hand, will be subject to the mid-year overhaul of some battery cell factories in August.
For the third quarter, the lithium carbonate smelters are not necessarily passive in pricing as their in-plant inventories are controlled at a reasonable level, but the battery factories still take the upper hand. That is, while the end-market demand growth has failed to bring surprises, the battery factories will keep forcing down raw material prices especially when they shall carry on de-stocking.
At present, the downstream players call for a further price cut of battery-grade lithium carbonate below Yuan 250,000/t. And the cathode material factories will only stockpile when lithium carbonate prices drop to a low level.
The seller-buyer game centering lithium carbonate is far from the end. Currently, the prices of lithium carbonate have dropped below the support gauged by the cost of producing lithium carbonate based on outsourced lithium concentrate. The next support would be producing lithium salt with lepidolite. With this in mind, lithium carbonate prices are projected to range Yuan 230,000-260,000/t in August, with a potential rally by month-end.
Written by Aggie Hu, huchenying@mysteel.com
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