Lithium carbonate prices are expected to pick up by late September when the demand rallies on the arrival of the traditional seasonal high.
Looking back on August, the prices kept falling through the month. First of all, the cost weakened with both spodumene and lepidolite prices declining slightly, and is expected to remain weak in the near term. The supply was sufficient as top-tier smelter maintained normal production, though some reduced the production for lack of spot soda ash. In addition, while the buyers stayed relatively pessimistic, the downstream procurement was slow, weighing on the price. Nevertheless, the demand is projected to improve since the second half of September based on historical data.
The battery-grade and industrial-grade lithium carbonate transactions were mostly made between Yuan 200,000-213,000/tonne and Yuan 191,000-201,000/tonne respectively in August, down 25.59% and 25.33% compared with end-July.
The lithium hydroxide market showed a similar pattern. Falling prices of spodumene concentrate and lithium carbonate pulled down the cost. The suppliers had no plans ramping up the production influenced by downstream players purchasing on rigid demand.
Though August, battery-grade and industrial-grade lithium hydroxide was mostly traded at Yuan 187,000-202,000/t and Yuan 168,000-182,000/t respectively, a monthly fall of 27.15% and 28.57%.
Source: Mysteel
Estimate of August supply and demand situation
According to Mysteel preliminary survey, China's lithium carbonate production is estimated at 454,400 tonnes, up 3.18% MoM. The capacity utilization rates are projected to be 70.97% on average, up 3.18 percentage points from July.
Lithium hydroxide production is likely to be 25,800 t in August, rising 1.57% MoM. The average capacity utilization rate is expected to add 1.41 percentage points MoM to 70.05%.
The downstream demand, however, softened against rising supply.
Estimated Cathode Materials Production in August 2023
Source: Mysteel
To sum up, the lithium carbonate market is expected to see steadily rising supply and flat demand in the first half of September, keeping the prices rangebound. While the automobile market kicking off the traditional seasonal high, the downstream demand may pick up accordingly, pushing up lithium carbonate prices in the second half.
Written by Aggie Hu, huchenying@mysteel.com