Chinese mainstream prices of battery-grade lithium carbonate dropped swiftly from Yuan 328,000/tonne to Yuan 277,500/t over the survey week of March 17-24, down by 15.4% week on week, with a few spot transactions concluded at nearly Yuan 200,000/t; while spot prices of battery-grade lithium hydroxide also slipped by 4.69% from Yuan 394,500/t to settle at Yuan 376,000/t by the same day. The negative price spread between lithium carbonate and lithium hydroxide widened to Yuan 100,000/t. (As shown in Figure 1-1)
Figure 1-1: The price spread between lithium carbonate and lithium hydroxide continues to widen (Unit: Yuan/tonne)
Source: Mysteel
According to the data released by the General Administration of Customs, China's exports of lithium carbonate surged by 110.5% from January to reach 1,420 tonnes in February this year, with the export value recording $ 112 million and the average price at Yuan 536,300/t; while its imports of lithium carbonate slipped by 21.86% month on month to 904,600 tonnes, valued at $ 751 million with an average price of Yuan 504,100/t. Meanwhile, China exported 10,340 tonnes of lithium hydroxide in February, up 7.44% from January, and the export value totaled $ 628 million while the average price stood at Yuan 413,300/t.
Figure 1-2: Export and domestic prices of lithium carbonate (Unit: '0000/t)
Sources: General Administration of Customs and Mysteel
Figure 1-3: Export and domestic prices of lithium hydroxide (Unit: '0000/t)
Sources: General Administration of Customs and Mysteel
The variances between the import/export and domestic average prices of lithium carbonate are mainly subject to a month-long time lag of import/export order contracts. Besides, most of China's exported lithium compounds are extracted from spodumene, which are of higher quality than those obtained from mica and salt lakes in the domestic market.
China produced 22,600 tonnes of lithium hydroxide in February, among which 10,300 tonnes were for export, accounting for 45.57% of the total; while the monthly production of lithium carbonate in China was 30,200 tonnes, with a net import of 8,000 tonnes which makes up 20.94% of the total amount of country's lithium carbonate. The current drop in the domestic prices of lithium carbonate is much steeper than that of lithium hydroxide, because of different demands for the two products at home and abroad.
China's domestic prices of lithium carbonate will be more driven by demand when the costs of extracting lithium from salt lakes in the country reach Yuan 40,000-60,000/t and its combined lithium carbonate capacity makes up 50% of the total. The prices of lithium carbonate in China will be marginally impacted by the costs of overseas lithium concentrates when there is an apparent shortage of domestic supply, otherwise, with a surplus seen in the domestic market, its prices will be majorly supported by downstream demand.
The lithium carbonate inventories at downstream manufacturers in China have been persistently declining after peaking in June 2022, and thinned to only 7,500 tonnes in February 2023, which could merely last them for about a week of production. In contrast, smelters' lithium carbonate stocks bottomed out in October last year and then increased dramatically to 52,200 tonnes in February, enough for about three months of consumption.
Figure 1-4: China's lithium carbonate inventory (Unit: tonne)
Source: Mysteel
On the downstream side, BYD had 257,400 units of new energy passenger vehicles insured over January-February this year in China, bringing its market share to 37.58%, while Tesla saw 61,300 units insured, with its market share rising to 8.95%. The rising market shares of the two leading new energy carmakers and other top-selling brands who rely on CATL's battery supply, such as NIO and Li Auto, have in turn pushed up the concentration of battery production. The combined market share of batteries supplied by BYD and CATL over January-February has already increased to 78.37%.
Given the current domestic inventories of lithium carbonate and the mere 18% year-on-year growth of new energy passenger vehicle sales in the first two months of this year, Chinese battery producers may have already seized the pricing power of lithium carbonate at present. Under such circumstances, the fixed lithium carbonate price of Yuan 200,000/t proposed by CATL's lithium-ion battery rebate program is also likely to be the key support level for this round of lithium carbonate price adjustments. Considering the low inventories of lithium compounds at downstream manufacturers, the prices of lithium carbonate are expected to hover within Yuan 180,000-220,000/t after the price adjustments come to an end.
Note:
Written by Mysteel Nonferrous Metal & New Energy Research Center
Edited by Ruby Zhang, zhangjiajing@mysteel.com; Alyssa Ren, rentingting@mysteel.com
