GLOBAL LITHIUM WRAP: Asian prices strengthen on supply concerns

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Published: Friday, 29 October 2021

Battery-grade lithium prices in Asia nudged higher over the week to Thursday October 28 on lingering tightness in supply, costlier feedstock and monthly restocking among buyers.

• Chinese suppliers of seaborne battery-grade lithium hydroxide price succeed in translating higher offers into transactions in the Asian spot market.
• Lithium prices in China’s domestic market rise on month-end restocking.
• Europe, US markets steady

Concerns over both a short-term tightness in the battery-grade lithium hydroxide spot market and a deficit market in 2022 led to prices for seaborne cargoes in Asia rising in the past week.

Fastmarkets’ weekly assessment of the lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price, cif China, Japan & Korea was $26-28 per kg on Thursday, up by $1 per kg from $25-27 per kg in the previous week.

Major suppliers in and out of China have struggled to allocate units outside their long-term commitments to the spot market, while some consumers in the region are finding it increasingly difficult to secure much material as they require when negotiating for next year’s term contracts, sources told Fastmarkets.

At least two distributor sources in Japan have told Fastmarkets they had received inquiries for term contracts from new local consumers.

"Many who are not our regular customers recently approached us," one of the sources said. "That might be because their usual suppliers could no longer meet their demand."

A trader in Asia noted the consumers from the traditional chemicals sector might have encountered even bigger challenges in securing lithium units.

"Lubricating grease and ceramics are probably suffering more," the trader said. "Major producers will focus more on the production of battery-grade units as opposed to technical-grade."

Prices for seaborne technical-grade lithium hydroxide in Asia have been at parity with those for battery-grade materials since mid-September, according to Fastmarkets data.

A few Chinese lithium hydroxide producers - major suppliers to South Korea and Japan - have been aggressive with their offers in light of rising prices for spodumene, the feedstock used to produce lithium salts.

At Australian miner Pilbara Minerals’ third auction via its Battery Material Exchange platform on Tuesday, bids for spodumene reached a high of $2,350 per dry metric tonne (dmt). This is $110 per dmt higher than that in the second auction in late September.

Spot trades for lithium hydroxide in Asia’s seaborne market were concluded at or close to $28 per kg in the past week, whereas some suppliers in China claimed that they would not consider selling anything unless East Asian buyers could pay the same level as those in China’s domestic market.

Fastmarkets’ assessment of the lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price range, exw domestic China was 185,000-205,000 yuan ($28,915-32,040) per tonne on Thursday, narrowing upward by 8,000 yuan per tonne from 177,000-205,000 yuan per tonne a week earlier.

Offers from different producers in the spot market remained in a wide range with some of them having fewer available units. This led them to test the market with higher offers.

Some aggressive offers were at or above 210,000 yuan per tonne, according to market participants.

A consumer source in China noted that such high offers were mostly from producers whose output had been reduced by their using lower grades of spodumene concentrate or because they had less of the feedstock due to a shortage.

Carbonate prices up amid LFP strength
News of electric vehicle (EV) producer Tesla’s higher adoption of lithium iron phosphate (LFP) batteries, costlier feedstock and monthly restocking in China have all contributed to the strength of lithium carbonate prices across the board in Asia.

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range, ex-works domestic China was at 195,000-200,000 yuan per tonne on Thursday, up by 5,000 yuan per tonne on the low end from a week earlier.

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price, cif China, Japan & Korea was $25.50-27.50 per kg on the same day, up by $0.50 per kg from $25.00-27.00 per kg last week.

Sentiment toward lithium carbonate improved after Tesla said it would adopt LFP batteries on all its standard-range models globally.

That said, some market participants have raised concerns over the rapidly rising prices for lithium carbonate, which will eat up the margins of LFP battery manufacturers and force them to slow the pace of their production ramp-up, which in turn might weigh on the market.

On the other hand, lithium carbonate producers raised their offers due to elevated purchasing costs for spodumene, while market participants acknowledged that the pressure on lithium carbonate producers might be higher compared with those on lithium hydroxide producers given that the former need to use more spodumene in the production process.

The first consumer source in China said that to produce one tonne of battery-grade lithium carbonate, approximately 7.8 tonnes of spodumene is needed. This compares with about 7 tonnes for lithium hydroxide.

Stable European, US markets
Spot lithium prices in Europe and the United States were unchanged in the past week after the gains of the previous week. But sources expect that price plateau to be short-lived.

They expect the strength from the more liquid Chinese market to filter through in the coming weeks.

Fastmarkets assessed the lithium carbonate 99% Li2CO3 min, technical and industrial grades, spot price ddp Europe and US at $24-25 per kg on Thursday, unchanged week on week. The price was at $21-22 per kg in mid-October.

The lithium carbonate 99.5% Li2CO3 min, battery grade, spot price ddp Europe and US was also flat, at $25-27 per kg. The price was at $21-22 per kg in mid-October.

Sources reported that the supply tightness in Europe and the US was mostly due to soaring prices in Asia, especially in China, with global producers allocating available stock to these more lucrative markets. This means the European and US markets will have to play catch up to secure units.