Amid intensifying apprehensions regarding the escalation of raw material prices, the average cost of battery-grade lithium carbonate has recently surged beyond ¥300,000 ($42,000) per tonne.
The price cycle of lithium carbonate reveals that the latest quote was sustained at ¥300,000 ($42,000) per tonne as of March 20. From its nadir of ¥180,000 ($25,200) per tonne, lithium carbonate has displayed a trend where it drops to and then subsequently rebounds from this low point within a one-month interval.
As lithium prices witness a rapid surge, a chain reaction has been initiated within the lithium battery sector, including a marked increase in the price of lithium hexafluorophosphate from its previous low point.
The swift ascent of lithium carbonate prices is primarily attributed to the aggressive destocking measures undertaken by battery manufacturers during the first quarter, combined with burgeoning downstream demand. From mid-April, battery manufacturers initiated inventory restocking, thereby stimulating the lithium battery industry to elevate production schedules.
Nevertheless, there are emerging disparities within various links of the lithium battery industry concerning the fast recovery of lithium prices, particularly as the lithium price breaches the ¥300,000 ($42,000) mark.
While upstream lithium mine manufacturers express clear intentions to raise prices, some have adopted auction mechanisms to boost product prices. Meanwhile, midstream battery manufacturers are increasingly adopting a wait-and-see approach. This, despite their willingness to restock inventories, the rapid ascent of lithium prices has sparked anxieties regarding potential subsequent price drops.
On May 23, reports emerged of a salt lake company in Qinghai executing a new round of lithium carbonate auctions, receiving only a single bid at the starting price. This has further fuelled market apprehension.
Moreover, with battery manufacturers ramping up the production of their own lithium mines and the initiation of overseas lithium mine projects, there are mounting uncertainties within the market, with lithium carbonate prices entering a complex game.
The rising price of lithium carbonate has instigated a chain reaction within the lithium battery industry, particularly in sectors directly utilising lithium carbonate as a raw material.
As an example, lithium hexafluorophosphate, a crucial raw material for electrolytes, has seen its price closely tied to lithium carbonate fluctuations. Following the average price drop to ¥84,000 ($11,760) per tonne at the end of April, lithium hexafluorophosphate prices have risen alongside lithium carbonate. By May 23, its price increased to ¥154,000 ($21,560) per tonne, marking an 83.3% surge.
The trend for lithium prices is influenced by market supply, demand and sentiment. Notably, the current price surge of lithium carbonate is a result of low battery manufacturer inventories and a recovery in the auto market during the second half of the year. On the other hand, lithium mine manufacturers have opted to restrict lithium carbonate supply, causing an imbalance between supply and demand.
However, the rapid price rebound of lithium, particularly as prices exceeded ¥300,000 ($42,000) per tonne, has revealed divergent market views on the direction of lithium prices.
The rapid escalation in lithium prices has triggered a market wait-and-see sentiment. Some believe that the recent sharp increase in lithium prices is more attributable to industry self-help behaviours rather than a full-fledged recovery in lithium battery industry demand.
With the uncertainty introduced by domestic battery manufacturers’ lithium mining projects, the trend for lithium carbonate prices remains uncertain. Amid these fluctuations, the industry’s most significant demand is still for stable raw material prices.
Whether raw material prices increase too rapidly or drop too rapidly, it affects the downstream lithium battery industry, creating supply chain management issues.