31 Mar 2022 | 08:55 UTC

Strong North Asian buying interest for lithium hydroxide

Highlights

Term contract shortfall sparks buying interest

Chinese export prices supported

Strong buying interest has been heard for battery grade lithium hydroxide from North Asian buyers amid insufficient supply from existing term contracts, market sources said this week.

Sources pointed to indicative bids from North Asian buyers at around the low $70s/kg on a CIF North Asia basis for spot cargoes.

There are numerous bids from various North Asian precursor makers not just for spot volumes, but also interest in securing forward cargoes, a Chinese refiner source said.

Several market participants estimated a monthly shortage of 500-600 mt each for several precursor makers due to a shift in term contract volume allocations.

Lithium producers in South America have been allocating more volumes towards European buyers from the previous year along with a shift towards having volumes for spot transactions in view of the sharp volatility and upward price trend from the past year, an international trader said.

Offer levels from Chinese refiners were heard to be close to $80/kg, supported by limited spot supply and high domestic prices in China.

Most refiners that produce lithium hydroxide prefer to sell almost all their volumes into term contracts, leaving limited spot volumes, a Chinese trader said.

Domestic Chinese prices will also keep these levels elevated, especially with most existing refining capacity being used for lithium carbonate rather than lithium hydroxide, another trader said.

However there were some expectations that Chinese sellers might have to lower their prices to sell their volumes despite strong North Asian demand.

North Asian precursor makers and battery makers have signed long term deals with electric vehicle manufacturers that might not leave much room for profits at current spot prices, a market source said. As such, North Asian buyers are definitely not in a rush to secure cargoes at any available prices and may prefer to delay production if supply cannot be secured, the source added.


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