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Lithium hydroxide reaches new record high on rising lithium carbonate prices

Highlights

Rising lithium carbonate prices lift costs

Limited spot availability

Lithium hydroxide prices continued to strengthen Sept. 8, breaching S&P Global Platts' all-time high for both North Asia and domestic Chinese prices.

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Platts assessed lithium hydroxide at $20,000/mt on a CIF North Asia basis Sept. 8, up $1,000/mt from Sept. 7. The previous Platts all-time high was $19,000/mt CIF North Asia, assessed on both Sept. 7, 2021 and Sept. 7, 2018.

The domestic lithium hydroxide index was assessed at Yuan 140,000/mt on a delivered, duty-paid China basis on Sept. 8, up Yuan 2,000/mt from Sept. 7, the previous all-time high. The prices were at Yuan 100,500/mt on Aug. 2.

The sharp surge in domestic Chinese lithium carbonate market was seen as a key factor behind the rise in prices, with lithium carbonate being a commonly used feedstock to produce lithium hydroxide.

China domestic lithium carbonate prices have surged over 50% from the start of August -- rising to Yuan 140,000/mt Sept. 8 from Yuan 91,500/mt Aug. 2.

Rising production of lithium iron phosphate (LFP) batteries has led to active procurement for lithium carbonate, reducing available supply for conversion into lithium hydroxide, market sources said.

Refiners, who rely on technical grade lithium carbonate to produce lithium hydroxide, were seeing limited spot availability as converter capacity from producers was adjusted to produce more battery-grade lithium carbonate and lesser technical grade volumes, a producer said.

Even some downstream buyers have also procured technical grade lithium carbonate to refine into battery grade for LFP battery production, given the general lack of supply to meet growing demand, the source added.

Contrary to strong demand for Chinese lithium carbonate, demand was seen as largely stable for lithium hydroxide, with most buyers preferring to rely on longer term contracts as opposed to monthly contracts or spot cargoes.

However, limited spot supply of lithium hydroxide was also expected to continue supporting spot prices.

There is not much active buying for lithium hydroxide as compared to lithium carbonate in the Chinese market, but there is also very limited spot availability of cargoes, a Chinese trader said. Sellers are likely to continue raising offers for any spot cargoes, given the higher prices for lithium carbonate and spodumene as feedstock, the source added.

Market sources indicated that the return of active spot buying interest for lithium hydroxide will depend on the procurement cycles of Japanese and South Korean consumers.

Previously, the surge in prices in June was fueled by strong spot demand from Japan and South Korea on lower allocation of term contract supply volumes, another producer said.

China's production capacity is heavily in favour of lithium carbonate -- which means there will be a fundamental supply shortage of lithium hydroxide when active buying resumes, the source added.