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Domestic Chinese lithium carbonate surges to premium over lithium hydroxide again

Highlights

Raised offer levels for October delivery cargoes

Support for lithium carbonate premium expected

Lithium carbonate prices rose again, hitting another all-time high according to Platts data, with domestic Chinese prices reaching a premium to lithium hydroxide prices once again.

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S&P Global Platts assessed battery grade lithium carbonate at Yuan 150,000/mt Sept. 9 on a delivered, duty-paid China basis, up Yuan 10,000/mt from Sept. 8, the previous Platts record high. A premium for Chinese lithium carbonate spot prices to lithium hydroxide was last observed on May 24.

The surge in domestic Chinese prices also led to higher price levels for the North Asian market, where battery grade lithium carbonate was assessed at $18,200/mt CIF North Asia on Sept. 9, a $200/mt day-on-day increase from the previous Platts high of $18,000/mt.

Market sources indicated that the latest spike in prices stemmed from a rise in offer levels for October delivery in the Chinese domestic market, increasing buying interest for earlier September delivery cargoes.

Previously, spot demand for September cargoes had slowed down on sufficient stocks for September production rates, a producer said. However, the sharp rise in October delivery prices has led to some consumers looking to procure earlier than required, with expectations that offers would continue to increase, the source added.

Limited availability for battery grade lithium carbonate has led to sellers keeping their offers at Yuan 150,000-155,000/mt for September delivery, but there is now buying interest for those levels, with sellers raising October delivery prices to above Yuan 170,000/mt, a consumer source said.

With lithium converter capacities prioritizing battery grade lithium carbonate production, market sources pointed to the narrowing spread between technical grade and battery grade prices on limited spot availability.

Spot availability is even lesser for technical grade cargoes, and the increase in prices is likely to carry over to lithium hydroxide prices due to its usage as a feedstock, a Chinese trader said.

Platts trade data history showed that earlier in the week on Sept. 7, the spread between technical grade and battery grade lithium carbonate was at around Yuan 10,000/mt basis trades done at Yuan 130,000/mt and Yuan 140,000/mt respectively.

The spread had narrowed to Yuan 5,000/mt on Sept. 9 basis trades done at Yuan 145,000/mt and at Yuan 150,000/mt respectively, according to Platts data history.

Market participants expected continued support for the current premium for lithium carbonate prices over lithium hydroxide in the Chinese domestic market given the prevalence of lithium iron phosphate (LFP) battery production which utilizes lithium carbonate, over lithium nickel manganese cobalt oxide (NMC) batteries which require lithium hydroxide. This is in contrast with the North Asian market where lithium hydroxide has a natural price premium by virtue of lithium carbonate being a feedstock for its production and with NMC battery production more prevalent in Japan and Korea as compared to LFP battery production.

October is seen as the peak in Chinese LFP battery production which will support continuous active buying for lithium carbonate, another trader said. Demand for lithium hydroxide is generally reliant on periodic spot procurement interest from North Asian buyers, with downstream consumers generally relying on lengthy term contracts, the source added.