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Increasing offers for industrial grade lithium carbonate push down prices in China

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Increasing offers for industrial grade lithium carbonate push down prices in China

Highlights

Third-party sellers offloading on slower demand

Limited carryover to battery grade expected

Increasing spot offers for industrial grade lithium carbonate were seen putting downward pressure on offer levels in China this week, market sources said Sept. 28.

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Market sources pointed to increasing offers of industrial grade lithium carbonate by third-party dealers and traders from their existing warehouse stockpiles.

Spot offers were heard to be down to Yuan 175,000-180,000/mt Sept. 28, with more sellers looking to offload cargoes on hand. In comparison, traded prices were at Yuan 185,000/mt on Sept. 24.

Most of the available spot volumes were understood to be produced from Qinghai salt lakes, with producers selling large volumes to third-party dealers and traders earlier in July and August as part of the increase in production capacity.

There have been a number of projects to increase production capacity in the Chinese salt lakes before the spike in lithium carbonate prices, and producers have largely offloaded these volumes to dealers when demand was not so strong, a lithium converter source said.

Market participants indicated an increasing willingness from sellers to offload existing stockpiles on expectations of a slowdown in demand before the Chinese Golden Week holidays from Oct. 1.

Spot liquidity has been thinning with ongoing term contract negotiations for October delivery cargoes and some sellers think that the peak for near term spot prices is near, leading to the a higher number of spot offers in the market, a Chinese trader said.

Spot buyers of industrial grade lithium carbonate are also open to procuring ahead of schedule, given the lower production volume from converters as compared with battery grade lithium carbonate, a producer source said. For October, there are expectations of minimal excess spot cargoes for industrial grade as production will be primarily focused on battery grade lithium carbonate, the source added.

However, there were market sources who expected the selling pressure on industrial grade lithium carbonate to have a limited impact on prices for battery grade lithium carbonate.

Demand for industrial grade lithium carbonate tends to be linked more to only lower end varieties of lithium iron phosphate (LFP) precursor materials and for processing into lithium hydroxide, another trader said. Spot demand for battery grade lithium carbonate will resume once term contract negotiations for October are settled, the source added.

S&P Global Platts assessed battery grade lithium carbonate at Yuan 185,000/mt on Sept. 28, flat on the day, on a delivered, duty-paid China basis.