Strong demand combined with tight supply drove seaborne lithium chemicals prices up Jan. 18. Market participants said there was room for additional increases.
S&P Global Platts assessed lithium carbonate at $40,500/mt, up $100/mt on the day and $1,300/mt week on week. Lithium hydroxide gained $300/mt on the day and $1,800/mt on the week to $36,500/mt.
The prices reflect the spot value of battery-grade material on a CIF North Asia basis, referring to deliveries to the main ports of China, Japan and South Korea. Lithium carbonate, however, is normalized to deliveries at the Shanghai port.
Prices have been rallying since late 2020 due to strong market fundamentals. Until recently, some buyers were hopeful that prices would ease in the second half of 2022 as new capacities should start up.
However, there is increasing sentiment at the moment that this additional supply could be insufficient to deal with the surging demand.
“There must be a correction in prices, otherwise people will find other solutions, but I don’t think the correction will be this year,” said a consumer source who is looking to build up inventory from his first-quarter contract since “we expect prices will keep on rising.”
A supplier source reported selling lithium hydroxide “near $40,000/mt” for CIF North Asia shipments, and a trader indicated $45,0000/mt for prompt delivery of technical-grade lithium carbonate.
“There are offers of $40,000/mt for hydroxide, but I would say the tradable value is still a bit below that,” said another trader source. “In the case of carbonate, prices are not so much above $40,000/mt, although offers can be at $50,000/mt,” he added.
Some market participants believe the bull run might decelerate in the coming weeks as the Lunar New Year approaches and China closes for business.
The huge supply-demand imbalance, however, should keep supporting prices despite the holiday, other sources said.
Platts' $40,500/mt assessment for battery-grade lithium carbonate CIF North Asia was equivalent to Yuan 290,914/mt on a DDP China basis, including 13% value-added tax, based on Platts’ import-parity calculation.
The DDP China lithium carbonate price was assessed at Yuan 330,000/mt Jan. 18, meaning seaborne prices are well below the Chinese import parity.
The US dollar was assessed at Yuan 6.3521 at 4:30 pm Singapore time.