GLOBAL LITHIUM WRAP: Chinese hydroxide producers’ plans to raise prices on virus-related costs boost short-term sentiment

  • Some Chinese lithium hydroxide producers plan to increase prices due to higher operational costs, supporting the spot price. 
  • Battery-grade lithium carbonate price steady on quiet buying activity. 
  • Asian seaborne market flat due to limited spot deals amid the coronavirus-related slowdown.
  • European prices slightly down on competitive offers from suppliers keen to liquidate stock.

Market participants were hopeful of the start of a recovery in China’s domestic spot lithium market in the week to Thursday February 13 although buying activities remained thin. Some lithium industries are still waiting for notification that they can resume business.

The main driver of optimism was talk that some producer of lithium hydroxide will raise their prices.

Chinese producer Ganfeng Lithium announced on February 13 that it plans to increase its battery-grade lithium hydroxide prices by up to 10% due to higher transportation fees and production costs resulting from the novel coronavirus in China.

Other producers have announced similar intentions for the same reason. China’s domestic logistics network continues to be disrupted by travel restrictions imposed by the central government to contain the spread of the virus, reducing the number of available freight options, and there are limited healthy, qualified drivers.

“I think hydroxide prices will maintain firm in the short term, but once transportation and production are totally recovered, prices will not see more increase,” a buyer told Fastmarkets.

Fastmarkets’ lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price range exw domestic China was steady week on week at 52,000-57,000 yuan per tonne on Thursday.

“Battery-grade lithium hydroxide prices hold firm but haven’t seen significant increase on the spot market, and slow demand is seen for the moment,” a second buyer said. “Micro-grade lithium hydroxide prices have seen an increase to 63,000-65,000 yuan per tonne from around 60,000 yuan per tonne. Usually, micro-grade hydroxide trades at a 5,000-10,000 yuan premium over the current Fastmarkets [battery-grade] price range.”

Meanwhile, Fastmarkets’ weekly price assessment for lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 45,000-51,000 yuan per tonne on Thursday February 13, unchanged from the previous week.

Downstream demand had not picked up greatly due to most buyers refraining from starting new purchases, sources said.

Asian seaborne lithium market flat
The cif China, Japan and Korea battery-grade lithium spot market saw limited spot deals week on week, with most Asian buyers taking a watchful attitude and in no hurry to place new orders.

Fastmarkets assessed the lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price at $8-9.50 per kg, and lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery grade, spot price at $9.50-11 per kg, both on a cif China, Japan and Korea basis, both unchanged week on week. 

“Most of our suppliers stopped production in China [during Lunar New Year], but some of them restarted production from February 10. Logistics remains complicated and delivery has been delayed. However, we have sufficient stock for the moment so it has limited impact on us so far,” a third buyer said.

European prices slightly down on destocking
In Europe and the United States, prices edged down for both carbonate and hydroxide grades due to competitive prices available in the market. This was because some producers in Europe are lowering their offers in a bid liquidate stocks; a trend that emerged a few weeks ago and is unrelated to the disruption caused by the coronavirus outbreak.

Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot price ddp Europe and US moved down to $10-11 per kg from $10-11.50 per kg the previous Thursday.

The lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price ddp Europe and US lost 50 cents on both ends of the range to $11-12 per kg from $11.50-12.50 per kg on the week before.

“There are not drastic changes but cheaper offers are available in the market,” a European producer said.

In Europe and the United States, lithium market participants have not yet reported significant disruptions in supply caused by the coronavirus so far because most of these participants source their raw materials from South America, especially from Chile.

“We rely in South America and US and haven’t had significant disruptions” a second European producer said.

Longer term, sources said the direction of European prices could depend on how long the delays in Asia continue.

“Some Chinese producers are increasing their cost and adding transportation fees, and there are minimal stocks in China, which could support the European battery prices,” a European trader said. “But the European market is still comparatively small, dealing with some oversupply and hasn’t received a push in demand for the time being.”

But the disruptions could also slow down global demand for lithium from end users, such as electric vehicles, and ultimately hit prices.

“In the long term the lack of demand from China can depress lithium prices globally if the situation is extended further,” he added.

Learn more about Fastmarkets’ lithium pricing methodology here and read the latest lithium price spotlight here.

Fastmarkets’ trade log for battery-grade lithium carbonate in China for February includes all trades, bids and offers reported to Fastmarkets.

All lithium carbonate, hydroxide and spodumene prices are available in our Battery Raw Materials Market Tracker. Get a sample of the report here.

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