Lithium: Spot prices soar in lunar new year

Lithium spot prices in Chinese markets showed substantial gains in the first week after the lunar new year holidays in East Asia, mainly driven by sustained supply tightness in spot units, the latest Fastmarkets assessment shows.

Fastmarkets’ price assessment for lithium carbonate, 99.5% Li2CO3 minimum, battery grade, spot price range, ex-works domestic China, was 400,000-430,000 yuan (US$62,833 to US$67,545) per tonne on February 10, up by 50,000-60,000 yuan per tonne from 350,000-370,000 yuan per tonne a week earlier.

The corresponding assessment of the lithium hydroxide monohydrate was 340,000-360,000 yuan per tonne on the same day, up by 50,000 yuan per tonne from 290,000-310,000 yuan per tonne a week earlier.

“Several major lithium producers in China put their facilities on maintenance before the new year holiday. They resumed production this week but didn’t reach full capacity until now. So spot lithium units have been tight,” one Chinese lithium producer told Fastmarkets.

A second Chinese lithium producer source added that its production would not reach total capacity until the end of February. Several market participants told Fastmarkets that Chinese lithium producers did not have any available spot units. Some traders may still have some stock, but the volumes would not be significant.

“Amid the scarcity of spot lithium units, we received a lot of inquiries for battery-grade lithium carbonate in the first week after Chinese new year, and many customers have urgent needs. But we are sold out,” the second Chinese lithium producer said.

According to Fastmarkets data, demand for battery-grade lithium carbonate was firmer than that for lithium hydroxide of comparable grade due to the outperformance and optimistic outlook of lithium-iron-phosphate (LFP) batteries in China compared with nickel-cobalt-manganese (NCM) batteries.

As a result, battery-grade lithium hydroxide prices were driven up more because of the high prices for battery-grade lithium carbonate than because of firm demand for lithium hydroxide. This explained why lithium carbonate prices in China continued to hold a large premium over lithium hydroxide prices, Fastmarkets’ first Chinese lithium producer source said.

Market participants broadly indicated that supply would remain tight in the near future. Even though brine production in China’s Qinghai province was expected to recover in the second quarter, lithium supply in China would remain short, considering the strong appetite for lithium in China.

Meanwhile, seaborne battery-grade lithium spot prices in East Asia continued to climb over the past week, with activity in the Chinese domestic market gradually picking up after the new year,” the Fastmarkets assessment found.

The tightness of spot units in the market remained a headache for market participants, adding further support to spot prices. Fastmarkets’ assessment of the lithium carbonate, 99.5% grade, spot prices, CIF China, Japan and Korea, was US$50 to US$54 per kilogram on February 8, up by US$3 to US$4 per kilogram from US$47 to US$50 per kilogram on February 7.

An Asia-based trader flagged to Fastmarkets that delayed expansions of lithium projects in South America and Australia were causing lithium supply tightness in seaborne East Asia and the global market into the second quarter.

Due to the tightness in the global spot market and current high Chinese prices, various market participants said that seaborne lithium spot prices had room to rise further shortly.

The survey also found lithium prices were on the rise elsewhere too. The rising trend follows the earlier increases seen in the Asian markets and the low supply of lithium chemicals.

“Small traders have no stock available and are ready to buy at any price,” one European lithium producer told Fastmarkets.

Fastmarkets assessed the lithium carbonate 99% technical and industrial grades, spot price, DDP (delivered duty paid) Europe and US, at US$45 to US$50 per kilogram on February 10, up by 22% from the previous month.

Market participants saw battery-grade carbonate and hydroxide prices at parity once again, with hydroxide technical grade at the same level following bullish offers in a tight market.

Battery grade lithium spot prices reached US$50.00 to US$52.50 per kilogram on February 10, up by 32% from the previous month.