CCM: China's lithium carbonate: price down by 10 percent up in H1 2016 and to stay stable in future 10-03-2016

Summary: Though the supply and demand of lithium carbonate in H2 2016 may probably still be tense for a while, a stable, new and reasonable price range can be expected in the future.


 

Source: Baidu


The increasingly high price of lithium carbonate has showed a prominent decline recently. In July 2016, the transaction price fluctuated at USD21,806-22,558/t (RMB145,000-150,000/t), 15%+ down from the highest price range of USD26,317-27,069/t (RMB175,000-180,000/t) in April this year. This reduction is also the steepest fall since the price hike in H2 2015.

 

As insiders put it, influenced by multiple factors such as subsidy adjustment, “cheating for subsidy” investigation, enterprise catalogue (meeting power battery regulation), and gradual capacity release, the tight supply of lithium carbonate has begun to relieve. A lot more insiders even pointed out that the price decrease of lithium carbonate has become a tendency and within a short period it will maintain stability and finally will stay at a reasonable range.

 

According to statistics from the China Association of Automobile Manufacturers (CAAM), in H1 2016, 177,000 alternative energy vehicles (AEV) were manufactured domestically and 170,000 AEVs sold, up by 125.0% and 126.9% YoY respectively. It’s worth noting that despite the fact that AEV sales has increased, the 177,000 figure only accounted for 24% of the target, at about 700,000, which was set by CAAM. Therefore, to reach the expected target, there exists huge pressure.

 

Moreover, the AEV sales in H1 directly impacted the output and shipment of power battery and further exerted influence on the supply and demand of lithium carbonate.

 

Statistics showed that the domestic output of power battery in H1 2016 reached 12.05 GWh, of which the shipment was 9.92 GWh. Influenced by subsidy adjustment and enterprise catalogue, the domestic output of power battery in Q2 decreased quarter on quarter, by 40%+.




The supply and demand relation of lithium carbonate has undergone certain changes, as the price has already begun to decline,” commented the president of Hefei Guoxuan High-Tech Power Energy Co., Ltd., “The declining tendency has already been formed and a reasonable price will arrive, optimistically in Q3 or within this year.”

 

Instead of prominent increase, the shipment of power battery in H1 decreased and the shipment by the end this year is estimated to be lower than ever expected. This means that a large number of battery manufacturers won’t get any orders. In reality, structural overcapacity is now very apparent,” pointed out by another trade source, "When the lithium carbonate price stays high, downstream manufacturers generally don’t sign full-year contracts with lithium carbonate producers, but purchase based on demand.”


Compared to power battery enterprises, cathode materials enterprises may be more sensitive about the price reduction of lithium carbonate.


Li Jigang, deputy general manager of Tianjin STL Energy Technology Co., Ltd. pointed out that the price of lithium carbonate has begun to drop and it will decrease further threatened by the imports of lithium carbonate. Although there is still room for price reduction, the figure will eventually arrive reasonably at USD15,039-18,046/t (RMB100,000-120,000/t).

 

Recently the price of lithium carbonate has presented a falling tendency and is expected to stay stable gradually in H2,” stated Beijing Easpring Material Technology Co., Ltd., “Price hike and slump will not appear like before and a small extent recovery is most likely to happen. With the continuous release of new capacity, the price will maintain at a rational range.”

 

According to analyst CCM, the further explosive growth of AEV business in H2 2016 will give a spur to the demand for power battery and raw materials. However, due to the limited new capacities of lithium carbonate in 2016, there may still be a period with supply and demand tension, and a reasonable and stable price range will be secured in the future.

 

Zhang Jiangfeng, secretary general of the Lithium Industry Branch, China Nonferrous Metals Industry Association commented that, the price of lithium carbonate has indeed descended recently, but whether the tendency will continue or not depends on the supply and demand in H2 as well as the enormous influence from the oversea lithium resources exploration and import.


Having had positive attitude towards the prolonged favorable prospect of AEV market, domestic key lithium carbonate manufacturers, including Sichuan Tianqi Lithium Industries, Inc., Jiangxi Ganfeng Lithium Co., Ltd., Tibet Mineral Development Co., Ltd., Steyr Motors Corp., Jiangxi Special Electric Motor Co., Ltd., Qinghai Salt Lake Industry Co., Ltd., and Youngy Co., Ltd., are all actively promoting the capacity expansion projects. However, whether such projects can be successfully put into operation, and weather the demand for power battery will grow sharply in H2, exert uncertainties on the market supply and demand of lithium carbonate.


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.

 

For more information about CCM, please visit www.cnchemicals.com or get in touch with us directly by emailing econtact@cnchemicals.com or calling +86-20-37616606. 


Tag: lithium carbonate


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