GLOBAL LITHIUM WRAP: Chinese lithium sentiment weakens after NEV subsidy transition period ends

China’s lithium market remained sluggish this week, which market sources attributed to the conclusion of the transition period for the new energy vehicles (NEV) subsidy and forecasts of declining demand for lithium in the short term.

  • The end of the transition period for the 2019 NEV subsidy has hit sentiment for lithium compound demand in the short term. 
  • Battery-grade lithium carbonate price range narrowed on concluded deals at lower levels. 
  • Technical and industrial grade lithium carbonate prices moved down on reduced demand. 
  • Seaborne Asian battery-grade lithium prices down, rest of the world prices unchanged.

There were limited transactions reported in the battery-grade lithium market in China this week following the end of the transition period for the NEV subsidy in the country.

The transition period for the 2019 NEV subsidies lapsed on June 25. China’s NEV subsidies have been reduced by over 50% with effect from June 26 and only cover vehicles with higher driving range and energy density batteries.

In addition, some local subsidies have been canceled, following national policy. Local subsidies are different from region to region, and Beijing took the lead in canceling local subsidies for NEVs from June 26.

“The reduction of NEV subsidies is aimed at promoting a healthy and sustainable development of the NEV industry with battery makers aiming to increase driving range, safety and performance,” a lithium producer told Fastmarkets. “Demand from the battery industry [for lithium] will fall in the coming weeks as battery makers will have to adjust their production in the absence of subsidies.”

“We haven’t purchased lithium carbonate this week and don’t plan to buy more material in the coming days,” a lithium consumer told Fastmarkets. “Lithium prices are set to decrease in the coming months due to the reduction in subsidies which will decrease consumption by some of battery makers.”

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China at 70,000-74,000 yuan ($10,169-10,750) per tonne on Thursday July 4, down from 70,000-75,000 yuan per tonne the previous week.

Technical and industrial grade lithium carbonate prices have also moved down on slow consumption this week.

Fastmarkets assessed the lithium carbonate 99% Li2CO3 min, technical and industrial grade, spot price range exw domestic China at 62,000-66,000 yuan per tonne on Thursday, down from 63,000-67,000 yuan per tonne the previous week.

Some lithium iron phosphate (LFP) battery producers have opted to use higher purity technical lithium carbonate material in the past months, which had supported the technical and industrial grade lithium price.

Ahead of the NEV subsidy reduction, which encourages the production of nickel-rich batteries such as nickel-cobalt-manganese (NCM) 622 and 811, LFP batteries had become more economically viable and desirable due to their relatively better performance-safety. Therefore, some cathode and battery producers in China opted to increase their LFP output.

The battery-grade lithium hydroxide price was unchanged week on week on slow consumption. This compound is typically used in nickel-rich batteries but the deceleration in consumption in China and Asia could push prices down in the coming months.

Fastmarkets assessed the lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price range exw domestic China at 80,000-85,000 yuan per tonne on Thursday.

“Prices below 80,000 yuan per tonne were heard in the market this week but we think this is mostly speculation as demand for hydroxide remains depressed,” a second lithium producer said.

Micronized battery grade lithium hydroxide material kept a price premium of 5,000 yuan per tonne over the standard grade assessed by Fastmarkets. Micronized material price was reported as high as 90,000 yuan per tonne.

Seaborne Asian market falls
Seaborne Asian battery grade lithium carbonate and hydroxide spot market prices fell in tandem with the domestic price in China.

Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot price cif China, Japan & Korea fell to $10.50-12 per kg on Thursday, from $11-12.50 per kg the previous week. 

The price of lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price cif China, Japan & Korea widened downward to $13-15 per kg on Thursday, from $14-15 per kg the previous week.

“The Asian seaborne market remains very slow and the lower Chinese prices keep pushing the rest of the cif China, Japan and Korean market down,” a third lithium producer told Fastmarkets.

European and US market stagnant
The European and US spot market moved sideways on slow consumption but market participants told Fastmarkets that falling prices in China as well as the lower offering prices from the Chinese market are adding pressure for the European and US spot prices to fall in the coming weeks.

Fastmarkets’ lithium carbonate 99.5% Li2CO3 min, battery grade, spot price was unchanged week on week at $11-13 per kg on Thursday, and the lithium hydroxide monohydrate 56.5% LiOH.H2O min, battery grade, spot price was flat at $14-15 per kg, both on a ddp Europe and US basis.

“We keep offering material into Europe and US but can’t conclude sales on slow consumption and very competitive prices from China,” a lithium supplier told Fastmarkets. “Prices will probably fall slowly throughout the rest of the summer if the current market conditions persist.”

Fastmarkets lithium prices

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

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

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

Martim Facada

martim.facada@fastmarkets.com

Carrie Shi

Carrie.shi@fastmarkets.com

Published

Martim Facada

Carrie Shi

July 05, 2019

13:30 GMT

London, Beijing