Upstream raw material lithium carbonate prices continue to fall

The industry believes that in the initial stage of global automotive electrification growth, the certainty of the cyclical growth of lithium demand is still stronger than the supply side. In the context of the trend of increasing demand, for a small metal market, the slight mismatch between supply and demand and the expected changes in both sides of the purchase may often bring about more significant price elasticity. Under the pressure of power battery cost, the upstream raw material price of lithium carbonate affects the hearts of the industry.

Recently, the price of lithium carbonate has dropped from about 170,000 yuan/ton at the beginning of the year to about 135,000 yuan/ton, a drop of 20%. The insiders judged that the current production cost of lithium carbonate is low, the profit margin is still large, and the enthusiasm of lithium carbonate manufacturers to expand production is still high. It is expected that the price will be lowered a little in the second half of the year.

If the above judgment is accurate, it is undoubtedly a big advantage for the cathode material and the downstream power battery company. However, to be cautious, it is necessary to objectively analyze the logic of the price change of lithium carbonate.

A large-scale cathode material company executive said: "Since the first quarter, there have been two reasons for the decline in lithium carbonate prices:? At the beginning of the year, the price of lithium carbonate was at a high level, and the capacity of upstream lithium salt manufacturers began to release, which had an impact on the price of lithium carbonate; After the introduction of the national subsidy policy, the power battery market is not too prosperous, and the recent 3C digital battery market is in the off-season, and the demand for lithium carbonate has also decreased."

Objectively speaking, the reason for the weakening of lithium carbonate prices this year, apart from the new supply, is that the core of the midstream is not strong enough. According to the survey data, the total production and sales of Q1 domestic new energy vehicle terminals are gorgeous, and the output of the certificate has increased by 203% year-on-year. However, the structural A00-class pure electric passenger vehicles constitute the main force of heavy volume, and pure electric buses and special vehicles are still recovering. At the stage, the total installed capacity of power batteries is different than expected.

Overall, the demand for upstream resources in the Q1 midstream material-battery link is insufficient: the start of the leading battery faucet is faster, but the operating rate of the second and third-line battery factories and their supporting materials, especially iron-lithium, is insufficient; Digested the inventory of finished products and channels last year, and the cathode material link pushed the lithium carbonate inventory to a low level.

Then, the price of lithium carbonate will be significantly reduced due to the concentration of supply, the trend of electrification is less than expected or event factors or the subsidy policy has officially landed, and the demand for power has been “bottomed up”. Strengthening the support for lithium salt prices?

From the perspective of lithium resource supply, the total supply of lithium concentrate in 2018 is expected to be marginal, and some international lithium mine projects will be put into production. For example, the BaldHill project of Tawana and AMAL in the Jintian area of ? Eastern Western Australia will produce lithium concentrate in the first quarter of this year. Mine; Pilbara Altura mining area is nearing completion, the first batch of lithium concentrate was sold in the second quarter of 2018; Pilbara Pilgangoora maintained the timetable for the second quarter of 2018 and the sales of lithium concentrate in the middle of the year; Wodgina mine reached the year 5 million tons, the first annual production of 250,000 tons of lithium concentrate is scheduled to go online in September...

But it is undeniable that the supply of high-quality lithium concentrates around the world is still scarce.

From the point of view of lithium salt processing, although the capacity planning of overseas new mines and domestic supporting lithium salt plants is radical, it should not underestimate the difficulty of running-in, the technical barriers, the product quality optimization cycle and the training period of core technicians. . Especially in the trend of high nickelization of downstream power batteries, the demand for lithium salt will gradually switch from lithium carbonate to lithium hydroxide, and the quality requirements are higher.

This also means that the lithium processing link will be the bottleneck of the increase in lithium supply. The current processing capacity for stable production and supply of high-quality lithium salt is still scarce, and the new production line will be verified, which will affect the supply of lithium salt.

It is worth mentioning that in order to ensure the safety of long-term resource supply, the middle reaches of domestic cathode materials, electrolytes, and even batteries are making efforts to add “resource attributes”.

For example, large-scale materials companies are deploying lithium, cobalt, nickel and other resources in various ways; some battery leaders and global terminal car companies have also begun to negotiate directly with resource providers and sign the “long-term resource supply security”, resulting in the future of the midstream. The bargaining power in the industry chain is not clear. That is to say, the participation of the middle and downstream links makes the prediction of lithium salt prices more complicated.

Overall, the uncertainty of the launch of new lithium resource projects, the increase in new capacity (especially high-end capacity), and the lock-in of the midstream and downstream links have made the supply and demand measurement in the lithium industry more complicated.

The industry believes that in the initial stage of global automotive electrification growth, the certainty of the cyclical growth of lithium demand is still stronger than the supply side. In the context of the trend of increasing demand, for a small metal market, the slight mismatch between supply and demand and the expected changes in both sides of the purchase may often bring about more significant price elasticity.

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