Platts China Lithium Commentary Chinese domestic lithium...

Platts China Lithium Commentary

Chinese domestic lithium carbonate prices were rangebound in the week to March 8, moving down to Yuan 104,000/mt March 7 before rising to Yuan 110,000/mt March 8 due to increase in trading activity and supposedly lower spot supply.

Platts assessed battery-grade lithium carbonate at Yuan 110,000/mt on a DDP China basis March 8, up Yuan 6,000/mt on the day but unchanged on the week.

Offers began to range widely from Yuan 105,000/mt to as high as Yuan 120,000/mt March 8. Tradable indications were pegged from as low as Yuan 109,000/mt to as high as Yuan 112,000/mt for battery-grade lithium carbonate. However, a deal was heard at Yuan 105,000/mt for industrial grade and Yuan 110,000/mt for battery-grade material March 8.

"The spread between industrial grade and battery-grade material in the market has been around Yuan 7,000-8,000/mt," a Chinese trader said.

Market sentiment for near-term spot supply was mixed, with some market participants saying they saw low inventory levels and therefore tighter spot supply.

"Inventory levels are low and everyone is out of stock," a Chinese trader said, adding: "Downstream consumers are finding it difficult to get their hands on [the] material."

"Because of the price drop seen last year, downstream reduced their volumes on term contract," a Chinese producer said, explaining that this created some demand in the spot market.

However, others continued to hold bearish expectation seeing that the market would be in an oversupply.

"Once futures prices move to a high enough level, people will start to short," a trader said.

At the same time, larger refiners were heard to be producing mainly for their term contracts, as there was still more supply in the market compared with demand.

"Bigger consumers with better appetite for [the] material are able to get materials," another Chinese trader said. "Smaller ones who have lower price appetite are finding it difficult" the trader said, adding that consumers were still buying material in the spot market.

On the demand side, market participants agreed that demand was mostly stable. Some sources said there were precursor makers' planned production levels for March and April and were at healthy levels after receiving new orders, increasing their spot demand.

Platts assessed battery-grade lithium hydroxide at Yuan 93,000/mt DDP China basis on March 8, unchanged on the day, but up Yuan 1,000/mt on the week. Tradable levels were heard at Yuan 90,000-95,000/mt in the week to March 8, with offers heard as high as Yuan 100,000/mt.

"Demand for hydroxide is actually increasing," a Chinese consumer said, adding that the price increase made sense because of market fundamentals. Demand for high-nickel batteries have increased.

Other market participants agreed that demand for battery-grade lithium hydroxide had increased, as more cathode makers in the market were buying the material.

"Demand for hydroxide is less impacted by news that has been pushing up carbonate prices," another China-based trader said, adding that domestic prices for lithium hydroxide saw fluctuations mainly due to fundamentals.

Upstream, Platts assessed spodumene concentrate with 6% lithium oxide content at $980/mt FOB Australia March 8, unchanged on the day, but up $10/mt on the week.

Domestic spodumene consumers provided tradable values between $900-$1,000/mt on a CIF China basis. An offer for Australian-origin spodumene was heard at above $1,100/mt.

Platts is part of S&P Global Commodity Insights.

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