Very well said
@Gajet.
Lithium demand is significantly increasing but not decreasing. Supply is not increasing at the same pace with demand. In fact, the supply is now being interrupted because of low lithium prices and demand will exceed the supply very soon. That's the fact.
As I explained on my previous p
ost #: 75157186 two days ago the cost curve is not allowing the high cost projects in production.
Many of the Chinese non-integrated lepidolite and spodumene mines are already gone and the rest will go one by one in coming months. Same applies to the chemical converters which buys low quality petalite and spodumene ore both from Zimbabwe, Brasil and even from Australia.
Let's have a look at what happens in China. See the analysis and news of
SMM (Shanghai Metals Market). News from the Chinese owned company;
"
SMM Analysis On China July Lithium Carbonate Production And August Forecast" Aug.12,2024
According to SMM statistics, the total domestic production of lithium carbonate in July (including recycling) was
64,960 mt,up 43.36% YoY. From January to July, the cumulative domestic production of lithium carbonate was 363,424 mt, up 46.10% YoYThe July 64,960t lithium carbonate production includes;
- Chinese lepidolite: 15,600t (12.3% down MoM)
- Overseas and some Chinese spodumene: 30,300t (1.7% up MoM)
- Chinese slat lake brine: 13,300t (2.5% up MoM)
- Recycling: 5,760t (1.1% up MoM)
The lithium carbonate imported from South America is not included in this volume of course.
Let's have a look at the same thing for lithium hydroxide;
"
SMM Analysis On China July Lithium Hydroxide Production And August Forecast" Aug.12, 2024
Also the
lithium hydroxide production is a separate thing. In July 2024, China's lithium hydroxide production reached
32,300 mt, down 8.3% MoM,
up 21% YoYWhat does this tell us?
Is the lithium production going down or up in China?
Simple;
- Lithium carbonate production is up 43.36% YoY,
- Lithium hydroxide production is up 21% YoY
SMM makes these comments on its analysis;
"
Most spodumene-based lithium salt plants maintained a high and stable operating rate in July. However, some non-integrated spodumene-based lithium salt plants saw a decline in production due to weak downstream demand and the risk of losses".
Simple again. The demand is there for spodumene. But non-integrated ones are in trouble as there is no margin. They need lower spod prices to be in production. Now the spod price is lower, they may be in production.
But, the lower the spod the more lepidolite mine will be closed down. As you can see above "Chinese lepidolite: 15,600t (12.3% down MoM)" it's already down 12.5% in one month.
And SMM makes comments on that as well;
"
The total production of lithium carbonate from lepidolite in July was 15,600 mt, down 12.3% MoM.Although some non-integrated lepidolite-based lithium salt plants experienced losses earlier, they did not significantly reduce production in June due to cash flow considerations. However, continued price declines made it difficult for these plants to sell their products, leading to production cuts. As a result, the production of lithium carbonate from lepidolite decreased by 12.3% MoM in July"
That means more lepidolite mines will be closed in China in August and later. That will make a significant impact on Chinese lepidolite industry due to lower spodumene prices which goes lower and lower.
And SMM says this;
"
In August, the risk of losses is expected to continue affecting some lithium salt plants, leading to anticipated production cuts. Except for salt lake-based lithium salt plants, which are expected to maintain a stable operating rate, production from other raw material sources is likely to be impacted. The total domestic production of lithium carbonate in August is expected to be 63,110 mt, down 2.8% MoM".
"
It is expected that the domestic supply surplus of lithium carbonate may slightly ease, but prices are likely to remain weak".
When it comes to lithium hydroxide production:In July 2024, China's lithium hydroxide production reached 32,300 mt,
up 21% YoY.
"
Demand side, in July, orders from major ternary cathode material producers increased significantly, leading to a substantial increase in overall scheduled production and a rebound in demand for lithium hydroxide".
"Ternary cathode material" means NCM type nickel based batteries which requires lithium hydroxide when produced as high nickel content like (6-2-2 and 8-1-1 ratios).
"
Major producers saw a notable increase in July. The production of ternary cathode materials in July was 59,000 mt, up 20% MoM from June's 49,000 mt; the increases for the 6-series and 8-series were 5% and 40%, respectively, with high-nickel showing the highest increase."
This tells me that 8-1-1 NCM high nickel battery type is gaining momentum. This type battery is used in high capacity EV batteries. The nickel battery of old times which is 5-3-2 is will be disappear soon, even 6-2-2 is also losing momentum.
And SMM tells "
SMM expects that lithium hydroxide production in August will reach 33,600 mt, up 4% MoM, up 32% YoY,.."
This is just a waiting game IMO.
I'm still patiently waiting for the funeral of Lepidolite mines in China and petalite/spod mines in Zimbabwe.
(20min delay)