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Lithium carbonate: the price increased 300% crazily in China

CCM - The price of the lithium carbonate is keep rising during the first week of 2016 in the China market. By Jan. 8th, the average price of the battery grade lithium carbonate has risen to around USD22, 307/t. Although the growth rate slows down compared to earlier, the average price is expected to reach USD23, 077/t in 2016, according to analysts CCM.

Source: Bing


The lithium carbonate price has been in the upward trend all the way since 2015; until the end of September, it increased by 14.03% compared with the price in the beginning of 2015. While the price surged since the end of October, with an increase of 73.15% against that was in the end of September.


Actually, the price of battery grade lithium carbonate was less than USD7, 962/t in Oct. 2015, which means that the price has increased 300% in just three months.


Imbalance of supply and demand


For most of the insiders, it’s the higher-than-expected popularity of the alternative energy vehicles that resulted in the surge of the lithium carbonate price.


“The enterprises of the lithium in China were weak in planning. No one has ever expected such a boom during the 2015. Neither it is in the industry of alternative energy vehicles, nor in the industries of battery or material” according to an insider.


The enlarged gap of supply and demand leads to the increase of the lithium carbonate price,


“The enterprises were all stepping up on launching products and grabbing market share, which resulted in the peak of the demand for raw materials” said Li Bo, Board Secretary of Tianqi Lithium.


It was the winter shutdown of the salt lake and the delay in the production of newly-constructed lithium carbonate projects that resulted in no substantial increase in supply in the short run.


As the lithium price has gone wild, many battery producers face the fate of bankrupt during 2016, according to insiders.


Influenced by the battery grade lithium carbonate price, not only the price of lithium chemical products went up, but also the price of the most of the battery materials. Some enterprises have already been hurt soon after the rapid increase of lithium price.


Smokeless wars between the international oligarchies


The capacity constraints of the international oligarchies are one of the important reasons for the increasing price of lithium carbonate.


The lithium magnate FMC, one of the major contributors who drove the domestic lithium price up, raised the lithium price since 1st October 2015 around the world with the price increase of 15% in terms of its lithium carbonate, lithium chloride and lithium hydroxide.


At present, it is the SQM, Albemarle, FMC and Talison that control the global lithium carbonate supply. In fact, the Big Four of the lithium industry actually monopolized more than 60% of the global lithium carbonate supply for many years.


The annual average price of the lithium carbonate increased three times during 1998 to 2009, which was caused, on the one hand by the growing demand for the lithium products around the world, on the other hand by the monopoly of the magnates over the lithium carbonate market.


As the development of the lithium industry, no matter the salt lake-based lithium production or the lithium mining, has always been in the underperformed situation. That’s why the soaring demand for the lithium carbonate has still been at the mercy of the imports in the recent years.


The domestic enterprises in China entered the “Magnates Club” of the lithium resource after Tianqi Lithium acquired 51% equity of the Talison in 2013.


Capacity of some newly launched lithium carbonate projects in 2015 has not released on schedule both in China and overseas, which is another factor for the soaring lithium carbonate price.


On one hand, it is the technical problems and force majeure that caused the underperformance in terms of the capacity release, but on the other hand, the magnates preferred to release the production step by step thus to keep the stable and moderate price growth.


Even the lithium mines of the Tianqi Lithium and the Talison (controlled by Albemarle) have not been fully released.


Here comes the age of high lithium price?


Facing the soaring lithium carbonate price, Tianqi Lithium remained quite indifferent.


“We also have concerned about the increasing price” said Li, Board Secretary of Tianqi Lithium.


“Tianqi Lithium has never offered our price openly and the price is much lower than that spread all around.”


Actually, there also are smokeless wars among those global magnates. Albemarle started to purchase raw materials from Talison for its Oriental-Equipment-Manufacture (OEM) factories in China since 2015, thus to extend market share over China market.


“The capacity utilization of Tianqi Lithium in 2016 is less likely to improve” according to the Galaxy Securities. The gap and the time lag between the demand and supply are the major reasons for the sustainable price rising of the lithium carbonate, while the capacity utilization of the Talison has just been an important but uncertain factor.


After the booming of several months, would the lithium carbonate price run out of its momentum in keeping the upward trend? According to many analysts, the price would keep raising at least to the mid of 2016, while the price of the H2 would depend on the release of the increased capacity.


“However, the production expansion may proceed slower than the expectation of the market.” stated Zhang Jiangfeng, Secretary General of the Lithium Industry Association of China Nonferrous Metal Industry Association.


The battery grade lithium carbonate is produced by the means of the recovery of lithium from ore, while for the lithium products from a specific mine, it is a long-term process to keep the stable production and to gain the recognition from the market; thus situation where the capacity releasing lag behind the schedule is quite common.


In fact, a few years ago there’s institution predicted that the period between 2013 to 2015 would meet a peak in terms of the capacity releasing of the overseas lithium carbonate; however, with regard to the situation at present, the planed capacity has not been fulfilled.


It seems like the age of high-price-lithium is on its way.


Apparently, the lithium carbonate price is still positive in increasing. In a midterm or long term, the fundamentals of the lithium battery industry would hold up well over the next few years. Meanwhile, there’s enough space for the lithium carbonate price to rise, due to the reduced proportion of lithium carbonate in the battery manufacturing and the strong demand from the downstream market.


Need more information about China’s lithium carbonate market?


If you are looking for more detailed intelligence on China’s lithium carbonate market, take a look at some of our latest research below:


Newsletter - for breaking news, data and expert commentary on China’s lithium carbonate market, download the latest issue of China Li-ion Battery News.


Market Data - get regular updates on the price, production, consumption, manufacturing costs and leading producers of lithium carbonate in China with our Market Data service



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