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Overseas premiums likely to provide support for lithium prices in China, analysts say

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Overseas lithium prices are already at a 20 percent premium to Chinese prices, which is expected to provide support for lithium prices as the export window opens, analysts said.


As months of declines in lithium prices continue, analysts are starting to express caution about whether the trend can continue.

With lithium prices plunging in China, there has been a significant premium for overseas products, which could provide support for Chinese lithium prices, said CITIC Securities analyst Bai Junfei’s team in a research note today.

South American producers of lithium extracted from salt lakes have an optimistic outlook for lithium prices in 2023, with some companies already adjusting their pricing strategies for lithium products this year, the team noted.

Among them, Albemarle plans to move away from fixed-price contracts in 2023 and expects to sell lithium products at 55 percent-65 percent higher year-on-year in 2023.

Livent has locked in 70 percent of its lithium selling price in 2023 with fixed-price contracts and expects the fixed price to increase 40 percent from the 2022 average price.

This means that Albemarle and Livent’s lithium products will sell for as much as $60,000 per ton in 2023, or about RMB 400,000 per ton, the team said, adding that SQM and Allkem are equally optimistic about the 2023 lithium price outlook.

Lithium prices in South America have been firm during the rapid decline phase of lithium prices in China, with price adjustments lagging behind, the team noted.

As of early March, lithium prices in Europe and the US stood at $67,000 per ton, or roughly RMB 450,000 per ton.

During the same period, Chinese lithium prices have fallen to about RMB 370,000 per ton, a price discount of more than 20 percent to overseas markets, the team said.

Considering that overseas lithium producers maintain their upward trend in lithium price guidance for 2023, the premium of overseas lithium products to Chinese products may continue to expand in 2023, and the opening of the export window may provide some support to Chinese lithium prices, the team said.

CITIC Securities expects lithium producers in South America to add 190,000 tons of capacity in 2023, with some of the new capacity to be released for the first time in this round of rising lithium prices.

Previously some of South America’s new projects to extract lithium from salt lakes have not progressed as expected, and most projects have been postponed to 2023, so the market expects a concentrated release of lithium supply in South America in 2023, the team said.

However, considering the rhythm of capacity creep of such projects, the actual new production from South American lithium producers is expected to be 54,000 tons in 2023, an increase of about 27 percent from 2022 production, according to the team.

In addition, the ongoing rectification of lithium producers in Yichun, Jiangxi province, is expected to further ease the pressure of lithium oversupply and accelerate destocking in the sector, the team said.

Yichun, nicknamed the “lithium capital of Asia,” is a center of lithium supply in China.

Local media Yicai reported on February 26 that a number of local lithium miners had halted production to correct mining violations.

Lithium prices continued to fall in China today, although to a lesser extent.

Battery-grade lithium carbonate was down RMB 1,000 per ton today, with the average price at RMB 376,000 per ton. Industrial-grade lithium carbonate fell RMB 3,000 per ton to an average price of RMB 343,000 per ton.


This article was first published by Phate Zhang on CnEVPost, a website focusing on new energy vehicle news from China.

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