GLOBAL LITHIUM WRAP: China’s battery-grade hydroxide prices fall in quiet trading conditions China’s domestic spot battery-grade lithium hydroxide prices fell on Thursday June 21 following the recent downtrend in the lithium carbonate market as well as because of quiet buying activity among downstream consumers. Lithium hydroxide prices fell on lower offers and deals. Lithium carbonate prices stable in China due to slow market activity. Downstream consumers held off from buying in anticipation of further price decreases. Lower quality battery-grade materials from Qinghai continue to put pressure on market prices although producers assessed the market as being close to their bottom line. Following the downtrend in lithium carbonate Chinese spot market prices last week, Metal Bulletin’s battery-grade lithium hydroxide prices fell on Thursday in China due to lower offer prices and deals reported. The lower lithium hydroxide prices did not increase downstream consumers’ appetite and only small deals were reported this week. Battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H2O) prices fell to 135,000-140,000 yuan ($20,798-21,568) per tonne on Thursday, down from 140,000-142,000 yuan per tonne last week, according to Metal Bulletin’s market assessment. “Lower prices for lithium hydroxide are emerging on spot market in line with lower carbonate prices [last week] due to the stagnant market. Some deals were heard concluded at 135,000 yuan per tonne this week, and prices below this level are also being reported,” a Chinese producer told Metal Bulletin. In the carbonate market, most downstream buyers in the battery and cathode industry remain well stocked and are hesitant to place more orders should prices continue to fall in the coming days. In addition, the availability of cheaper, lower quality battery-grade material from the Qinghai region has been putting continuous downward pressure on lithium carbonate compounds prices over the past weeks. This is adding to buyer reluctance to buy material should prices fall again. “We slowed down our purchasing plan as recent lithium carbonate prices keep decreasing. We have booked a small batch of lithium carbonate, but haven’t paid to the supplier as we think prices will slide down further,” a Chinese cathode producer told Metal Bulletin. Meanwhile, producers told Metal Bulletin that the 120,000 yuan per tonne level for domestic carbonate prices was already approaching a bottom given production costs. “Price are already close to production costs for battery-grade lithium carbonate and in China we expect prices to stabilize at 120,000 yuan per tonne as a consequence,” a second Chinese producer told Metal Bulletin. As a result, Metal Bulletin’s Chinese domestic spot battery-grade lithium carbonate price (min 99.5% Li2CO3) was unchanged week on week at 120,000-125,000 yuan per tonne on Thursday 21. Asian seaborne markets unchanged After a slight decrease in the cif China, Japan and Korea battery-grade lithium carbonate market last week, prices held steady in the latest pricing session. The spot market remained quiet and most downstream consumers remain covered by their long-term contracts. Metal Bulletin’s battery-grade lithium carbonate (min 99.5% Li2CO3) prices were assessed at $18-19.5 per kg on June 21, unchanged from the previous week, and hydroxide (min 56.5% LiOH.H2O) prices stand at $19-20 per kg on a cif China, Japan and Korea basis. “The market remains stable, resisting the lower prices in China,” a trader told Metal Bulletin. “We have received different bids for 5-tonne lots of battery-grade lithium carbonate cif China, Japan and Korea as low as $17 per kg, but I will not sell material as low as $17 per kg for the time being,” he added. “Our latest price offer of battery-grade lithium hydroxide on a cif China, Japan and Korea basis was at $21 per kg. However, our customers have resisted as the market remains below this price,” a third lithium producer told Metal Bulletin. European, US prices unchanged In Europe and the United States, the lithium spot market remains largely unchanged due to a lack of spot market activity. The battery-grade lithium carbonate price was steady at $17.50-20 per kg while hydroxide spot market price was at $19-20 per kg, on a delivered duty-paid basis, according to Metal Bulletin Market assessment on Thursday 21. “We keep offering battery-grade lithium carbonate between $17.5-20 per kg on a delivered basis, however, consumption remains dormant and activity sluggish since the beginning of the year,” a fourth lithium producer told Metal Bulletin. “We remain mainly engaged in price negotiations for our contracts and not very active in the spot market recently as prices offered remain at high levels in Europe and the US,” a downstream consumer told Metal Bulletin. Metal Bulletin’s trade log for battery-grade lithium carbonate in China for June includes trades, bids and offers reported to Metal Bulletin.
Earnings on the 22nd. $44 is a good place to get your feet wet with a small position. Worldwide demand for Lithium is not going to pull back. BHP reports tomorrow... and while not a head to head comparison.... their report will give some insight into the worldwide headwinds/tailwinds currently affecting the industry.... and those will apply to SQM. From an article last week: _____________________________________________________ SQM says will pass Albemarle as world's no. 1 lithium producer by 2022 Sociedad Quimica y Minera de Chile (SQM -0.3%) says it will overtake rival Albemarle (ALB +4%) as the world’s top producer of lithium by 2022, raising its production capacity that year to 28% of the world’s total vs. ALB’s 16%. SQM VP Daniel Jimenez says capacity increases at its Chile operations plus new projects in Australia and Argentina will help put the company in the top slot. ALB currently is the world’s top producer of the key ingredient in electric vehicle batteries, with capacity to produce 29% of the global total vs. SQM’s 23%, according to SQM’s data. Jimenez also expects global lithium production capacity to more than triple by 2022, reaching 735K metric tons by 2022.
Read through BHP's report. It was okay, nothing spectacular. Copper sales were up YOY, so that bodes well for various world economies, emerging markets. Chilean labor issues were settled, which I (assume) includes SQM's operations there too. SQM is near a 52 week low and below both the (declining) 200 & 50 day. Short interest on the float is nearly 20% so any move up will gain traction fast. That said, its still best to only take a small position before the earnings report, there will plenty of room left to jump in if it starts heading north.