As an important raw material for lithiumbatteries, the price of lithium carbonate has not yet seen the ceiling

On Nov. 7, the average domesticbattery-grade lithium carbonate spot price on the Wuxi electronic market was615,000 CNY/ton, with the highest price of 617,000 CNY/ton. And on the sameday, the average price of battery-grade lithium carbonate on ShanghaiNonferrous Network was 563,500 CNY/ton, up 2,000 CNY/ton from the previoustrading day.

This price, which is about 14 times theaverage price of battery-grade lithium carbonate of 41,000 CNY/ton in June2020, is about 55% higher than the price of 364,000 CNY/ton in early Februarythis year. In the case of tight supply of battery-grade lithium carbonate andhigh prices, there have been individual companies in the middle and lowerreaches to ensure production capacity, pay the product advance for the whole ofnext year.

According to Shanghai Nonferrous MetalsNetwork, the domestic lithium carbonate spot supply is still maintaining a highshortage, so the spot quotation are up. The main market circulation isdominated by small factories and traders, and most of them are small amount andhigh price transactions.

In the view of industry insiders, the mainreason for the current domestic lithium carbonate price rise is still animbalance between supply and demand. The main customers of lithium carbonateproducts for downstream battery cathode material manufacturers, batterymanufacturers and vehicle enterprises, the impact of the power battery market.On the demand side, the peak season of automobile manufacturers is mainlyconcentrated in November-December (4S store year-end sales promotion), theproduction and sales of new energy vehicles in the fourth quarter will focus ongrowth.

As for the supply side, it is understood thatdomestic lithium ore resources are mainly located in Sichuan Ganzi and Aba,Xinjiang, Jiangxi, etc., and salt lake lithium resources are mainly located inQinghai and Tibet, where the salt lake resources are affected by seasonalityand geographical environment. Entering the fourth quarter due to the drop intemperature, the salt lake production decreased, and lithium salt companiesalso have some hoarding, contributing to the tight market conditions.

On November 7, the domestic lithium saltproduction leader Ganfeng lithium company came to the news that the company'slithium salt production is now in full production. According to reports,Ganfeng Lithium currently sources more than 90% of its lithium ore from twomines in Australia: Pilgangoora mine project of Pilbara, and Mount Marionproject of RIM. "The company's lithium ore is sourced through anunderwriting model, with locked-in volumes and no locked-in prices. A pricingformula is applied to the product price, which varies according to marketconditions. In the case of a tighter supply of lithium ore, the cost ofprocurement has gone up." Ganfeng lithium company an insider said.

It is understood that Ganfeng Lithiumcurrently owns 5.8% of the pilgangoora project and 50% of RIM. According to theannual report data, the lithium concentrate production of pilgangoora projectin FY2022 is 377,900 tons; Mt Marion's existing lithium concentrate productioncapacity is 450,000-484,000 tons/year. According to the agreement, GanfengLithium underwrites 160,000 tons/year of lithium concentrate from thepilgangoora project and 49% of Mount Marion's total lithium concentrateproduction.

In terms of lithium carbonate capacity,Ganfeng Lithium currently has an effective capacity of 5,000 tons/year of highpurity lithium carbonate in Xinyu, Jiangxi, 20,000 tons/year of lithiumcarbonate in Ningdu, Jiangxi and 6,000 tons/year of lithium carbonate inCangzhou, Hebei. In addition, the company's Cauchari-Olaroz lithium salt lakeproject in Argentina with an annual capacity of 40,000 tons of lithiumcarbonate is under construction and is expected to gradually release itscapacity from the end of 2022 to the first half of 2023.

In terms of lithium salt sales, GanfengLithium currently does not sign long term contracts, sales contracts are signedat any time and the price follows the market.

Another domestic lithium salt and lithiummining giant Tianqi Lithium recently said on the investor interaction platform,the company's lithium salt products are basically full production and fullsales, the specific sales price combined with the commercial needs of differentcustomers to determine the market, the price is mostly a monthly contract.Foreign customers are mainly long orders, the contract time is generally about3-5 years.

In terms of lithium ore supply and price,Tianqi Lithium's lithium ore basically comes from the Greenbush lithiumpyroxene mine in Australia owned by its holding subsidiary Teleson, whichcurrently has a lithium concentrate capacity of 1.34 million tons/year and isplanned to expand to 1.94 million tons/year by 2024. "Currently Greenbushchemical grade lithium concentrate is priced every six months, with pricingreferencing the previous quarter's price changes from the three mainstreamquotation agencies in the lithium products market, and then giving Tianqi andYabao two shareholders a certain discount based on the purchase volume."Tianqi Lithium side said.

In terms of lithium salt productioncapacity, Tianqi Lithium's three bases in Shehong, Zhangjiagang and Tongliangin China can provide 44,800 tons/year of lithium chemical products capacity,and the completed capacity of the Quinaina plant in Australia is 24,000tons/year, plus the expansion projects of the Quina plant, Anju plant andTongliang that are in trial operation or under construction/planning, it isexpected that after the projects are fully completed and put into operation,the total lithium chemical products capacity will exceed 110,000 tons/year.

It is worth noting that in response toinvestors' questions, Tianqi Lithium indicated that in order to ensure thecontinuity of production, the inventory stockpile (mainly the safety stock ofGreenbush lithium concentrate purchased by the company from its holdingsubsidiary Telesun, work-in-process products, etc.) increased compared to thebeginning of the year.

In addition, from another domestic lithiummining company, Zangger Mining Company, we learned that although some parts ofQinghai Province were affected by the epidemic, the production of ZanggerMining Industrial Park was not affected too much, and the plant was still in anopen state, and the local government had opened a special green channel totransport lithium salt products out. But into the fourth quarter, the salt lakeitself due to the impact of climate, production than the summer decline.