Gravity-defying lithium price rally continues with “little relief in sight”

Lithium prices have jumped across the board over the past year on the back of heavy demand from the automotive sector, but inside China there is a mad scramble, particularly for carbonate.

Carbonate continues to soar in 2022 after more than quadrupling in value last year, according to Benchmark Mineral Intelligence, a battery supply chain researcher and price reporting agency.

The mid-March assessment by Benchmark shows battery grade lithium carbonate (EXW China, ≥99.5% Li₂CO₃) averaging $76,700 a tonne. That’s up 10% over just two weeks and 95% since the start of the year. In March last year it was trading at $13,400 a tonne. 

The rally in lithium hydroxide, used in high-nickel content cathode manufacture, is accelerating, up 120% so far this year, narrowing the discount to carbonate, which historically is priced below hydroxide.   

Benchmark says  it continues to hear reports that Chinese inventory levels for hydroxide, carbonate, and spodumene feedstock remain very low sustaining the high price environment:

“Robust demand for material, and hence high prices, will be sustained in the near-term, with expectations that the seasonal recommencement of supply from domestic Qinghai brines in the coming months will provide little relief to the growing market deficit.”

Nickel rich

Benchmark in a recent report said record high Chinese lithium carbonate prices have pushed the costs of lithium iron phosphate – or LFP cells – higher than high-nickel cells on a dollar per kilowatt-hour basis, compared to a deep discount historically.

The chaos on nickel metal markets may spill over onto the metal’s use in the battery supply chain, reversing the trend.

Nickel contracts were suspended on the LME at $80,000 a  tonne last week after a short squeeze on Tsingshan, the world’s largest stainless steel manufacturer, and the imposition of sanctions on Russia, a major producer of nickel.  

Nickel trading in London is set to reopen on Wednesday.