In the first quarter of 2024, the domestic lithium hydroxide market first fell and then rose. According to the Commodity Market Analysis System of Business Society, the average price of industrial grade lithium hydroxide in China was 133600 yuan/ton as of January 1, 2024. As of March 26, the average price of industrial grade lithium hydroxide in China was 106400 yuan/ton, and the market fell by 20.36% in the first quarter.
Market Review:
The fundamentals were weak in January, and the lithium hydroxide market declined. Within January, the price of industrial grade lithium carbonate in the upstream remained stable with small fluctuations and weak fluctuations. The market for lithium pyroxene concentrate in the upstream fell, and cost support was limited. The supply side has a low operating rate, mainly due to the digestion of inventory, and the downstream demand for high nickel materials is poor. The follow-up of lithium hydroxide procurement is slow, and market transactions are mainly long-term orders. The lithium hydroxide market is under pressure, and some companies have lowered their high-end quotations. After the decline, the market is deadlocked and stable, with a strong wait-and-see atmosphere.
At the end of February, the lithium hydroxide market stopped falling and rose. Within February, the pre holiday cost support is limited, and the follow-up of downstream high nickel positive electrode pre holiday reserves is still acceptable. Post holiday cost support is slightly weak, inquiry enthusiasm is still acceptable, and actual transactions are light. Towards the end of the month, upstream lithium carbonate prices have risen, while upstream spodumene concentrate prices have risen. Cost support has been boosted, and the mentality of the industry is still good, driving a slight upward trend in the lithium hydroxide market.
The cost boost in March, combined with a rebound in demand, led to a rise in the lithium hydroxide market. As of March 26th, prices have risen by 6.40% for the month. In March, the price of upstream spodumene concentrate rose, and the upstream lithium carbonate market was relatively strong. The increase in cost prices boosted the mentality of industry players. Some companies on the supply side had relatively low inventory, and downstream demand for nickel materials improved. The 3C digital market performed average, while some manufacturers gradually increased production. The downstream inquiry atmosphere improved, but the purchasing attitude remained cautious and the market had a strong wait-and-see attitude.
Cause analysis:
Cost side: Production costs have a significant impact on the price of lithium hydroxide, with upstream lithium carbonate having a significant impact on the lithium hydroxide market. In the first quarter, the trend of lithium hydroxide mainly followed the adjustment of upstream lithium carbonate, and the price of lithium carbonate rose in March, providing strong support for the lithium hydroxide market. The impact of lithium carbonate may continue in the future.
Comparison chart of price trends between lithium hydroxide and upstream lithium carbonate in the first quarter:
Supply side: In January and February, some enterprises stopped for maintenance, and the industry’s operating rate was low. Some lithium hydroxide enterprises slowly resumed production after the Yuanxiao (Filled round balls made of glutinous rice-flour for Lantern Festival). At present, major factories are operating normally, and most production enterprises mainly deliver long-term cooperative orders. It is expected that in April, the supply side will start construction or focus on single production, while inventory may be maintained within a controllable range.
Demand side: Currently, there is still a decent demand for high nickel ternary downstream, with the downstream energy storage equipment market mainly following up on demand. The downstream electronic product market has relatively stable demand, and the demand side has improved compared to the previous period. However, there is still uncertainty, and it is expected that short-term demand will mainly follow up. The purchasing mentality on the demand side may still be cautious.
Comprehensive prediction:
In summary, there is still some cost support in the near future, and manufacturers still have a mentality of raising prices. However, downstream follow-up is cautious, and procurement is mainly based on demand. It is expected that the lithium hydroxide market will be mainly wait-and-see in the short term, and more attention will still be paid to the trend of upstream lithium carbonate.
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