Sinome Resource Group (中矿资源)
On March 28th, China’s Sinome Resource Group (a global mining group with a comprehensive resource industrial chain) announced that it aims to expand Bikita production capacity to 2 million tons per year.
This can be achieved through increasing the company’s self-sufficiency in raw materials for its lithium business, enhancing its main business’s profitability and sustainable development capabilities.
To do so, the company plans to increase the production capacity of the existing Bikita lithium mine from 1.2 million tons/year to 2 million tons/year. The company will use its own funds to increase investment by CNY300 million on top of the original investment of CNY 360 million, increasing the total investment of the project to CNY 664 million.
The processes to be worked upon include the upgrading of mining, tailing engineering, tailings storage facilities, and supporting facilities.
Electric Vehicles
Electric vehicles in China are given a special license and plate, small electric vehicles are given green plates while larger electric vehicles are given a combination of both yellow and green.
China Association of Automobile Manufacturers (CAAM) proposes equal rights for new energy vehicles to further efforts that integrate electric vehicles. According to media reports, Cui Dong Shu, Secretary-General of the National Passenger Car Market Information Association had proposed to the relevant departments of the state to merge the “blue plate” and “green plate” policies. The merging of the two plates is expected to be fulfilled within the next two years.
Similarly, China Automobile Dealers Association has also presented several opinions regarding the energy vehicles industry.
On March 30, the association organized a seminar on the transition to China VI B emission standards with the participation of some automakers. It was discovered that about 2 million China VI B non-RDE-compliant vehicles are still in inventory.
Participating companies suggested that the production end should strictly follow policy documents and completely stop the production of non-compliant vehicles before June 30th.
Exceptions are for vehicles that were made before June 30th that do not contribute to worsening environmental impacts. For these vehicles, it is expected that the China VI B emission standards should be postponed to January 1, 2024. (Source: Shanghai Metals Market)
Lithium OPEC
Bolivian Ministry of Foreign Affairs calls for the acceleration of the formulation of the “Lithium OPEC” in South America. In the negotiation process since July are countries such as Argentina, Chile, Bolivia, the three countries take up to 65% of the world’s known resources of lithium and reached 29.5% of world production in 2020.
The Bolivian Ministry of Foreign Affairs announced that it is calling on Latin American countries that produce lithium resources to respond to the President of Bolivia’s call and work together to accelerate the formulation of the “Lithium OPEC” organization for lithium mining-producing countries. (Source: SMM).
Lithium Prices
For the month of April 2023, lithium prices continued to decline, while the price gap for Battery grade and industrial-grade lithium carbonate narrowed.
On the week ending 31/03/2023, the prices of lithium salt continued to decline. The average spot price of battery-grade lithium carbonate (99.5%) fell by 13.5% compared to the previous week, to 238,000 yuan/ton. The average spot price of industrial-grade lithium carbonate (99.2%) fell by 9.5% compared to the previous week, to 206,000 yuan/ton.
The price of Linyang Zhonglian Carbonate Lithium 2304 contract fell by 4.5% compared to the previous week, to 182,000 yuan/ton. The premium of spot lithium carbonate over futures contracts also narrowed by 29,000 yuan to 57,000 yuan/ton. The decline in the price of lithium hydroxide increased during the week, with the average prices of course-grain and fine-powder lithium hydroxide falling by 9.8% and 9.5% compared to the previous week, to 33.3 and 34.4 thousand yuan/ton respectively. The price gap between the battery-grade lithium hydroxide and lithium carbonate slightly increased by 0.1 compared to the previous week.
Lithium Battery News
With the price decline of lithium, mint reports that it could provide relief for auto makers and consumers after commodities helped lift battery prices about 7% last year. The price reversal is accompanied by the cutting of electric vehicle prices.
Smallcaps also reports Citi’s forecast that they expect support for battery grade carbonate prices around US$25,000/t as most non-integrated chemical producers should be loss making at these levels.
Some other factors were put forth for consideration such as the tendency of all markets to go through rise and falls, stocking and destocking of lithium supplies, and the high demand from Australian resources.
According to the weekly research report from Shanghai Orient Futures, it is noted that the market is focusing on the weakness of demand. However, traders should not ignore the negative feedback that may arise from the supply side, constrained by cost pressures after the sharp drop in prices.
Therefore, the second quarter is an important window period. It will be important to check if lithium salt plants have fallen into losses as it may reduce their operating rates. In connection with these losses, it will then be important to check if Chilean lithium carbonate, with a price inversion, can still be exported to the Chinese market on a large scale.
Orient Futures Weekly Report: 锂盐价格持续下挫，电工价差环比收窄
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