COLUMN-What price lithium, the metal of the future? Andy Home - lithium ion battery price

(The opinion expressed here is Andy House London, author and columnist of Reuters, June 6 (Reuters )-
Lithium will be the next big thing.
Prices are rising and junior miners are rushing to hold shares in future supply and investment sites that are getting hot with speculation about the prospect of this metal.
Global X lithium-based gold is one of the few ways to get involved, with asset management jumping from $ 25% to $41 million over the past three months, up 68 million.
It's a 1990 away when U. S.
With the end of the nuclear arms race, DOE is selling excess stocks and mines are closing, which reduces the need for a material used in hydrogen bombs.
But the fate of the most widely used metal was changed in 1991, when Sony commercialized lithium --
Ion batteries are now an integral part of almost all electronic devices.
However, it now seems that with Tesla-led automakers stepping up their efforts to produce electric vehicles on a large scale using the enhanced version of the technology, it will be larger.
In the upcoming green revolution in energy storage, lithium could be a key material.
However, the lightest metal in the periodic table is shrouded in darkness in terms of pricing mechanisms.
If lithium is to become an integral part of the global energy supply chain, the opacity of its market will be a big problem.
Start with the most basic questions.
What is the price of lithium?
According to research firm CRU, the price of battery-grade materials in China's spot market exceeds $20,000 per ton.
China imports about $7,000 of carbon carbonate
The most traded form of metal
But only $5,000 for the United States. S.
Analysts at Macquarie Bank said imports.
No matter which method you use, the price is rising.
CRU estimates that spot prices in China have almost tripled from $7,000 last year.
At the same time, Macquarie pointed out that the import price of China's carbonated roots and the export price of hydrogen oxides hit a record high.
It's a bit confusing, isn't it?
There are two questions here.
The first is the number of confusing products that can be produced from lithium, from hard lithium (industrial grease) to lithium fluoride (aluminum smelting) to lithium Zhengding (organic compound ).
They are usually converted into lithium carbonate and are mainly used in battery manufacturing.
But even so, the situation is complicated.
There are different types of carbonated roots with low content
For example, grade materials in the ceramic and glass industries
Grade material for batteries.
Neither is lithium.
The ion battery itself is homogeneous.
There are five main types, each using a different lithium compound.
Things get even more vague because the second problem with lithium pricing is that most of the trade is between a few producers and their customers.
There is no exchange trading, no terminal storage market, and only a very limited spot market.
This means that price assessments like CRU and Macquarie rely first on published transaction volume and trade value, and statistical surveys become more difficult due to the complexity of the lithium product chain.
The bottom line is that the pricing of lithium is very opaque.
This opacity is a direct result of the lithium market structure.
Only four producers controlled about 85% of the supply, Macquarie said.
Square meters of Chile and square meters of the United StatesS.
FMC and Albemarle take the lead in production, extracting lithium from salt lakes in Chile and Argentina.
Abbott has also opened brine operations in Nevada.
The fourth producer is Talison, Australia, which produces lithium at the Greenbushes mine in Western Australia.
But it's not independent, 49%-
Albemarle and China's Tianqi Lithium industry have a 51% stake, and Tianqi Lithium industry accounts for almost all the production of the mine processed in China.
This oligopolistic monopoly is a real challenge for Tesla. By the end of 2018, it will take about 27,000 tons of lithium carbonate per year to reach the sales target of 500,000 vehicles per year.
Macquarie estimates that this is equivalent to 16% of global consumption last year.
Tesla appears to have confidence in a new generation of producers and signed a future contract.
Reached an agreement with Bacanora Minerals, owner of the Sonora project in Mexico, and pure energy Minerals, which are working on the Clayton Valley project in Nevada.
Interestingly, in announcing these transactions, both miners said that according to Tesla's goal of reducing battery costs, the supply of materials will be lower than the predetermined level of current market prices.
Other companies claim there is no shortage of profits from the expected lithium heat.
But does the world really need more lithium?
Given the limited number of suppliers, and the projected growth in electric vehicles, it seems obvious.
That's why the price is so strong, isn't it?
Well, not necessarily.
Macquarie Bank believes that one of the reasons why prices are so strong is that the size of the oligopolistic monopoly is far below the capacity.
Since no major operator has released hard production figures, it is difficult to come up.
But according to Australia's exports of lithium concentrate, Macquarie said that Talison operated its Greenbushes mine last year in a capacity of only 60%.
"We believe that existing producers will be forced to increase production to protect market share and prevent new entrants from entering the market," the bank said in a report last week . " It added that prices are expected to peak later
2017 and then start moving down.
This is a thought-provoking assessment for a metal that makes such a buzz in the blogosphere.
There is a clear analogy to the rare earth frenzy a few years ago, when excited about the prospect of demand for esoteric metals such as nd, only the investor boom will be broken by the awareness that there is enough supply to meet that demand.
Will lithium do the same?
Should we be concerned about future supply shortages or whether supply has been squeezed by dominant producers?
The market dynamics of lithium are so dark that it is almost impossible to say at any level of uncertainty.
This is a problem for investors.
For companies like Tesla, this is also a big problem, they will be dominated by these market mechanisms, at least before some bright sparks invented a new type of battery.