commentary: lithium price tensions highlight need for an lme contract - lithium battery price

LONDON (Reuters)-
What is the price of "hot metal" lithium in the core of electric vehicles (EV)revolution?
As the market absorbs a wave of supply, spot prices in China have collapsed in 2018, with most of them coming from new hard
Rock mines that have been put into operation in Australia.
However, outside of China, the situation is very different from the price of lithium
Volume contracts have consolidated the upward trend since 2015.
This difference shows that the pricing of lithium is still in progress.
This also explains why the London Metal Exchange (LME)
I'm looking for a competitor to the first exchange
Lithium contracts traded
The spot market for lithium carbonate plummeted from an average of $26.
December 2017 $18 to $11 per kilogram.
According to data from Fastmarkets MB, October.
Spot prices are purely domestic in China, reflecting an assessment of lithium carbonate pricesworks in China.
Due to its active construction, China is at the core of the lithium market --
Electric cars and batteries.
Manufacturing capacity.
It's also a short place.
Long-term supply and demand drivers have had a negative impact on prices.
China's domestic lithium salt water production is not only strong, but also a direct transportation of ore from Australian new producers such as Galaxy Resources (GXY. AX)
Mining, Ullah (AJM. AX)
Pilbara Minerals (PLS. AX).
This lithium pyroxene ore must be processed in large quantities before it can be used to make lithium.
Ion battery, create log-
Blockage of raw materials in the domestic market.
The new supply stream also coincides with a major change in the battery environment in China, a change caused by the new electric vehicle subsidy, and the battery factory has carried out destocking and renovation accordingly.
The net result of the additional supply and demand disruption was a sharp drop in spot prices in China.
Does this mean an astonishing price increase in 2015
Is 2017 over now? The short-
The answer to the term is yes, but the potential bull market voucher for lithium is still intact.
What is the price of lithium carbonate-
The term contract is shown.
Over the past few months, the rapid market MB has eased slightly in its assessment of this part of the global lithium market, but at $16.
Every kilogram in October is still rising. on-
This year, the key is that the current trading price is higher than the spot price in China.
"Markets outside China are still relatively tight," said analysts at Benchmark Mineral. (
"The decline in lithium prices in China was not comprehensive" in August ". 20, 2018)
"While the expansion in South America has finally begun to yield results, the number of incremental new arrivals into the market will not cause a huge oversupply problem warned by some institutions.
The benchmark miner's view is that the spot price decline "is an early correction in China's lithium carbonate market and will go through several stages of growth in the next decade ".
The decline in spot prices will affect contract prices in the rest of the world, as they have affected for a longer period of time --
In the process of rising, regular pricing.
At the beginning of 2016, a large spot price premium resulted in buyers and sellers adjusting their contracts for annual or in some cases quarterly price reviews.
Now the spot price is lower than the contract price, the buyer will naturally delay the signing time.
During the negotiations in 2019, long-term contracts dominated by spot materials inevitably faced downward pressure.
However, contract prices are essentially buffered by fluctuations in the spot market as they fail to match the surge in spot prices in 2015 --
2016, it is unlikely that they will be fully following its shortcomings now.
These structural tensions in lithium prices are reminiscent of the iron ore market at the turn of a decade.
The result of iron ore is a collective shift from an annual or longer period --
Fixed-term contracts for spot market pricing, which in turn provide the impetus for the huge futures trading stage now.
In fact, due to the difference between batteries and non-batteries, the pricing of lithium is much more complicated than iron ore
The flow of battery materials and the chemical composition of the evolving battery.
Fastmarkets MB, for example, has actually released more than 30 lithium price assessments covering the entire production process from lithium pyroxene ore to lithium carbonate to hydroxide.
In fact, the market is so complicated that some people think that lithium is not a commodity market in the traditional sense, which has eased compared to any single pricing reference point.
However, it is clear that any form of lithium product still has content to cope with, although it is still highly opaque in the current market structure.
With the exception of a handful of top producers that have historically dominated the market, everyone wants more transparency.
This is a lithium contract that the London Metal Exchange wants to offer, which will be launched by the end of 2019.
In fact, LME has become at the heart of the lithium pricing debate by setting up an electric vehicle metal advisory group to explore not only lithium contracts, but also other key battery inputs (such as nickel sulfate, graphite and manganese) potential contract.
Short exchange-
Three price reporting agencies are listed to provide the lithium price index that can be quoted in cash
Settlement contract: fast market MB, Benchmark Minerals and Argus Media.
A demo of these three projects is available on the LME website. (here)
All three stand out.
The important fact about the lithium market is that demand will continue to grow exponentially as the electric vehicle revolution is gaining momentum.
Current sales
Taking benchmark minerals as an example, the fall in spot prices is just a bump on the road because "every part of the battery supply chain --
From Lithium to chemical plants to cathode and battery manufacturing-builds out.
As lithium transits from specialty chemicals to mainstream automotive materials, there will be more "bumps ".
What the entire supply chain needs is a better roadmap for navigating these bumps.
LME is in front right now-
Provide a runner.
The opinion expressed here is the opinion of the columnist of Reuters.