China May Find It Hard to Cool Lithium’s Rally This Time Around

China May Find It Hard to Cool Lithium’s Rally This Time Around By Bloomberg

Breaking News

‘;

Commodities 2 hours ago (Sep 22, 2022 07:36PM ET)

(Bloomberg) — Scorching gains for lithium, a raw material vital for powering electric vehicles, threaten to push costs even higher for Chinese battery makers, and the government is finding itself powerless to do anything about it.

Even after a meeting last week where Chinese authorities pleaded with major producers to stabilize prices, lithium carbonate surged to a fresh record, rising to 500,500 yuan ($70,716) a ton. In yuan terms, that exceeds the level prevailing when Tesla (NASDAQ:TSLA) Inc.’s Elon Musk called prices “insane” earlier this year.

“In the short term, I don’t think the meeting will help China cool the rally,” said Peng Xu, analyst at BloombergNEF. Prices for seaborne spodumene — a partly processed form of lithium — are increasing amid a supply-demand mismatch and that’s squeezing the margins of Chinese lithium refiners, Xu said, adding there’s still room for further gains from current price levels.

It was easier for China back in March, at the time of the previous peak. Then, officials hauled in representatives of the supply chain and told them they wanted “rational” prices. That did at least stall the rally. But it came at a time when virus lockdowns were curbing demand, and downstream users were also struggling to cope with high costs for other battery materials like nickel and cobalt. Now, things are different.

China’s manufacturing is picking up, with output of electric vehicles more than doubling from a year ago in August. The China Passenger Car Association expects EV sales to hit a record 6 million this year, double the number in 2021. Lithium supply still trails demand, and there are concerns about the availability of power in key production hubs this winter. In a sign of market tightness, an auction of Australian spodumene just attracted the highest-ever winning bid.

A slumping Chinese currency is also playing a role in the surge in domestic prices. The yuan has tumbled more than 10% this year, and is heading for the worst annual performance since 1994. The Federal Reserve’s 75-basis-point hike on Wednesday only made things worse. China typically buys raw materials in dollars, so the weakening yuan increases costs for the nation’s importers.

In China’s meeting with the lithium industry last week, authorities asked major firms to ensure prices don’t hugely deviate from production costs and urged consumers to strike long-term agreements. The nation also said it will help boost exploration, stabilize imports and promote recycling of raw materials.

(C)2022 Bloomberg L.P.

China May Find It Hard to Cool Lithium’s Rally This Time Around

Oil Heads for 4th Week of Losses as Fed Jitters Offset Tightening SupplyBy Investing.com – Sep 22, 2022

By Ambar Warrick
Investing.com– Oil prices rose slightly on Friday, but were set to lose for a fourth straight week as concerns over headwinds from rising interest rates…

Oil prices rise as Iran deal stalls, Russian supply amid conflictBy Reuters – Sep 22, 2022

By Laila Kearney (Reuters) – Oil prices rose in early Asian trade on Friday on the prospect that a stalled Iran nuclear agreement and Moscow’s new mobilization campaign in its…

Gold Steadies Despite Rate Hike Headwinds, set for Flat WeekBy Investing.com – Sep 22, 2022

By Ambar Warrick
Investing.com– Gold prices steadied on Friday, and were set to end the week largely unchanged as selling pressure from a hawkish Federal Reserve appeared to have…

Our Apps



Terms And Conditions
Privacy Policy
Risk Warning

(C) 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

About the author

Related