Rodney Hooper: The So-called Death of Lithium Carbonate Was Premature

TL;DR

The lithium industry has seen an uptick in the supply of hard rock from Australia to China, causing pressure on prices. The industry predicts further price pressures in 2019, but demand is expected to outstrip supply by 2021-2022.

Transcript

priscila wa rida with investing news network and here with me today is rodney hooper consultant in the lithium industry and the co-host of the lithium ion rock podcast orny thank you so much for joining us ray thanks very much for having me alright so we're here at the lithium supply and markets conference in Chile can you let our audience know wha... Read More

Key Insights

• 👨‍🎤 There has been an increase in the supply of hard rock lithium from Australia to China in 2019.
• 👶 Price pressures continue to affect the lithium market due to oversupply and the entry of new conversion capacity.
• 🚙 Demand for lithium is expected to outstrip supply by 2021-2022, driven by the implementation of EU CO2 emission standards and increased electric vehicle production.
• 🍉 The debate between lithium hydroxide and lithium carbonate as preferred chemicals continues, with carbonate remaining dominant in the near term.
• 😑 The LME's launch of a lithium futures contract aims to bring transparency to prices, but some major producers have expressed their reluctance to participate.
• 🛩️ Investor caution is advised due to the volatile nature of lithium prices and the small size of the industry.
• 🆘 Supply discipline and potential financial pressures on companies could moderate supply and help stabilize prices.

Questions & Answers

Q: What are the main trends in the lithium industry in 2019?

The main trends in the lithium industry in 2019 include an increase in the supply of hard rock from Australia to China and ongoing price pressures.

Q: What are the predictions for lithium prices in the near term?

SQM and Livent have indicated that they expect further price pressures in 2019, with SQM projecting a price band of 11 to 12 thousand, down from 14,600 in Q1. This is likely to impact the China battery grade spot market for carbonate and hydroxide.

Q: Is there a debate about the future demand for lithium hydroxide and lithium carbonate?

There is a debate about the future demand for lithium hydroxide and lithium carbonate. The transition to NCM 811 cathodes has been slower than expected, and carbonate remains the dominant and preferred chemical for now. However, in the long term, the market is expected to be more balanced.

Q: Will the launch of a lithium futures contract by the London Metal Exchange (LME) bring transparency to prices?

The LME's partnership with Fast Markets to launch a lithium futures contract is aimed at bringing transparency to prices in the sector. However, some major lithium producers, such as SQM, Albemarle, and Tianqi, have expressed their reluctance to participate. It remains to be seen if the contract alone will be enough to bring transparency to prices.

Summary & Key Takeaways

• The main trends in the lithium industry in 2019 include an increase in the supply of hard rock from Australia to China and ongoing price pressures.

• Price pressures are expected to continue due to oversupply and the entry of new conversion capacity into the market.

• Demand for lithium is predicted to exceed supply by 2021-2022, driven by the implementation of EU CO2 emission standards and increased production of electric vehicles.