Argentine authorities set reference values for exports to Canada, the US, Hong Kong, South Korea, China, the Philippines, Japan, Taiwan and Thailand at $53/kg ($53,000/mt) of lithium carbonate, according to a report published May 30 by Argentina's Federal Administration of Public Revenue (AFIP) and the General Directorate of Customs (DGA).

The measure arose from joint work with AFIP's specialized international tax sectors to dismantle irregularities detected and investigated over the last two years in lithium carbonate exports. With this initiative, DGA seeks to expand its ability to monitor foreign trade and eliminate under-invoicing strategies in exports.

This means customs authorities are required to inspect any shipments below $53,000/mt, and an explanation must be provided to justify the lower prices, according to an international producer. Shipments won’t be stopped, but fines may be levied where appropriate, the source added.

“The purpose of the reference value is for sellers not to evade taxes by declaring low customs prices,” said a Chinese producer of lithium chemicals. “So we don’t expect the spot market to respond to the announcement in this context or any impact in the short term.”

Related blog: Is LFP still the cheaper battery chemistry in the wake of record lithium price surge?

Some market participants said there was initial confusion around the announcement, evident in the drop in lithium producers’ stocks on May 30.

“I don’t think overseas prices will decrease after Argentina’s announcement, but at the same time, there isn’t sufficient support for prices to rise so much further,” said a Chinese consumer of lithium carbonate.

Prices had likely already peaked and would fall in due course, with a supply surge expected in the short term as firms compete for lithium and step up extraction efforts, the source added. Others said prices were at least seen stabilizing at current levels as downstream demand progressively gets a move on.

While the announcement is unlikely to impact spot cargoes—since lithium carbonate has traded significantly higher than $53,000/mt since January 31—producers could face challenges shipping under term contracts, which are often pegged far lower than spot or based on previous month averages.

The reference value could be revised if lithium carbonate trades much lower than $53,000/mt for an extended period, several sources said. The current value reflects the Argentine government’s belief that high lithium prices will be maintained.

In 2021, Argentina—home to some of the world’s most valuable lithium resources—exported over 27,000 mt of carbonate for $185 million. China imported 3,300 mt from Argentina in the first four months of this year, accounting for 9.9% of its total carbonate imports, according to the General Administration of Customs.

Prices for seaborne carbonates, hydroxides slip
Seaborne lithium hydroxide prices continued declining as Chinese suppliers lowered offers alongside the exchange rate, while overseas buyers sought realignment following the recent correction of Chinese domestic prices.

Platts, the pricing arm of S&P Global Commodity Insights, assessed lithium hydroxide flat on day at $76,000/mt on June 6, down $2,000/mt on the week. Lithium carbonate was assessed at $74,000/mt, down $3,000/mt week on week.

These prices reflect the spot value of battery-grade material on a CIF North Asia basis—deliveries to major ports in China, Japan, and South Korea. Lithium carbonate was adjusted to reflect shipments to Shanghai port.

Even with the drop, costs remained near their record highs from March, with only slight volatility since. While supply is still tight, some market participants said there is little room for further increases in the near term, as downstream margins are increasingly seen as unsustainable over the long run.