S&P Global Platts assessed the price of battery-grade lithium carbonate at Yuan 303,000/mt ($47,548/mt) Jan. 11 on a delivered, duty-paid China basis, after prices crossed the $300,000/mt mark Jan. 10.

Prices of lithium carbonate are now 35% on a month and 531% on year, Platts data showed.

It is pretty tough to position lithium salts in the spot market, and also several producers of such fringes out of the supply all the time, according to sources.

“Many in the downstream would much rather get hold of spodumene and have a refiner make the salt for them because they reckon it’s way too hard to get lithium salts tonnage in the spot market in light of the price and tight stocks,” an international spodumene trader said.

“We don’t have enough inventory to sell. We are using all of our lithium carbonate in-house to manufacture lithium iron phosphate batteries as demand for LFP is strong,” said a domestic producer.

Tight supply potential and strong growth in downstream demand will likely drive domestic lithium chemicals prices up, sources said.

New energy vehicle market

Sales of new energy vehicles in China are projected to be 3.4 million units in 2021 and 5 million units in 2022, according to estimates released by China Association of Automobile Manufacturers, or CAAM, in December.

If achieved, China's NEV sales in 2022 will increase 300% from the country's sales in 2020, according to CAAM data.

China's NEV sales were expected to top 6 million units for the first time in 2022, as some market observers say consumers could rush to buy the NEV before the sales price is raised in anticipation of the termination of subsidies on the EV purchase in the country starting from Dec. 31.

Since it became the world's largest NEV market in 2015, China's NEV market has grown by leaps and bounds, far outpacing the EU and US markets.

China’s power battery makers have also scaled up their production capacity to meet soaring demand.

The emergence of new or expanded projects of cathode materials coming online in 2022 would provide strong support for domestic lithium carbonate demand. But then the buildout of lithium carbonate capacity would trail the ramp-up in demand by a long way in 2022, according to the sources.

“I really can’t see anything ever catching up with World Passage demand this year,” the other international trader said.

While market sentiment is still positive, some leaks bringing sources have talked about a possible price volatility.

Because of the strong cyclic nature of the material, the price increase in lithium salts is not healthy for the market, a European supplier said. Prices are going to hit a peak very, very soon, but also drop equally quickly, he said, explaining that the market is a mismatch of balancing the demand and supply.

Price trend is still upward, but unclear when prices will hit a record, the supplier said, adding that the market is supply driven at present but subject to who has greater need -- producers or consumers.