Albert Li: The Current State of the Lithium Market in China

Battery Metals
Lithium Investing

Benchmark Mineral Intelligence Analyst Albert Li shares his thoughts on the lithium market in China, supply and demand in the Asian country, prices and what’s ahead.

At this year’s Lithium Supply and Markets conference in Las Vegas, the Investing News Network had the chance to catch up with Benchmark Mineral Intelligence analyst Albert Li, who shared his insight on the lithium market in China.

Li, who is focused on market research, price assessments and trends in China, said there are political and economical factors that could impact the market in the Asian country.

“Many people haven’t been to China before so they fear the [lithium] capacity can flood the market, but the truth is there are many problems right now in China so that capacity won’t be easily released into the market,” he explained.

Speaking about prices, Li said many believed that in 2018 prices would keep rising and drop in the second half, “but to our surprise the price began to drop in the first half.”

However, Li added that looking ahead in the short-term, all the sellers in China are quite optimistic.

Listen to the interview above or read the transcript below for more insight from Li, including his thoughts on China’s future, what’s next for battery chemistry and environmental regulations. You can also click here to listen to our full Lithium Supply and Markets interviews playlist on YouTube.

INN: To start, can you let us know what your role is at Benchmark and a little bit about your background?

Albert Li: I’m an analyst, so I cover the market research and price assessment and also the market trend analysis in China’s market, including lithium, cobalt and graphite from cathodes to anodes.

INN: For investors who are new to the market, can you briefly talk about what is the current state of the lithium market in China? What factors are impacting the local markets supply and demand dynamics?

AL: I think, right now the market in China is going well with the general economy. We can say the electric vehicle (EV) market is still like a booming market there. For the factors, we have political side and economical side too. For example, the policies, the NEV (new energy vehicles) subsidy policy has already made huge impact on the market. Sometimes even the rumor of the NEV subsidy policy can have a deep impact on the market that will affect the cathode producers, the battery producers and even the NEV producers too.

INN: At the Lithium Supply and Markets conference and for the past months, there’s been a lot of discussion around China’s conversion capacity. Can you tell us your thoughts on that, what are some of the common misunderstandings and what is actually happening?

AL: About the capacity, there is always this overcapacity problem in many industries in China so that includes lithium, since it’s a hot industry now. But the truth is, and also some misunderstandings are the fear. Many people haven’t been to China before so they fear the capacity can flood the market, but the truth is there are many problems right now in China so that capacity won’t be easily released into the market. That again, there are some political reasons and also economical reasons, too. Also, the key issue for example in the salt lakes in Qinghai, the technology there is yet not mature, so the producers there, they’re still working hard to make the technical breakthrough so before that new capacity won’t be released into the market.

INN: Now, looking over to prices can you talk a little bit about local price trends and where do you see prices going in the future?

AL: So for prices at first, people thought in 2018, price will keep rising and it may drop in the second half, but to our surprise the price began to drop in the first half. There were some reasons like the leading battery producer in China called Optimum Nano, [which is wholly-owned by Shaanxi J&R Optimum Energy] capital chain broke this caused the whole industry to change. And then there are some cheap products from Qinghai and Zhangi province that made from brine, they couldn’t wait the price to increase so they put it on sale and these direct down overall prices in China through. But for the future especially in short-term, all the sellers they are quite optimistic about the trend because in the second half usually the NEV sales increase and usually happens in the second half. Also the consumer electronics, their hot season is usually after August and then the new capacity won’t be quickly released into the market so the supply, according to many sellers, will be still tight.

INN: There is also a lot of talk about changing battery chemistry. What is the current technology preferred in China and what are you seeing as potential replacements of the current technology?

AL: About the technology, most battery producers they are– while they used to consider two matters, two directions. One is our LFP (lithium-ironphosphate) the other is NCM (nickel-cobalt-manganese) and NCA (nickel-cobalt-aluminum). However, as years go by the Chinese government they are making the subsidy policy, which is encouraged the industry to use more– the battery was higher energy density so that will lean towards the NCM and NCA and also this will cause the demand growth of lithium hydroxide.

INN: What about environmental regulations in the country. Are they having or will they have an impact in the lithium sector?

AL: Yes. In China, the environmental inspection is getting stricter and stricter and sometimes and also it has already made some impact in other industries like graphite and magnesium. For example graphite price has increase this year because productions were shut down in Shandong Province but in lithium sector it is better because lithium production doesn’t involved with the acid or other dangerous chemicals like hydrogen chloride and so right now there’s no major impact in the lithium sector.

INN: And finally my last question for you today, do you think China will continue to dominate this space in the next few years and if so why?

AL: I think every person in the industry will agree that China will still dominate the space because the NEV sales in China that accounts for over half in the world, biggest battery producers is CATL is in China. The biggest NEV producer BYD is also in China and the technique of spodumene processing in China is mature and the major conversions in the world are also done in China.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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