The price of lithium hydroxide by sea is falling. The price in my country's market continues to be lower than that in other countries.

Although China's Golden Week holiday led to quiet trading, the price of seaborne lithium hydroxide fell from October 1 to October 5, dragged down by a decline in market intention prices.

S&P Global Platts assessed battery-grade lithium hydroxide at $18,000/t CIF North Asia, reflecting sources delivered at major ports in China, Japan and South Korea.

Although the seaborne lithium hydroxide market is highly concentrated in long-term contracts and there is little activity in the spot market, market participants say prices are currently trending downward, especially in 2019 contract negotiations. The spot market has been sluggish due to pressure from China and the widening price gap between the two products.

Seaborne lithium carbonate prices, on the other hand, were flat this week at $14,500/t CIF North Asia, having remained at that level for the past five weeks, but sources said they expected prices to resume their downward trend soon.

“Production activity is slow on the buyer side, which is leading to weak demand [for lithium carbonate],” said an Asian trader. The trader said he would inquire about selling lithium carbonate at $17,000/t CIF, “but buyers don’t want to make any purchases… The highest price buyers are willing to accept is $15,000/t.” In addition, consumers “are gradually using more lithium hydroxide instead of lithium carbonate,” which will eventually force demand for lithium carbonate to decrease, “causing prices to fall.”

"Buyers think prices will continue to trend downward, but we need to see what happens in the Chinese domestic market after the holidays," said another Asian trader, who added that no deals had been concluded this week and he was still negotiating with buyers. He said Japanese buyers were asking $13,000-14,000/t CIF Japan for battery-grade lithium carbonate, while Chinese buyers were inquiring at $9,000-10,000/t CIF China.

An American consumer source said, "Even suppliers have said they expect prices to fall in 2019 - we just have to see how they fall." He expects the long-term contract prices of lithium carbonate and lithium hydroxide to be around $14,000 per ton and $17,000 per ton respectively next year, and the price gap between the two will eventually narrow to as low as $2,000 per ton.

“[Next year] prices in Europe and the United States are likely to be similar to those in Japan and South Korea,” he added, stressing that “Chinese prices will continue to be different from other countries, but Chinese prices will continue to fall.”

A South Korean consumer said he would inquire about 3,000-5,000 tons of lithium hydroxide for production next year at $16,000/ton CIF, but he believes the average transaction price in the spot market is $18,000/ton. He believes that domestic prices in China are under pressure, with the domestic transaction price at 130,000 yuan/ton. He added that the widening gap between lithium hydroxide and lithium carbonate has lowered the price of lithium hydroxide to a certain extent.

Another South Korean consumer agreed that the spot price of seaborne lithium hydroxide could be traded at $18,000/tonne, but they paid $19,000/tonne in their contracts with producers this year.

“In the long term, China’s domestic prices and export prices should converge,” he said, referring to recent exchanges with Chinese lithium producers.

An Americas producer did not see any major changes in the market as “China is on holiday this week and there is no trading.”

The Chinese market was closed for the National Day holiday from Oct. 1 to 7. Platts' domestic Chinese prices for lithium carbonate and lithium hydroxide, delivered duty-paid, were steady this week at RMB 78,000/t and RMB 130,000/t, respectively.

According to Platts’ import parity formula, the $14,500/ton CIF North Asia valuation is equivalent to RMB 116,000 [B1]/ton (China delivery price, including 16% VAT) and RMB 102,000 [B2]/ton (including port handling charges but excluding VAT). This means that imported resources remain unattractive to Chinese consumers, reinforcing the recent bearish momentum of seaborne lithium carbonate prices.