The following content is excerpted from the Quarterly Report of Allkem Limited dated July 20, 2022.
Lithium Market Quarterly Review
Demand
Demand for lithium chemicals and spodumene concentrate remained strong during the quarter, despite temporary COVID-19 lockdowns experienced in China and associated supply chain disruptions.
Electric Vehicle ("EV") sales for the June 2022 quarter were estimated at ~2.2 million units, up ~50% compared to the PCP. EV sales in China alone were estimated at ~1.3 million units during the quarter, representing a ~90% increase from the PCP.
Demand for lithium chemicals in China within the battery supply chain saw a soft start in the June quarter due to lockdowns but subsequently bounced back strongly from May onwards. EV battery installation volumes were estimated at ~52 GWh during the quarter compared to ~29GWh PCP and in line with the March 2022 quarter.
Dominance of LFP battery formats (lithium, iron, phosphate) continued in the Chinese domestic market during the June 2022 quarter representing ~55% of battery chemistries.
Spot prices for lithium carbonate and hydroxide in China reduced by ~8% and ~5% respectively during the June quarter from all time high prices in March 2022 in response to the slowdown of activities associated with temporary lockdowns. Outside China, spot prices for lithium chemicals continued to rally reaching parity with Chinese prices. Spodumene concentrate spot prices registered record highs, increasing more than 50% QoQ, further reinforcing the tightness in the supply chain.
Contracted prices for lithium carbonate and spodumene were gradually adjusted up to reflect tight market conditions.
Supply
Estimated lithium chemical production in China was up by more than 20% QoQ due to increased supply of mineral feedstock from local sources with improved weather conditions and higher spodumene concentrate imports from Australia.
Spodumene concentrate volumes shipped to China from Australia during the quarter were 50% higher QoQ with brownfield expansions and restart of idled capacity. This incremental spodumene volume will mostly be consumed during H2 CY22 and is expected to boost utilisation rates of lithium chemical plants in China.
Interest from automakers in the lithium industry continued to increase with Chinese and Western OEMs investing and funding directly into lithium assets in order to secure supply.
The race to secure key critical materials has further intensified across the EV battery value chain.
