Lithium carbonate futures: insight into the golden opportunity of the future energy industry

Lithium carbonate futures: insight into the golden opportunity of the future energy industry

Lithium carbonate is a colorless crystalline substance and one of the important compounds of lithium. In today's society, lithium is mainly used in the production of lithium-ion batteries, and lithium carbonate is one of the key raw materials for lithium-ion battery cathode materials. With the rise of electric vehicles and renewable energy, the demand for lithium carbonate is showing a rapid growth trend. The focus on lithium carbonate is mainly on the following reasons:

Growth in the electric vehicle market: The popularity of electric vehicles has driven the demand for lithium carbonate, as lithium-ion batteries are the main energy storage method for electric vehicles. Lithium carbonate futures trading provides investors with the opportunity to participate in this booming market.

New energy technology: With the development of renewable energy technology, the demand for energy storage equipment is constantly increasing. Lithium ion batteries, as efficient energy storage devices, make lithium carbonate a key raw material in the field of renewable energy.

Global energy transformation: Countries are promoting energy transformation and increasing investment in new energy technologies. Lithium carbonate futures trading has become a way for investors to participate in the global energy revolution.

The upstream and downstream of lithium carbonate

The upstream and downstream of the lithium carbonate industry involve multiple links, including lithium mining, lithium salt production, battery material manufacturing, etc., forming a complex and tight industrial chain. The following is a detailed description of the upstream and downstream relationships of the lithium carbonate industry:

Upstream:

Lithium mining: The first step upstream is the mining of lithium mines, which usually include hard rock and salt lake mines. The main production areas include Australia, Chile, Argentina, and other places. Hard rock minerals mainly include spodumene and lithium mica, while salt lake minerals are mainly salt lake brine with high lithium content.

Extraction and refining of lithium ore: The process of extracting lithium from lithium ore includes steps such as ore crushing, flotation, and hydro metallurgical extraction. These processes may employ different techniques and methods to obtain high-purity lithium salts.

Mid stream:

Lithium salt production: After extracting lithium ore, the industry chain enters the middle stage, including converting the lithium extracted from the ore into usable lithium salts. Common lithium salts include lithium carbonate, lithium hydroxide, etc. Among them, lithium carbonate is the most commonly used form in battery manufacturing.

Lithium carbonate production: Lithium carbonate is an important form of lithium salt, mainly used as a positive electrode material for lithium-ion batteries. The production of lithium carbonate usually involves extracting lithium from lithium mines, extracting lithium salts, and then conducting chemical reactions to synthesize lithium carbonate.

Downstream:

Manufacturing of battery materials: The downstream stage involves the final application of lithium carbonate, mainly as a raw material for lithium-ion batteries. Lithium carbonate will form a positive electrode material with other materials such as cobalt, nickel, manganese, etc., and together with the negative electrode material (usually graphite), form the core part of the battery.

Battery production: Battery manufacturing is a key link in the downstream industry chain. Battery manufacturers will use a series of processes to produce lithium-ion batteries based on the ratio of raw materials such as lithium carbonate.

Electric vehicles and energy storage systems: Lithium ion batteries, as the core energy storage unit of electric vehicles and energy storage systems, are applied in many fields such as transportation, electric vehicles, smartphones, laptops, and renewable energy storage.

Derivative industries:

Electric Vehicle Industry Chain: The rise of electric vehicles has driven an increase in demand for lithium carbonate, while also driving the development of the entire electric vehicle industry chain, including the design, production, sales, charging facilities, and other aspects of electric vehicles.

Research and development of new energy technologies: Lithium carbonate, as a key material in the new energy industry, promotes the research and development of new energy technologies, involving multiple fields such as energy storage technology, battery technology, and energy transformation.

Environmental protection and regeneration industry: The recycling and regeneration of lithium batteries have also become an important link in the industry chain to reduce dependence on limited resources and address environmental issues related to waste batteries.

The upstream and downstream relationships of the lithium carbonate industry are closely connected, forming a complex and huge industrial chain. Its development is influenced by various factors such as the promotion of new energy technology, market demand for electric vehicles, and environmental policies. Investors and industry practitioners need to closely monitor the dynamics of upstream and downstream in order to better grasp market opportunities and risks.

The production method of lithium carbonate

The production of lithium carbonate usually involves extracting lithium from lithium ore and then obtaining lithium carbonate through a series of chemical reactions. The following are the main production methods of lithium carbonate:

Lithium mining: Lithium mines mainly include hard rock mines and salt lake mines. Hard rock minerals include spodumene and lithium mica, while salt lake minerals mainly include brine containing lithium. The mining of ore usually involves steps such as blasting, crushing, and flotation.

Extraction of lithium ore: Lithium in lithium ore is obtained through hydrothermal extraction. This includes soaking the ore in water and extracting lithium from the ore through steps such as dissolution and filtration.

Preparation of lithium salts: Lithium extracted from lithium mines usually exists in the form of lithium hydroxide (LiOH) or lithium chloride (LiCl). These lithium salts can serve as precursors for lithium carbonate.

Preparation of lithium carbonate: Lithium salts (usually lithium hydroxide or lithium chloride) are prepared by carbonation reaction to produce lithium carbonate. The basic reaction for the preparation of lithium carbonate is to react lithium salts with carbon dioxide to produce lithium carbonate.

Purification of lithium carbonate: Through process steps such as filtration and crystallization, the lithium carbonate generated from the reaction is purified to ensure that it meets the standards of industrial production.

Finished products of lithium carbonate: The final lithium carbonate product can be used in the manufacturing of lithium batteries, energy storage equipment, pharmaceuticals, and other fields.

From a technical perspective, there are currently three main lithium extraction technologies in the industry, namely brine extraction, mica extraction, and spodumene extraction, corresponding to three types of lithium resources - salt lakes, lithium mica ore, and spodumene ore. In China, lithium resources are mainly distributed in Qinghai, Xizang, Sichuan, Jiangxi, Xinjiang and other provinces and regions; Among them, Xizang and Qinghai are salt lake brine types, Sichuan and Xinjiang are mainly spodumene, and Jiangxi is mainly lepidolite.

Lithium extraction from brine:

Principle: Lithium extraction from brine is the process of extracting lithium from brine containing lithium salts. This method is commonly used in salt lake mines, especially those containing lithium sulfate.

Process: Firstly, the brine is extracted and concentrated through evaporation, increasing the concentration of lithium salts in the brine. Then, lithium is extracted from the brine through chemical treatment. Finally, lithium salts are obtained through crystallization or other methods.

Mica lithium extraction:

Principle: Mica lithium extraction is mainly used for hard rock lithium mines, which contain lithium mica. Lithium mica is an ore containing lithium.

Process: Firstly, the hard rock ore is crushed and subjected to flotation to extract lithium mica. Then, lithium is extracted from mica through chemical treatment. Ultimately, the compound that yields lithium is usually lithium carbonate.

Lithium extraction from spodumene:

Principle: Lithium extraction from spodumene is suitable for hard rock lithium mines, where lithium mainly exists in the form of spodumene.

Process: Firstly, by mining and ore crushing, an ore containing spodumene is obtained. Then, lithium is extracted from spodumene through processes such as roasting or leaching of the ore. Finally, lithium compounds, such as lithium carbonate, are obtained through chemical treatment or other methods.

In terms of cost, there are significant differences among the three lithium extraction technologies. In terms of domestic resources, data from Shanghai Nonferrous Metals Network shows that the cost of extracting lithium from brine per ton is about 40000 to 50000 yuan, the cost of lithium pyroxene ore per ton is about 60000 yuan, and the cost of lithium mica ore per ton is about 60000 to 80000 yuan. However, due to the different tastes of lithium mines, the cost of lithium extraction also varies greatly. According to data from China Securities News, in lithium mica mines in Jiangxi, the complete cost of producing lithium carbonate from lithium mica mines below 0.4% is 120000-150000 yuan/ton; The complete cost of producing lithium carbonate in mines between 0.4% and 0.6% is 80000-100000 yuan/ton; More than 0.6% of mines produce lithium carbonate at a complete cost of less than 80000 yuan per ton. However, data shows that the grade of lithium mica in Jiangxi is relatively low, with high grades ranging from 0.4% to 0.6% and low grades ranging from 0.2% to 0.3%. Therefore, if the price of lithium carbonate is lower than 120000 yuan/ton, mica lithium extraction manufacturers will face the risk of losses, and 100000 yuan/ton is a lifeline.

It should be noted that the production process of lithium carbonate may vary depending on the manufacturer and source of raw materials. In addition, the production of lithium carbonate is a complex process that requires highly pure products to meet the requirements of applications such as batteries.

The origin of lithium carbonate

The main production areas of lithium carbonate are divided into two categories: hard rock deposits and salt lake deposits. In 2022, the global lithium ore reserves are 13 million tons of LCE, of which China has 10 million tons of LCE, accounting for 8%. The following are the main production areas of lithium carbonate and the characteristics of each production area:

1. Hard rock ore:

1.1 Australia:

Production Area: Australia is one of the largest hard rock lithium mining areas in the world, mainly including Western Australia.

Main ore: Greenbushes lithium ore is the largest hard rock lithium ore in Australia, containing abundant spodumene.

1.2 China:

Production area: China's hard rock lithium ores are mainly distributed in Xizang, Qinghai and other places, such as Qaidam Lithium Industry Co., Ltd. of Qinghai Mining.

Main ores: China's hard rock lithium deposits mainly include spodumene and lithium mica.

1.3 Canada:

Production area: Hard rock lithium mines in Canada are mainly distributed in Quebec and Manitoba provinces.

Main ore: Whabouchi lithium mine is a typical hard rock lithium mine in Canada, mainly containing spodumene.

2. Salt Lake Mine:

2.1 Chile:

Production Area: Chile is the world's largest salt lake lithium production area, with major production areas including the Atacama Desert.

Main ores: The main lithium ores in salt lake mines are lithium salts, especially lithium sulfate.

2.2 Argentina:

Production area: Argentina also has abundant salt lake lithium resources, mainly concentrated in the northern region.

Main ore: The main lithium ore in salt lake mines is also lithium sulfate.

2.3 China:

Production area: China's salt lake lithium resources are distributed in Qinghai, Xizang and other places, such as Chaka Salt Lake in Qinghai.

Main ore: Lithium in salt lake mines mainly exists in the form of lithium sulfate.

3. Other origin:

3.1 Portugal:

Production area: Lithium mines in Portugal are mainly distributed in the northern regions, such as the Minera ç ã o do Barroso project.

Main ores: mainly including spodumene.

3.2 Brazil:

Production area: Brazil also has some hard rock lithium mines, such as the Carnaiba project.

Main ores: including spodumene, etc.

As of 2022, the global lithium resources have reached 98 million tons of metallic lithium equivalent, equivalent to about 520 million tons of lithium carbonate equivalent, and the lithium reserves have reached 26 million tons of metallic lithium equivalent, equivalent to about 140 million tons of lithium carbonate equivalent. Therefore, lithium is not a scarce resource. Driven by high profits, the growth of capital expenditure will drive rapid supply growth.

Overall, Australia, Chile, Argentina, and China are the main producers of lithium carbonate. These regions are rich in resources and have become key suppliers of the global lithium market. The distribution of salt lake mines and hard rock mines enables the global lithium carbonate industry to flexibly respond to market demand. With the rapid development of electric vehicles and renewable energy, these production areas play a crucial role in the global lithium industry chain.

Import and export of lithium carbonate

The import situation of lithium carbonate in China:

Import volume: China is one of the world's largest lithium demand countries, but due to its abundant lithium resources, China's import volume of lithium carbonate is relatively low. Most of the demand for lithium carbonate can be met by domestic production.

Import sources: If there are imports, the main source countries may include countries with abundant lithium resources such as Chile, Argentina, and Australia. These countries are usually the main sources of lithium ore or lithium salts imported from China.

Trade policy: China may manage the import of lithium carbonate through trade policies and tariffs. Trade policies may be influenced by international market supply conditions, domestic demand, and environmental and resource policies.

Import status

From the perspective of import trends, Australian mining companies have begun to take the lead.

Lithium concentrate: Currently, the vast majority of concentrates are imported from Australia. From the trend, the import of Australian ores has significantly accelerated in Q3-4. Since September, Australian ores have entered a competitive mode. As only Chinese smelters have the ability to digest Australia's huge lithium concentrate production capacity, a price war at the mining end is inevitable after the African ore production volume is realized next year. Therefore, Australian ores have started to discount and ship a large amount to China within a limited time window.

Lithium salt: China's lithium salt imports mainly rely on countries such as Chile and Argentina, and the import volume of Q4 lithium salt is also worth looking forward to. According to the export data of Chilean customs in October, there will be 1.7wt of lithium salt exported to China. Including a 45-50 day shipping schedule, it is expected that China's lithium carbonate import volume will exceed 1.5wt in December.

The export situation of lithium carbonate in China:

Export volume: China is one of the major producers of lithium carbonate globally, and its export volume may be relatively high. Lithium carbonate in China is mainly used to meet the needs of battery manufacturing and new energy industry both domestically and internationally.

Export destinations: The main export destinations for lithium carbonate in China may include Asia, Europe, North America, and other regions. These countries and regions may be the centers of new energy industries such as lithium-ion battery manufacturing and electric vehicle production.

Trade policy: China may manage the export of lithium carbonate through trade policies. Export policies may be influenced by international market demand, domestic supply conditions, and trade relations.

Industry trends and developments:

The growth of the battery industry: The import and export situation of lithium carbonate in China is directly affected by the demand of the battery industry. With the growth of electric vehicles and renewable energy industries, the production and trade of lithium carbonate in China may show a growth trend.

Environmental protection and sustainable development: Trends in environmental protection and sustainable development may affect the trade of lithium carbonate. The international market's attention to environmentally friendly mining and sustainable production may lead to China strengthening its environmental supervision of lithium carbonate production.

Global market supply and demand relationship: The supply and demand relationship of the global lithium carbonate market will also affect China's import and export situation. Oversupply in the market may lead to fierce competition, while demand growth may increase China's export demand.

The influencing factors of lithium carbonate futures prices

The price of lithium carbonate futures is influenced by various factors, including market, economy, and politics. The following are some key factors that may affect China's lithium carbonate futures:

Lithium market supply and demand situation: The price of lithium carbonate futures in China is influenced by the supply and demand relationship of the global and domestic lithium markets. If the global demand for the battery industry increases, especially in areas such as new energy vehicles, it will drive up lithium demand, thereby affecting the price of lithium carbonate futures.

Development of electric vehicle industry: The Chinese government has been promoting the development of electric vehicles, and lithium-ion batteries are the main power source in electric vehicles. Therefore, the growth of the electric vehicle industry has a direct impact on the demand for lithium carbonate, thereby affecting the futures price of lithium carbonate.

Exploration and extraction costs: The exploration and extraction costs of lithium carbonate will affect the profitability of producers. High costs may lead to a decrease in supply, thereby pushing up futures prices.

Technological innovation: New extraction and production technologies may change the production cost of lithium carbonate, thereby affecting futures prices. Technological innovation may reduce production costs and drive down prices.

Macroeconomic factors: The macroeconomic situation also has a significant impact on the overall market demand. Economic growth may drive demand for batteries, while economic recession may lead to a decrease in demand.

Policy factors: Government policies supporting or restricting the lithium industry can also have an impact on the price of lithium carbonate futures. For example, government support policies for new energy vehicles may stimulate demand for lithium.