Lithium carbonate: evenly matched, prices maintain wide fluctuations at the bottom

According to the "minimalist transaction" price theory established by Jin Zhifeng, the director of China Minmetals Economic Research Institute, the futures market and spot market have different fundamentals, and the futures prices originated in the futures market. This column pays attention to the fundamentals of the futures market itself, with special emphasis on analyzing the internal strength and main influencing factors of the capital game in the futures market. Through the option market, analyze the changes of market sentiment and expectation.

In November, the price of lithium carbonate increased for many times, but it failed to break through the pressure level effectively. After that, the bulls withdrew, and the bears tentatively increased their positions. With the rising price of lithium, major domestic participants continue to expand short exposure to a higher scale. At present, the price of lithium carbonate is in the middle and lower part of the long-term price range, keeping the bottom wide and fluctuating. There is a strong bearish mood in the market. It is expected that the price will mainly run in the range of 70,000-90,000 yuan/ton in December.

Long positions of lithium carbonate increased and the price failed to break through the pressure level effectively. From October 22nd to November 13th, lithium carbonate was short-selling, which led to a slight rebound in prices. After that, long positions increased, pushing up the price and hitting the pressure level of 86000 yuan/ton, but failing to break through effectively; From November 14th to 25th, the withdrawal of bulls led to a sharp drop in prices for two days in a row. After that, the bulls increased their holdings slightly to boost prices, but the increase was small and the pull was weak. Since then, the bulls have further withdrawn, and the bears tentatively increased their holdings until the prices went down on November 26. On November 20th, the closing price of lithium carbonate was 82700 yuan/ton, up by 14.15% from 72,450 yuan/ton in the same period of last month. 

With the rising price of lithium, domestic main force has expanded its short exposure. On November 20th, the net short positions of the top 20 futures companies with lithium carbonate position were 102,968 lots, compared with 70,798 lots in the same period of last month. The short exposure has further expanded and maintained a relatively high short exposure. 

In the short term, the market speculation risk can be controlled, so we should pay close attention to changes of futures positions. On November 20th, LC 2501, the main contract of lithium carbonate futures, held 285000 lots of 1 ton each; Guangqi designated 52,988 warehouse receipts for delivery. In October, the national lithium carbonate output was 59000 tons, and social inventory was 116500 tons. Although high output and high inventory lead to short-term controllable market speculative risks, it is still necessary to closely monitor the rapidly rising futures positions.

The price of lithium carbonate is at the middle and low level in the long-term price range. The long-term operating range of lithium carbonate futures prices is expected to be between 40,000-180,000 yuan/ton. On November 20th, the main contract for lithium carbonate closed at 82700 yuan/ton, which is located at the 31% of the long-term price range.

The price of lithium carbonate remained wide at the bottom. On November 14th, the price of lithium carbonate briefly broke through the previous high point and then fell rapidly, so it was difficult to form an effective breakthrough. In November, the price of lithium carbonate continued to fluctuate in a wide range at the bottom of 70,000-87,000 yuan/ton.

There is a strong bearish sentiment in the market, and it is expected that the price of lithium carbonate will mainly run in the range of 70,000-90,000 yuan/ton in December. On November 20th, the implied volatility of lithium carbonate option closed at 41.71%, which is in the middle of the long-term operation range. The market believes that the probability of lithium carbonate prices continuing to fluctuate at the bottom is high. Judging from the maximum exercise price of lithium carbonate option, on November 20th, the exercise price of the put option in LC 2501 contract was 70000 yuan/ton, and the option premium was 60 yuan/ton; The exercise price of the call options with a large position is 90000 yuan/ton, and the option premium is 760 yuan/ton. The market expects that the price of lithium carbonate will mainly run in the range of 70,000-90,000 yuan/ton in December. From the perspective of option positions, on November 20th, the put option positions were 53163 lots, a significant increase of 27385 lots over the same period of last month; Call option positions were 173175 lots, an increase of 76275 lots over the same period of last month; PCR closed slightly at 0.31, up slightly by 0.04 year-on-year, which is still at a relatively low level, indicating that the market is in a strong bearish mood.