battery demand has changed the lithium market forever

Battery demand has changed the lithium market forever

3

Industry growth

+529%EV (LCE)

+600%ESS (LCE) CE Batteries Traditional

20252016

Fastmarkets | Battery raw materials

Growth in electric storage systems and electric vehicles will lead to a significant increase in demand for lithium and other battery raw materials by 2025. As the market continues to change, the need for price transparency and risk management tools has never been greater.

Our lithium prices

Our global coverage and specialist knowledge ensures the most market-reflective prices for

today’s lithium market

Global & complete lithium coverage

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Spodumene Prices

Lithium Hydroxide Spot Prices

Lithium Carbonate Spot Prices

Lithium Hydroxide Contract Prices

Lithium Carbonate Contract Prices

Lithium prices


Fastmarkets provides holistic coverage of the lithium market, capturing raw materials, different compounds and different contract terms globally

Key lithium prices for today’s market

2018 | Fastmarkets | Name of Presentation

Lithium carbonate min 99.5% Li2CO3 battery grade$ per kg cif China, Japan & South Korea

Lithium carbonate min 99.5% Li2CO3 battery grade yuan per tonne, ex-works China

Lithium hydroxide monohydrate min 56.5% LiOH.H2O battery grade

$ per kg cif China, Japan & South Korea

Lithium hydroxide monohydrate min 56.5% LiOH.H2O battery grade

yuan per tonne, ex-works China

The highest liquidity is seen in the battery hubs of China, Korea and Japan.Four prices have been identified as being central to this market.


Price specifications

Lithium carbonate min 99.5% Li2CO3 battery grade

Lithium carbonate min 99.5% Li2CO3 battery grade

Lithium hydroxide monohydrate min 56.5% LiOH.H2O battery

grade

Lithium hydroxide monohydrate min 56.5% LiOH.H2O battery

grade

Price $ per kg cif China, Japan & South Korea yuan per tonne, ex works China $ per kg cif China, Japan & South

Korea yuan per tonne, ex works China

Delivery PortMain Chinese Japanese & South

Korean ports (other ports normalised)

ChinaMain Chinese Japanese & South

Korean ports (other ports normalised)

China

Basis Cost, insurance & freight Ex-works, VAT included Cost, insurance & freight Ex-works, VAT included

Type Assessment Assessment Assessment Assessment

Min Lot Size 5 tonnes 5 tonnes 5 tonnes 5 tonnes

Quality

Min 99.5% Li2CO3 (delivery of Min 99.2% Li2CO3 also accepted,

qualified for use in battery applications)

Min 99.5% Li2CO3 (delivery of Min 99.2% Li2CO3 also accepted,

qualified for use in battery applications)

Min 56.5% LiOH.H2O (qualified for use in battery applications)

Min 56.5% LiOH.H2O (qualified for use in battery applications)

Form Powder Powder Powder Powder

Published Weekly, Thursday by 4pm London Weekly, Thursday by 4pm London Weekly, Thursday by 4pm London Weekly, Thursday by 4pm London

Establishing a lithium benchmark

Despite the China ex-works battery grade carbonate price having the most

liquidity, we expect a seaborne delivered price to China, Japan and South Korea to

emerge as the benchmark

China leads the way


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China ex-works, $/kg

Biannual contracts, US/Europe, $/kg

Large contracts, packed in bags, CIF Asia, $/kg

• Despite the majority of business still being concluded on a long-term basis, Chinese spot prices have emerged as leading other global lithium prices

• Fastmarkets therefore believes an Asia-centric price will evolve as a global proxy for the lithium market

• There are two forerunners for this position – battery grade lithium carbonate and lithium hydroxide

Lithium liquidity: Lithium carbonate


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Lithium carbonate min 99.5% Li2CO3 battery grade, spot prices range, ex-works domestic China, yuan/tonne

Non-transaction Price points deals price Price Published

• Chinese spot prices have emerged as leading other global lithium prices

• Despite the Chinese domestic ex-works price having the most spot liquidity, Fastmarkets expects a delivered seaborne price will evolve to become the benchmark

Lithium Liquidity – Battery Grade Carbonate


• Despite lower liquidity than the domestic China price, lithium carbonate (cif China, Japan Korea) is a prime contender to emerge as the proxy benchmark

• Lithium carbonate currently remains a more liquid spot market than hydroxide, but this is expected to change in the future as the chemical composition of batteries evolves

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Lithium carbonate min 99.5% Li2CO3 battery grade, spot prices CIF China, Japan & Korea, $/kg

Non-transaction price points deals price Price Published

Lithium Liquidity - Hydroxide


• As battery compositions evolve we expect to see increasedlithium hydroxide consumption and this could also be a key benchmark for the lithium sector

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Lithium hydroxide monohydrate min 56.5% LiOH2O battery grade, spot prices CIF China, Japan & Korea, $/kg

Non-transaction Price points deals price Price Published

How we price lithium

Price assessment process

Robust Transparent

Replicable Transaction based

Auditable


Fastmarkets utilizes a standard methodology that has been successfully applied to various other battery raw materials markets, supporting the development of industry benchmarks such as our cobalt standard grade price

Robust methodologies, auditable pricing processes

Fastmarkets has no financial interest in the level or direction of its indices and assessments

• All Fastmarkets employees are required to adhere to a code of conduct and strict pricing guidelines.

• Full details of data inputs and calculations are stored in Fastmarkets’ electronic Markets Information Database and may be accessed for internal review and auditing purposes.

Fastmarkets aligns its pricing operations to the IOSCO principles for price reporting agencies

• International Organization of Securities Commissions • Principles cover governance and monitoring; quality, integrity and transparency of methodologies;

and accountability, including document pricing procedures and auditable processes.• In September 2018, Fastmarkets successfully completed an external assurance review for some

of its benchmark prices carried out by PwC.


Trade data:How it skews the picture

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Lithium price discovery vs Chinese trade statistics

Indexed MB Lithium Carbonate Battery & Technical and Industrial Grades Price

Indexed Chinese Customs Price as when released date

7 week lag

9 week lag

10 week lag

• The market is increasingly looking to index linked pricing mechanisms

• Prices using trade statistics derive a price from customs data

• This includes some spot business but also material delivered under fixed price contracts

• Trade data does not distinguish between lithium compounds

• Spot prices better reflect the fundamentals of the day and do not lag the market


Risk management


Market evolution

Ferrous Scrap

Alumina

Reference Pricing Benchmarks Exchange Contracts

Oil & Gas

Market maturity

Lithium

Cobalt Iron Ore 65%

Steel

Manganese Ore

Iron Ore 62%

Lithium

Bauxite

Met Coal

Copper Concentrates

Fastmarkets is working in conjunction with the physical market as pricing evolves to provide tools that facilitate physical market trading

Risk management benefits


• Accurate budgeting for raw material requirement costs

• Mitigates severe price volatility

• Enables inventory and trade financing

• Increased ability to commit to future sales prices

• The entire supply chain benefits from a transparent and accurate pricing mechanism

• Enables long-term strategic decisions to be made around procurement

• Access to lower financing costs – owing to banks viewing this as a lower risk

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Lithium Carbonate Spot Market (ex-works China)% Change

Charlotte Radford, minors, ores and alloys editor, Europe +44 20 7827 6463 / [email protected]

Jon Mulcahy, price development manager+44 20 7827 6480 / [email protected]

Will Adams, head of battery raw materials research+44 1886 833617 / [email protected]

For more details on lithium or our battery raw materials coverage please contact:

battery demand has changed the lithium market forever

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