Behind the lithium carbonate futures falling below 100,000 yuan/ton: the exchange investigates the operating conditions of lithium companies The spot price is in a stalemate
Every reporter: Xu Shuai Every editor: Yang Xia
Lithium carbonate futures prices fell sharply again, with the "LC2401" contract falling 7% on December 5, down more than 40% since November 1. At present, the "LC2401" contract has fallen below the 100,000 yuan/ton integer mark, and the "LC2402" and "LC2403" contracts have fallen below 90,000 yuan/ton.
The lithium carbonate futures contract LC2401 has been falling for several months. Image source: Screenshot from Wind
The reporter of "Daily Economic News" exclusively learned from some listed lithium companies that in the context of lithium price fluctuations, some lithium companies received a written survey questionnaire from the Shenzhen Stock Exchange last week, mainly to investigate the operation of enterprises and countermeasures. Some lithium companies said that the spot market is not as fierce as the futures market, but it has fallen into a stalemate of 110,000 yuan/ton and 120,000 yuan/ton prices.
The futures open interest is not equal to the delivery volume
Today (December 5), lithium carbonate futures fell sharply again, with the "LC2401" contract falling 7%, down more than 40% since November 1. On December 4, the "LC2401" contract fell below the psychological integer mark of 100,000 yuan/ton. However, the integer mark is also difficult to stop the downward trend of lithium carbonate futures prices, and the "LC2402" and "LC2403" contracts have even fallen below 90,000 yuan/ton.
At the time of the sharp fall in lithium carbonate futures, the online "small composition" is also spreading. There is a saying that "the current position of 'LC2401' is 145,300 lots, 1 ton per lot." If there is a similar CATL (300750. SZ, share price 158.81 yuan, market value 698.612 billion yuan) This kind of spot long entry sweep and other delivery, short expiration needs to give 143,000 tons of goods. According to the 5-day average price, the market value is close to 15 billion. What is the current national inventory? 62,000 tons. There is a gap of 80,000 tons, and now the inventory of all upstream and downstream enterprises is maintained at the minimum inventory of about a week."
However, after multiple interviews with the reporter of the "Daily Economic News", it was learned that the statement was considered to have misread the delivery rules of lithium carbonate futures, and the number of positions is not equal to the full delivery, and the registered warehouse receipts can be used for delivery. An industry insider familiar with lithium carbonate futures said that entering the delivery month of lithium carbonate futures, there will be restrictions on the position of trading entities. Natural person customers do not have the delivery qualifications, and the positions cannot enter the delivery month, and they need to close their positions before the last trading day of the month before the delivery month, otherwise they will be forced to close their positions. Starting from the 15th trading day of one month before the delivery month, the position limit of lithium carbonate futures contracts for non-FF members, OSNBPs and clients is 1,000 lots. At the end of the delivery month, the position limit is 300 lots. In the normal month of non-delivery month, if the total number of unilateral positions is greater than 30,000 lots, the above position limit is 10% of the total amount, and if it is less than 30,000 lots, it is limited to 3,000 lots.
The secretary of the board of directors of a lithium company told reporters that the futures holding institutions are scattered, and if there is not enough lithium carbonate for delivery, they may buy the supply to close the position. Even so, the cost of shorting and not delivering is not borne by a single institution, and there is no single short hand delivering 143,000 tons of lithium carbonate at one time.
Image source: Daily Economic News data map
Recently, the Guangzhou Futures Exchange has adjusted the trading limits and handling fees of lithium carbonate futures contracts several times in a row. On November 24, the Guangzhou Futures Exchange announced that starting from the trading on November 28, 2023, non-FF members or clients shall not open more than 10,000 contracts in each lithium carbonate futures contract in a single day. On November 30, the Guangzhou Futures Exchange announced that starting from the trading on December 4, 2023, the intraday closing transaction fee standard of the lithium carbonate futures LC2401 contract will be adjusted to 0.8/10,000 of the transaction amount. On the evening of December 4, the Guangzhou Futures Exchange announced that from the trading time on December 6, 2023, the trading fee standard for lithium carbonate futures LC2401 contract will be adjusted to 3.2/10,000 of the transaction amount, and the transaction fee standard for closing the position within the day will be adjusted to 3.2/10,000 of the transaction amount. Starting from trading on December 6, 2023, non-FF members or clients may not open more than 2,000 lots of lithium carbonate futures LC2401 contracts in a single day.
On December 4, the Guangzhou Futures Exchange issued a document to adjust the trading fee standard of lithium carbonate futures LC2401 contract. Image source: Guangfu official website
However, it should be noted that lithium carbonate futures have not yet "moved to the month", and the "LC2402" contract position has not increased significantly, with a position of 19,645 lots. At the same time, the price of "LC2402" and "LC2403" lithium carbonate futures contracts has fallen below the integer mark of 90,000 yuan/ton.
The exchange investigates the operation of lithium companies
Lithium industry insiders said that the total social inventory of lithium carbonate is lower than the open interest, but the spot market is far less intense than the futures market. According to SMM data, the total monthly inventory of lithium carbonate downstream plus smelter inventory in October was about 45,917 tons, and the upstream inventory was higher than the downstream inventory. The general manager of a large lithium company who did not want to be named said that the inventory also includes the battery end, plus the lithium carbonate inventory of cathode materials, the real lithium carbonate inventory is less than 20,000 tons in China, plus some overseas, it should be more than 40,000 tons.
Image source: Visual China
The vice president of a listed lithium company also mentioned a strange phenomenon to reporters, the spot market of lithium carbonate of 110,000 yuan/ton and 120,000 yuan/ton "no one wants and no one sells". A number of lithium industry insiders said that the spot price of lithium carbonate has little correlation with the futures price, although the futures market is fierce between the long and short sides, but the spot price is not as low as the futures price, and the trading volume is not as active as the futures market. The general manager of the above-mentioned lithium company said that the futures market mainly affects the inventory demand for lithium carbonate, and there is a lag effect on the impact on prices.
"I think it's a bit like the state in April this year, the downstream thinks that the price will continue to fall, and then the upstream doesn't want to sell this price, and it's very stalemate. The secretary of the board of directors of the above-mentioned lithium company said that the price of lithium carbonate fell to 80,000 yuan/ton, not only 1/3 of the lithium companies lost, "as long as it is purchased lithium concentrate, I estimate that it is at a loss, although some overseas imported spodumene concentrate has now fallen to 1,000 US dollars / ton." If the proportion of 1 ton of lithium carbonate extracted from 7 tons of lithium concentrate is used, the cost of this part of the purchased concentrate is still about 50,000 yuan/ton. However, judging from the information it understands, the lithium price has now touched some high-cost production margin enterprises, mainly mica to extract lithium, and there is still no large-scale reduction in domestic spodumene lithium extraction.
The reporter of "Daily Economic News" exclusively learned from industry insiders that affected by the continuous sharp decline in lithium carbonate futures prices, the Shenzhen Stock Exchange has investigated the operation of some lithium companies in the recent period, and some listed lithium companies have received a questionnaire. "Mainly asked about the perception of the industry and the company's response, as well as suggestions for the relevant departments. A person from a lithium company who received the questionnaire said. Another lithium company mentioned that it mainly communicated the current operation of the company, and also informally informally inquired about the impact of the sharp drop in (lithium carbonate) prices on the company.
Tianqi Lithium (002466. SZ, share price of 51.13 yuan, market value of 83.916 billion yuan) and other leading lithium companies talked about the impact of lithium prices through the investor interactive platform last month, saying that they would formulate corresponding production and operation strategies in combination with market fluctuations, comprehensively consider the inventory of raw materials and products, market conditions, customer orders and delivery, the company's factory capacity release and other factors, and reasonably plan the company's lithium concentrate procurement rhythm and the production rhythm of the company's own factories and foundries in the future. Yahua Group (002497. SZ, share price of 12.54 yuan, market value of 14.453 billion yuan) also mentioned that production will be adjusted according to market demand.
The sluggish lithium price may still be affected by expectations, one is the expectation of an increase in global lithium carbonate supply, and the other is that the demand in the fourth quarter did not exceed expectations, and the first quarter of next year will usher in the traditional off-season of new energy downstream. According to the Power Battery Innovation Alliance, the total output of power and energy storage batteries in mainland China was 77.3GWh in October, a slight decrease from the previous month. According to SMM (Shanghai Nonferrous Metals Network), the operating rate of ternary materials and lithium iron phosphate remained at 45% and 44% respectively in November, and the two figures were 44% and 53% in October.
The reporter noted that despite the low price of lithium, the momentum of Chinese-funded enterprises in overseas mines has not decreased. According to Xinhua News Agency, at the end of November, Zimbabwean President Emmerson Mnangagwa also attended the completion and commissioning ceremony of the upgrading project of Zimbabwe's largest lithium mine, Bikita Mine. Zimbabwe has the highest level of lithium mining in Africa and is also one of the countries with the most lithium mines.
The President of Zimbabwe attended the commissioning ceremony of the Chinese-funded lithium mine. Image source: Xinhua News Agency
"But the volume of Zimbabwe's mines is not suddenly increased, and there is also time for mine ramp-up and equipment commissioning, and the overall feeling is not so fast. A lithium industry person returning from Zimbabwe said.
National Business Daily