CATL’s Lithium Partner Lopal Sees Swings in Near-Term Prices

(Bloomberg) -- Jiangsu Lopal Tech Co., a Chinese battery-material producer, said the lithium market will be volatile in the near term as supply growth outpaces demand.

Prices of the material key to electric vehicles and energy storage could swing between 65,000 yuan ($9,000) and 85,000 yuan a ton in the short term, Chairman Shi Junfeng said in an interview Friday. 

The Nanjing-based manufacturer of lithium-iron phosphate (LFP) cathode materials has partnered with Contemporary Amperex Technology Co. Ltd. in a domestic lithium refinery, where production has restarted in Jiangxi despite weak prices.

Lithium’s roller-coaster ride in recent years highlights the volatility of the green technology amid an energy transition that has faced setbacks. A massive expansion of global mining capacity is also weighing on the industry. Lithium is currently trading around 73,000 yuan a ton in China, down from its peak less than three years ago of nearly 600,000 yuan.

“The lithium market is still in surplus, and refiners including our project could be under a bit of pressure,” Shi said. “But for the entire supply chain, the biggest pain point for the industry is overcapacity and vicious competition.”

In the medium term, prices will rise and stabilize at about 100,000 yuan a ton, Shi said. That’s the level needed for the battery recycling industry to develop, ensuring supplies that will be environmentally friendly and help with market balance in the long term, he said.

In addition to CATL, Lopal’s other customers include LG Energy Solution Ltd., Sunwoda Electronic Co. and EVE Energy Co. The firm operates an LFP cathode materials plant in Indonesia to supply markets outside of China, and is planning to expand capacity from 30,000 tons annually to 120,000 tons. It’s also looking at locations for a second overseas plant, Shi said, with an announcement likely coming later this year.

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