Argentina's lithium carbonate reference value to have limited impact on Chinese imports: sources

The reference value for exports of lithium carbonate established by the Argentinian government has so far had limited impact on Chinese imports so far, market sources said June 6.

The General Directorate of Customs, or DGA, established reference values at $53/kg ($53,000/mt) of lithium carbonate for exports to Canada, the US, Hong Kong, South Korea, China, the Philippines, Japan, Taiwan and Thailand, according to a report released by Argentina's Federal Administration of Public Revenue, or AFIP, on May 30.

The measure is the result of joint work with the specialized areas of international taxation of AFIP to dismantle irregularities detected and investigated over the last two years in lithium carbonate exports, the AFIP report said. DGA aims to strengthens its capacity to control foreign trade and avoids under-invoicing maneuvers in sales abroad through this move.

According to an international producer, this meant that any shipments that were below $53,000/mt would have to be inspected by customs authorities and an explanation would have to be provided to justify the lower prices. Shipments would not be blocked but fines could be imposed as deemed appropriate, the source said.

"The aim of the reference value is actually to prevent sellers from avoiding tax evasion by declaring low prices with customs," a Chinese lithium chemicals producer said. "Hence, we don't see any impact of this announcement on the spot market in the near term."

Related blog: Is LFP still the cheaper battery chemistry after record lithium price surge?

Market sources also said that initially there was some misunderstanding surrounding the announcement, causing stock market losses for some lithium producers on May 30.

"I think overseas prices won't drop drastically following Argentina's announcement, though there's also not enough support for prices to go up that much more," a Chinese consumer of lithium carbonate said.

The source said prices likely had already peaked and would come down eventually on the expectation that more supply would enter the market soon as firms vie for lithium resources and continue to ramp up extraction efforts. Other sources said they felt prices would at least stabilize at current levels as downstream demand continues to expand.

While the announcement might not affect spot cargoes given that lithium carbonate has been trading well above $53,000/mt since Jan. 31, producers could face some issues shipping volumes under term contracts, which are typically priced much lower than spot deals or based on previous month averages, sources said.

Some sources said they felt the reference value could be adjusted in the future if lithium carbonate ends up trading much lower than $53,000/mt for an extended period, though the current value reflected the Argentinian government's confidence that high lithium prices would be sustained.

Argentina, home to some of the richest lithium reserves in the world, shipped more than 27,000 mt of carbonate abroad for $185 million in 2021. China's lithium carbonate imports from Argentina reached 3,300 mt in the first four months of this year, taking up 9.9% of the country's total carbonate imports, customs data showed.

Seaborne carbonate, hydroxide prices inch down

Seaborne lithium hydroxide prices continued to drop as Chinese suppliers lowered their offers in tandem with the exchange rate, as buyers overseas pushed for a readjustment given the recent correction in Chinese domestic prices.

Platts, part of S&P Global Commodity Insights, assessed lithium hydroxide flat on the day at $76,000/mt June 6, down $2,000/mt week on week. Lithium carbonate prices also fell to $74,000/mt, down $3,000/mt week on week.

The prices reflect the spot value of battery-grade material on a CIF North Asia basis, referring to deliveries to the main ports of China, Japan and South Korea. Lithium carbonate, however, was normalized to deliveries at the Shanghai port.

Despite the decrease, prices remained close to their record levels achieved in March, with very little volatility since then. Although supply remains tight, some market participants said there is little room for additional price increases in the coming weeks and months as downstream margins are considered unsustainable in the long term.