Core Viewpoint - The price of lithium carbonate has surpassed 170,000 yuan per ton, with a significant increase in both futures and spot markets, indicating a shift in trading methods and the re-emergence of sales agreements in the industry [3][4][5]. Group 1: Price Trends - On January 13, the main contract for lithium carbonate futures on the Shanghai Futures Exchange hit a limit up, reaching 174,060 yuan per ton, with a cumulative increase of over 40% this month [3]. - The highest market price for battery-grade lithium carbonate exceeded 160,000 yuan per ton on January 13, continuing to rise from the previous trading day [4]. Group 2: Sales Agreements - Recent signals indicate that sales agreements, which were prevalent during the last upcycle and quiet during the downcycle, are making a comeback [6]. - Sales agreements typically grant buyers priority procurement rights for a certain percentage or all output from a project, with stricter performance obligations [7]. - The essence of sales agreements is not about lower prices but about greater certainty regarding supply [9]. Group 3: Characteristics of Sales Agreements - The strength of certainty in sales agreements is reflected in three aspects: higher coverage ratios, stronger rights, and flexible pricing mechanisms [10][11]. - A recent example includes a binding 10-year sales agreement between Lilac Solutions and Traxys North America for 50,000 tons of lithium carbonate, covering 100% of Lilac's planned capacity [12]. Group 4: Domestic Developments - Leading domestic lithium companies are also showing movements towards sales agreements, particularly in financing and asset integration transactions [13]. - Ganfeng Lithium announced a financial support agreement with Lithium Argentina, which includes a sales agreement for 6,000 tons of lithium carbonate equivalent [14]. Group 5: Market Dynamics - The current cycle shows that sales agreements are not only occurring at the resource end but also in demand-side strategies, as companies seek to manage risks amid rising costs [16][17]. - The return of sales agreements often coincides with periods of supply uncertainty and rising prices, as seen in previous cycles [18]. Group 6: Future Supply and Demand - The market is experiencing a shift in supply and demand expectations, with predictions of a potential shortage in 2026 amid strong growth in energy storage demand [20]. - The anticipated increase in lithium demand for energy storage is projected to grow by 71% in 2025 and an additional 55% in 2026 [20]. Group 7: Implications of Sales Agreements - The re-emergence of sales agreements may compress liquidity in the spot market, making prices more susceptible to marginal transactions [23]. - The arrangement of locking quantities without locking prices could redistribute risks and profits along the supply chain, with upstream securing sales and downstream providing financing support [24]. - When sales agreements are embedded in financing and asset integration terms, they evolve from procurement arrangements to transaction pricing, pushing the industry towards further integration and capitalization [25].