• Chinese lithium prices fall on weak demand, bearish sentiment, weak futures
• East Asian lithium prices track downtrend in China
• European, US lithium prices mirror weakness in Asia
Sustained pressure on Chinese market
Spot demand for lithium salts in China’s domestic market remained limited over the past week, with consumers continuing to only purchase spot units on a hand-to-mouth basis amid a bearish outlook.
“We haven’t purchased spot lithium carbonate over the past week because our supply is well covered by our long-term agreements. In general, cathode producers dare not stock up while the lithium price downtrend is expected to persist,” a Chinese cathode producer source said.
Multiple sources told Fastmarkets that some of China’s cathode producers were operating on low lithium inventories – just about 2-3 days’ worth of production.
“Cathode producers’ lithium inventories are low and whenever they run out of lithium they just stock up in the spot market, but only in small quantities of several tens of tonnes. This way they can benefit from a rapidly falling market,” a Chinese lithium producer source said.
A second Chinese producer source said: “Amid such weak demand, lithium producers who have locked much of their output under long-term agreements are not that pressured to lower spot prices. But lithium producers who only have a small proportion of their output tied to long-term agreements are under much more pressure and they are more aggressive with the lowering of spot offers.”
Compared with the lithium carbonate market, the lithium hydroxide market was under even greater downward pressure, due to the more sluggish performance of the nickel cobalt manganese (NCM) battery sector in comparison with the lithium iron phosphate (LFP) battery sector.
“The NCM battery market is lifeless and there is barely any demand for lithium hydroxide. Therefore, the price for lithium hydroxide is not the matter, because with no demand, no one will buy the material however low the price is,” the second Chinese lithium producer source said.
Although traders are said to be offering battery-grade lithium hydroxide at 165,000 yuan ($22,586) per tonne or even lower, major Chinese lithium producers are still insisting on prices of around 180,000 yuan per tonne. Producer sources told Fastmarkets that the downward room for their prices were limited due to production costs still being high.
The weakness in China’s lithium carbonate futures market was also a major factor that contributed to the decline of lithium prices in the country over the past week, market participants said.
The most-traded January 2024 lithium carbonate futures contract on the Guangzhou Futures Exchange closed at 159,950 yuan per tonne on Thursday, down by 9,200 yuan per tonne from a closing price of 169,150 yuan per tonne a week earlier.
Fastmarkets’ weekly price assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 165,000-175,000 yuan per tonne on Thursday, down by 15,000 yuan per tonne from 180,000-190,000 yuan per tonne a week earlier.
Fastmarkets’ corresponding weekly price assessment of the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 160,000-180,000 yuan per tonne on Thursday, down by 10,000-20,000 yuan per tonne from 170,000-200,000 yuan per tonne a week earlier.
East Asian lithium prices fall further
Spot lithium prices in the wider East Asia region retreated further over the past week in response to the downtrend in China, with sources noting persistently weak spot demand due to consumers expecting prices to continue to fall.
“I’ve never seen a spot market as quiet as now,” a third Chinese lithium producer source said.
A fourth Chinese lithium producer source said: “We received some inquiries for battery-grade lithium hydroxide over the past week, but those were only to test where the prices have fallen to, and consumers expect prices to decrease further. Therefore, we are not issuing offers at the moment, until there is some confirmed buying interest.”
Multiple Chinese lithium producer sources told Fastmarkets that they were unable to further lower their prices for battery-grade lithium hydroxide despite the current downward pressure, saying high production costs were already squeezing their margins.
Multiple sources told Fastmarkets that there was even talk of South Korean consumers attempting to sell their lithium carbonate inventories back to the Chinese market.
“If the Korean consumers are selling back their lithium carbonate stock, they will definitely not buy any carbonate no matter how low the prices are,” the fourth Chinese lithium producer source said.
Fastmarkets’ daily assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $24.60-26.00 per kg on Thursday, down by $0.40-1.00 per kg from $25-27 per kg a day earlier, and $1.40-3.00 per kg lower than $26-29 per kg a week earlier.
Fastmarkets daily assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $25-29 per kg on Thursday, widening downward by $1 per kg from $26-29 per kg a day earlier, and down by $1 per kg from $26-30 per kg a week earlier.
Europe, US spot lithium prices continue freefall
Spot prices for lithium in Europe and the US fell across the board over the past week, with sources reporting that typical restocking that takes place at the beginning of the fourth quarter was yet to start while buyers continued to keep a cautious approach amid the downtrend in Asia.
“Buyers only inquire to test what level prices have reached, and I have a feeling they will start to actually buy only when prices will start to move upward again,” a distributor source active in Europe said.
A buyer of battery-grade lithium compounds active in Europe also said that he felt that there was no short-term tightness in the market at the moment and that if extra lithium units were needed outside of long-term commitments, supply was readily available for price negotiations.
Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price ddp Europe and US at $25-28 per kg on Thursday, down by $3-4 per kg from $28-32 per kg a week earlier.
Spot prices for technical-grade lithium in Europe and the US were also dragged down by the weak demand and bearish sentiment across the regions.
Keep up to date with the latest lithium prices, data and forecasts on our dedicated lithium price page.
