Chinese lithium prices continue to fall on low demand

Chinese lithium prices extended their downtrend over the week to Thursday January 5, under pressure from persistently thin buying appetite, and other global markets followed the same downward trajectory

Lithium prices continued their downtrend last week, with reduced buying appetite, with other global markets also following the same path.

  • Chinese lithium prices lower on weak demand
  • Seaborne lithium prices down amid Chinese weakness, limited activity
  • European spot prices track global bearish trend stemming from China
  • Spodumene prices down on weaker lithium prices

Fastmarkets’ assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range, exw domestic China, was 490,000-520,000 yuan ($71,032-75,381) per tonne on January 5, down by 10,000-20,000 yuan per tonne from 500,000-540,000 yuan per tonne a week earlier.

The assessment of the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range, exw domestic China, was 490,000-520,000 yuan per tonne on Thursday, down by 20,000-30,000 yuan per tonne from 510,000-550,000 yuan per tonne a week earlier.

Market participants noted that some cathode producers had taken holiday and suspended production due to thin order books for January, which kept the demand for lithium salts at a low level.

“Cathode makers are relying on their long-term supply at the moment,” a Chinese lithium trader said. “So spot trading continues to be muted this week.”

While market participants expected lithium prices to stay on a downtrend in the near term, this further curbed any potential buying appetite from consumers.

“I don’t see any hope for improvement in the demand for lithium, at least before the Chinese New Year holiday [January 21-27]. And the spot market should be even less active next week, when domestic transport comes to a halt,” a second Chinese lithium trader said.

“Consumers are mostly watchful since they expect prices to edge even lower,” a Chinese lithium producer source said. “So they are in no hurry to confirm any orders now.”

Amid such expectations and the thin demand, some traders continued to reduce their offer prices to boost sales before any further weakness in lithium prices became apparent, market participants said.

But the market expected that more spot activity after the Lunar New Year holidays are over because they also expected a round of restocking of lithium salts among cathode producers, after destocking for two months.

Seaborne East Asia lithium prices lower

Spot lithium prices in the seaborne East Asian market trended lower over the past week, with market participants citing downward pressure from the continuing weakness in the domestic Chinese lithium market.

“The Chinese market has been softening for weeks, and the spread between lithium prices in East Asia and in domestic China has been widening. Seeing this, the consumers expect seaborne lithium prices to follow suit,” a second Chinese lithium producer source said.

But the spot market remained quiet, with little activity reported, especially right after the New Year holiday. Multiple lithium producer sources told Fastmarkets that they did not make any offers over the past week.

Market participants noted that Japanese and South Korean consumers were primarily relying on long-term supplies and expected that the spot market would remain quiet until the Lunar New Year holiday was over.

“My customers told me recently that they do not have any plans to purchase spot material,” a third Chinese lithium producer source said.

Fastmarkets’ daily assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices, cif China, Japan & Korea, was $78-80 per kg on Thursday. This was unchanged since Tuesday, but down by $1 per kg from $79-81 per kg last Friday, when the price had held steady since December 22.

The corresponding assessment of the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea, was $83-84 per kg on Thursday, unchanged since last Friday, but narrowing downward by $1 per kg from $83-85 per kg a week earlier.

Europe, US spot prices follow downtrend

Spot lithium prices in Europe and the US edged lower in the first week of 2023, following the global downtrend in lithium prices stemming from the more liquid domestic Chinese market, sources said. The only exception remained the lithium hydroxide technical grade spot price, supported by the continuing tight availability.

“I believe lithium technical grade hydroxide prices have the potential to get even firmer, due to the tight supply and unavailability of Russia-sourced material,” a distributor active in Europe and Asia said.

Spodumene prices lower on softer lithium prices

The spot market for spodumene concentrate has remained quiet over the past two weeks, with minimal activity reported.

But market participants said that, due to the weakness in the lithium market, especially in China, spodumene prices were under downward pressure.

In addition, since Chinese lithium prices were expected to edge even lower in the near term, by the time they could sell lithium salts produced from the spodumene purchased now, lithium prices may have further weakened from the current level, market participants said.

This further fuelled the caution among Chinese lithium producers about securing spodumene at high prices, Fastmarkets heard.

Fastmarkets’ fortnightly assessment of the price for spodumene, min 6% Li2O, spot price, cif China, was $7,900-8,200 per tonne on January 5, down by 1.22% from $8,000-8,299 per tonne two weeks earlier.

Keep up to date with the latest news and insights in the lithium market by visiting our dedicated lithium page.

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