Spodumene market rises following GFEX rally on production cut reports

Spodumene prices rose on Wednesday September 11 after reports of a potential production suspension in China’s Jiangxi province drove up lithium carbonate futures prices on China’s Guangzhou Futures Exchange (GFEX)

Multiple sources told Fastmarkets that a lepidolite and lithium producer has suspended their lepidolite production.

Lepidolite, which can be refined into battery grade lithium salts, is often considered a swing source of production within the lithium industry.

The most active 2411 (November) lithium carbonate futures contract on GFEX closed at 78,450 yuan ($10,815) per tonne on Wednesday, up by 5,550 yuan per tonne, or 7.61%, from the day’s opening price of 72,900 yuan per tonne.

The lithium carbonate futures price surge on GFEX attracted market participants to hedge lithium carbonate prices amid the price uptrend, multiple sources said, and prompted a rise in activity and prices for spodumene.

“We were approached by multiple buyers of spodumene following the surge on GFEX. The market is very active,” a Chinese trader said.

Fastmarkets’ daily assessment of the spodumene min 6% Li2O, spot price, cif China was $720-770 per tonne on Wednesday, up from $700-750 per tonne on Tuesday.

“Spodumene prices are closely linked to lithium carbonate prices. And spodumene prices are rising today [Wednesday], with both offers from the sellers and bids from the buyers lifted by the GFEX surge,” a Chinese market participant said.

Buyers were looking to acquire spodumene for lithium carbonate production and to sell forward lithium carbonate contracts on GFEX to arbitrage, sources said.

Spodumene prices rose briefly after the result of a spodumene auction on 28 August, but otherwise prices have been steadily declining since May, driven by oversupply and bearish sentiment.

Persistent oversupply

China’s lithium prices have been on a general downtrend throughout 2024 due to weak demand and oversupply.

Some sources expect 5,000-6,000 tonnes per month of lithium carbonate supply to be lost if the production suspension is confirmed, which would ease the oversupply. But with market inventories around 130,000 tonnes, according to a trader, the impact is not enough to reverse oversupply, said Chandler Wu, Fastmarkets senior analyst for battery raw materials.

“We think the halt of production would change the periodic degree of oversupply rather than oversupply itself,” Wu said.

“As we mentioned in the Fastmarkets Tracker last week, pressure on Chinese producers was likely to grow after the forward curve on GFEX prices flattened. It appears too much forward selling has flattened the curve, and without the ability to sell forward, taking advantage of the contango to cover the cost of carry until the hedges become prompt may force producers to rein in production,” he added.

Despite the rise in spodumene prices today, battery grade lithium carbonate and lithium hydroxide CIF prices for China, Japan and Korea remained unchanged.

Fastmarkets’ daily price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $9.20-11.00 per kg on Wednesday.

And Fastmarkets’ daily price assessment for lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was stable at $9.80-11.50 per kg on Wednesday.

“It could take months to see a reaction in prices. We need more companies to cut production,” a European trader said.

US-based lithium producer Albemarle is said to be holding an auction for spodumene concentrate on Friday September 13, according to sources. Market participants will play close attention to what the result of the auction will be amid the surge on the GFEX, Fastmarkets heard.

Gain a competitive edge with our spodumene pricesTalk to us about our market-reflective spodumene prices, data and analysis

What to read next
Despite falling prices, three Brazilian lithium plants – owned by Sigma Lithium, Companhia Brasileira de Lítio (CBL) and AMG Lithium – are seeking to expand their operations in the coming years, in order to become more competitive in the global market, Fastmarkets heard during the “Lithium Business Brazil” event held July 8-10 in the state of Minas Gerais.
The government of Finland was ramping-up support for its burgeoning battery materials supply chain through grants for facilities owned by Easpring Finland New Materials and Fortum Battery Recycling, the firms said on Thursday July 10.
In the weeks following confirmation that the cobalt market will face an additional three months of no exports from the Democratic Republic of Congo (DRC), metal prices have consolidated as participants point to the future for bullish sentiment.
Despite the current headwinds, strategic partnerships and continued investment in the right areas, coupled with the underlying strong long-term demand fundamentals, will pave the way for success for lithium producers, according to the participants of the executive panel during the Fastmarkets Lithium Supply and Battery Raw Materials Conference, which took place from June 23-26 in Las Vegas, Nevada.
The US needs well-defined and stable policy around critical minerals, energy transition and trade, while derisking projects and maintaining good relations with other countries to be able to establish sustainable electric vehicle (EV) and energy storage systems (ESS) supply chains in North America, according to industry experts.
The US and Europe must adopt long-term, consistent policies and should learn lessons from China, according to lithium industry experts speaking at Fastmarkets’ Lithium Supply and Battery Raw Materials Conference in Las Vegas, US, over June 22-25.