China’s lithium prices continue to tumble amid falling futures and muted demand

The East Asia market tracked the downtrend in China, with spot demand in the region similarly weak, sources said.

Downward pressure on China‘s spot lithium prices

The ongoing rapid decline in lithium carbonate futures contract prices continued to apply great downward pressure on China’s spot lithium prices over the recent week, multiple sources told Fastmarkets.

The most-traded January 2024 lithium carbonate futures contract on Guangzhou Futures Exchanged closed at 106,200 yuan ($15,003) per tonne on Thursday, down by 18,600 yuan per tonne from its close at 124,800 yuan per tonne a week earlier.

“We, along with many major lithium producers, are no longer offering spot lithium salts because spot demand is muted and spot prices are too low. We are only delivering regular long-term orders,” a Chinese lithium producer source said. “Some traders are offering lithium carbonate at competitively low prices, but they will recoup the loss from the spot sales with their positions in the futures market. For majority of major producers, they won’t sell at similar price levels due to no margins.”

Given that spot lithium prices were still on a fast downtrend, caution among market participants intensified, with buyers opting to remain watchful until prices stabilize before resuming spot purchases.

On the other hand, consumers also continued to destock in the year end to avoid holding excess inventories for better performance in their annual financial reports, which further undercut any potential spot demand, sources told Fastmarkets.

A major Chinese brine producer reportedly offered discounts on large amounts of technical grade lithium carbonate to boost sales during the recent week, which further weighed down spot lithium prices, sources said.

“Lithium inventory levels across the supply chain seem to be still pretty high, especially for lithium hydroxide in China, which explains downward pressure on lithium prices and somewhat lower hydroxide prices versus carbonate prices in China,” an international consumer source said.

Fastmarkets’ weekly price assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 106,000-125,000 yuan per tonne on Thursday, down by 10,000-17,000 yuan per tonne from 123,000-135,000 yuan per tonne a week earlier.

Fastmarkets’ weekly price assessment of lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 112,000-120,000 yuan per tonne on Thursday down by 8,000-10,000 yuan per tonne from 120,000-130,000 yuan per tonne a week earlier.

East Asian spot lithium prices have remained on the downtrend in recent weeks

East Asian spot lithium prices remained on a downtrend over the recent week, tracking the weakness seen in China’s domestic market. Demand in East Asia maintained its sluggishness, with consumers relying on long-term deliveries, sources said.

“We haven’t done any spot deals recently and have been just delivering our long-term orders. We approached some consumers and offered spot units but they didn’t buy [because] are wary of their inventory levels at the year end,” an international lithium producer source told Fastmarkets.

An East Asian consumer source noted that some Chinese lithium producers still sat on large lithium hydroxide inventories. Therefore “the bargaining process wasn’t too difficult,” the source said.

Multiple Chinese lithium producers sources told Fastmarkets that they had only been delivering long-term orders over the recent week.

“The inventory levels of battery packs and cathodes are high in East Asia, and some battery and cathode producers are running on low operation rates due to insufficient orders from downstream automotive producers,” a second international lithium producer source said. “Some consumers even stopped picking up long-term deliveries [altogether].”

Fastmarkets’ daily price assessment of the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $18.00-19.00 per kg on Thursday, unchanged from a day earlier, but down by $1.00-1.50 per kg from $19.00-20.50 per kg a week earlier.

Fastmarkets’ daily assessment of the lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $18.00-19.00 per kg on Thursday, unchanged from a day earlier, but down by $1.00-1.50 per kg from $19.00-20.50 per kg a week earlier.

Keep up to date with the latest lithium prices, data and forecasts on our dedicated lithium price page.