Chinese demand outlook pressures lithium prices to 2-year lows as battery makers still have plenty of inventory to draw down
- Lithium carbonate prices in China fall to almost half from June peak ahead of the Golden Week holidays
- Meaningful restocking has yet to materialise, as battery makers have plenty of inventory to draw down in the fourth quarter when demand typically rises
Lithium prices are spiralling down toward the lowest level in two years on concerns over the strength of Chinese demand for the material, a key ingredient in electric vehicle batteries.
Prices of lithium carbonate in China fell to 166,500 yuan (US$22,814) a tonne last Wednesday, ahead of the Golden Week holidays, a loss of almost half from the recent peak in early June. The decline has been precipitous. Less than a year ago, the metal reached a record of 598,000 yuan a tonne.
The slump has hammered lithium producers too, with the Sprott Lithium Miners ETF tumbling to the weakest since its inception in February, and Global X Lithium & Battery Tech ETF plunging to the lowest since 2020.
Demand for lithium typically picks up in the fourth quarter in China – the world’s largest EV market – because of strong battery cell production and installation, and manufacturers usually replenish their feedstock ahead of that.
But this year, that has not happened. Sizeable restocking has yet to materialise, said Susan Zou, an analyst with researcher Rystad Energy. Battery makers still have plenty of inventory to draw down, she said.