Chinese lithium prices soften further amid bearish sentiment

Lithium prices continued to lose ground to mirror China’s domestic market. The typical lull ahead of the peak summer holiday period also contributed to the softening of prices globally, sources said.

• Chinese lithium prices fall on cautious sentiment, weak demand• East Asian lithium prices track Chinese weakness• Europe, US spot demand weakens ahead of peak summer holiday period

Market participants noted a quiet lithium market in China, saying there was barely any spot transaction or even offers for lithium salts.

This resulted from consumers taking a cautious approach.

Market participants expect prices to trend downward further in the near future.

“There’s no news that can support the spot market. In the meantime, the January lithium carbonate futures contract on the Guangzhou Futures Exchange has been hovering slightly below 230,000 yuan per tonne this week. Market participants widely expect spot prices to fall to that level in the run-up to January. There is still room for current spot carbonate prices to fall,” a Chinese lithium trader said.

A Chinese lithium producer source echoed the view, citing the existing spread between spot prices and futures as a factor that contributed to the bearish sentiment.

A second Chinese lithium trader said: “The stronger the bearish sentiment is, the smaller the buying appetite becomes, because consumers fear that they miss out on further price decreases.”.

In addition, there is talk that a few major Chinese battery producers planned to lower their battery production in August, which sources attributed to the subdued appetite for spot lithium salts among Chinese cathode producers.

“Cathode makers in China are relying on long-term supply or supply provided by their customers, as the cathode producers struggle to shift the high production cost from lithium prices to their customers,” a second Chinese lithium producer source said.

A third Chinese lithium trader said: “The lithium hydroxide market is extremely weak amid the lifeless nickel cobalt manganese (NCM) cathode sector. It’s not a matter of prices anymore.

“With no demand, consumers will not buy spot materials however low the spot prices are.”

Market participants noted the ample supply of lithium in the current market, which puts more pressure on prices.

Fastmarkets’ weekly assessment of the lithium carbonate, 99.5% Li2CO3 min, battery grade, spot price range exw domestic China was 250,000-270,000 yuan ($34,816-37.602) per tonne on Thursday, down by 10,000 yuan per tonne from 260,000-280,000 yuan per tonne a week earlier.

Fastmarkets’ weekly assessment of the lithium hydroxide monohydrate, LiOH.H2O 56.5% LiOH min, battery grade, spot price range exw domestic China was 240,000-270,000 yuan per tonne on Thursday, down by 10,000-20,000 yuan per tonne from 260,000-280,000 a week earlier.

Spot lithium prices in the East Asian market also trended downward over the past week amid a summer lull, while ongoing weakness in the Chinese market also added to the pressure, sources told Fastmarkets.

“On the lithium chemical front, there is currently very little spot activity or appetite among buyers,” an international lithium producer source said. He expects more buyers to come back to the market over the next few weeks.

An East Asian consumer source told Fastmarkets that it had enough stock of lithium hydroxide and would not be purchasing spot material until the end of August.

A fourth Chinese lithium trader noted muted spot demand for lithium salts from two major battery producers in East Asia.

In the meantime, market participants said that the weakness in the Chinese market was affecting lithium hydroxide prices more than those for lithium carbonate in East Asia since the former fell lower than the latter in China.

“In China’s domestic market, hydroxide prices are lower than those for carbonate. So the weak Chinese market is weighing on hydroxide prices more than carbonate prices in East Asia,” the fourth Chinese lithium trader said.

Fastmarkets’ daily assessment of the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea was $37.00-40.00 per kg on Thursday, unchanged from a day earlier, but down by $0.50-3.00 per kg from $37.50-43.00 per kg a week earlier.

Fastmarkets’ price assessment of lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea was $36-39 per kg on Thursday, unchanged from a day earlier, but down by $1-2 per kg from $38-40 per kg a week earlier.

Lithium spot prices in Europe and the United States continued to lose ground across the board, taking the cue from the East Asia market while also accounting for the seasonal slowdown in consumer demand in the region due to the typical summer lull.

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price ddp Europe and US at $38-41 per kg on Thursday, down by $1 per kg week on week. Prices have fallen by 12.08% since June 22 when they were at $43-48 per kg.

Fastmarkets assessed the lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price ddp Europe and US at $39.00-42.00 per kg on Thursday, down by $0.50-3.00 (4.14%) week on week. Prices are down by 22.85% since June 22 when they were at $51-54 per kg.

An intermediary source said the market was very quiet in Europe at the moment and that price differences with the East Asian market were minimal due to intense competition to sell units amid a sluggish demand.

“Buyers have more bargaining power at the moment,” the same intermediary source said.

A buyer active in the European region said that the softening of the market was noticeable although there was still some buying activity at a premium to current spot prices such as small quantities delivered to grease manufacturers that did not have same purchasing power as battery value chain participants in East Asia.

“[Lithium] carbonate remains very competitive at the moment with a good amount of traded product coming from traders in the Netherlands,” the buyer source said.

A lithium producer source active in the global market agreed that the market was indeed experiencing a seasonal lull. The source expects trading activity to pick up toward the end of the summer.

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