Lithium Carbonate Market Woes: Oversupply and Tariffs Trigger Price Downturn

Texas, USA: By the end of July 2024, Lithium Carbonate prices experienced a downward trend week-on-week due to abundant supply, lackluster electric vehicle sales, and a stagnant energy storage sector. Demand for lithium has weakened in key markets like the USA, Europe, and China. Factors such as inflation, high interest rates, range anxiety, insufficient charging infrastructure, and limited product options have dampened global expectations for EV sales, particularly in the U.S. and Europe. The increasing supply of spodumene from Africa is adding additional pressure to the lithium market. Several major Chinese lithium Carbonate  producers, including Huayou Cobalt, Chengxin Lithium, Yahua Lithium, and Sinomine, have launched vertically integrated lithium mining projects in Zimbabwe.

In recent years, Lithium Carbonate producers have rapidly expanded capacity and sought new reserves, raising expectations of oversupply due to battery gluts fueled by government subsidies. Additionally, Chile, the world's largest lithium producer, plans to double its output over the next decade. Meanwhile, China is facing a wave of tariffs from Western nations, including the U.S. and the EU, which could significantly reduce EV imports to the country. According to the Kiel Institute for the World Economy, a 20% tariff imposed by the EU could decrease Chinese EV imports by 25%. While increased production in Europe might partially compensate for this shortfall, European carmakers may still struggle to meet the demand.

According to the data from ChemAnalyst, the assessment for Lithium Carbonate Battery Grade DDP USGC stood at USD 12600 per tonne.

Headwinds faced in the past were primarily due to China’s lithium supply glut which was worse than ever. The output is anticipated to grow by nearly 40%, causing a steeper downtrend in the prices of Lithium Carbonate. According to industry experts, China’s domestic production of Lithium Carbonate is presumed to reach 650,000 tons. With increased supply anticipated in the second half of the year, Lithium Carbonate prices could reach their lowest levels of the year in the global markets.

Lithium Carbonate’s recovery has been hampered by oversupply, weaker-than-expected electric vehicle sales, and a sluggish energy storage sector. The global market is currently experiencing a surplus of 180,000 tonnes of Lithium Carbonate equivalent. This surplus is largely due to a production increase over the past few years, spurred by historically high prices.

In Mainland China alone, production rose to 275,000 tonnes, while Chinese operations in Africa and South America contributed an additional 30,000 tonnes. Although China is the third-largest producer of lithium annually, it dominates the refining segment, allowing it to exert significant influence over global pricing dynamics. Regional markets share similar pricing constraints, with Chinese lithium prices setting the trend for global prices. China, which controls 70% of the world's lithium refining capacity, is the largest consumer globally and hosts the most active spot lithium market.

As per the ChemAnalyst database, the upcoming weeks for Lithium Carbonate are presumed to remain unfavorable, and a further decline in the prices is anticipated.