Overview of Lithium Carbonate Market post CNY Holiday

SHANGHAI, Feb 3 (SMM) -  Since 2023, lithium prices have continued to decline against the background of cancelled NEV subsidies and high inventory of salt factories, in addition to production cuts and destocking activities of battery plants and car makers. The overall transactions in the lithium carbonate market were sluggish after the Chinese New Year (CNY) holiday.

Lithium salt factories began to offer quotations this week, but downstream buyers reduced their purchases significantly amid falling lithium prices. Although some traders were able to strike a few deals within the week, the transaction prices were far lower than the quotes of large manufacturers.

Here are some trades achieved this week.

A deal on more than 1,000 mt of battery-grade lithium carbonate was closed with a transaction price of 467,800 yuan/mt; less than 30 mt of battery-grade lithium carbonate were traded at 467,500 yuan/mt; the transaction price of a deal on industrial-grade lithium carbonate landed at 440,000 yuan/mt.

As for the market outlook, SMM believes that the prices of lithium salt will decline further.

On the supply side, the average operating rate of lithium salt manufacturers stayed high during the CNY holiday with only a few closed for maintenance. The weaker demand of downstream enterprises since mid-December last year, accompanied with a slowdown in the pick-ups, has resulted in high inventory of salt plants.

On the demand side, the cathode material plants had sufficient lithium salt stocks and finished product stocks, thus most of them had no intention of restocking raw materials. It is expected that the demand may improve in the middle and late February.

Beside, SMM survey shows that lithium salt plants were more reluctant to purchase concentrates when lithium salt prices inched lower. The prices of lithium raw ore were reduced slightly.

The price negotiations on the long-term orders between salt plants and downstream players are currently underway, but both seem unwilling to compromise.