Uncertainties Surround Post-Holiday Lithium Prices with Focus on Shipment Pace and Terminal Demand

SHANGHAI, Jan 13 (SMM) - Since 2023, lithium prices have been on the decline against the background of cancelled NEV subsidies as well as production cuts and destocking activities of battery plants and car makers. As the Chinese New Year holiday approaches, the trades of lithium carbonate have been thin. This week, some lithium salt factories suspended shipments and would not resume until the holidays end. The quotations in the market have decreased significantly, and some lithium salt factories still held optimistic market outlook. At the same time, the procurement of downstream buyers shrank substantially amid falling 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.

What about the prices in the wake of the holidays?

SMM believes that there are uncertainties surrounding the lithium prices in February. On the supply side, many lithium salt factories have high inventories, but they are divided on selling off to promote the sales or slowing down in making shipments in the future. On the demand side, auto makers and battery companies, who previously cut the production to destock at the end of December, are expected to gradually resume normal production in February. Besides, cathode material plants are expected to stock after the holidays as their inventories now stay at low levels. As for the exact shipping arrangements of lithium salt plants with high inventories, and the intensity of restocking on the expectations for recovering demand, it is not yet viable to confirm. SMM will continue to keep an eye on it. On the cost side, SMM survey shows that lithium salt plants were more reluctant to purchase concentrates when lithium salt prices were on a downward trend. The price negotiations on the raw materials have stagnated as lithium salt plants insisted on forcing down the prices.