Lithium hydroxide market is expected to trend downwards in December due to falling supply and demand

December forecasts suggest that falling lithium hydroxide prices will challenge cost management for producers. Although spodumene price keeps falling, due to the higher costs from previous purchases, profitability remains low. Furthermore, with current lithium hydroxide prices lower than lithium carbonate and no reversal in sight, causticization smelters incur losses, leading to controlled production and shipments. Beyond key long-term contracts, many producers are cutting production or switching to lithium carbonate, thus lithium hydroxide supply is expected to keep shrinking.

Demand-side shows Q4 production slowing, with most battery cell factories cutting output. In December, some companies slightly increased orders for high-nickel ternary materials due to low stocks, but overall, demand, especially for Series 6, is down. Lithium hydroxide demand keeps falling. Downstream players likely to keep cautious buying amid oversupply, aiming for low inventories to minimize price decline risks.

In terms of supply and demand as well as market performance, the trend of dwindling lithium hydroxide inventories is set to continue into December, with prices expected to fall further, prompting producers to cut back or alter production. Smelters will reduce operations, focusing on inventory liquidation to ease year-end financial strains. Cathode material producers expect a sharp drop in future orders, leading to ongoing cuts in high-nickel output. Their cautious procurement of upstream lithium hydroxide will likely keep purchase volumes low. Considering December's downward supply and demand trends, industry lithium hydroxide inventories will likely keep slowly falling. High stocks won't quickly deplete, keeping the supply-demand situation slack. Battery cell companies' push for cheaper cathode materials may force cathode producers to seek cost cuts up the supply chain. In annual negotiations, there's a strong push for lithium hydroxide discounts, potentially driving prices down further.