Amidst Demand-Supply Mismatch, the Chinese Lithium Carbonate Shows a Double-Digit Increase Towards December-End

Amidst strong demand and limited supply throughout the domestic markets in China, the pricing trend of Lithium Carbonate showcased a continuous increment during the month of December. As per ChemAnalyst, Lithium Carbonate Ex-works prices in China have escalated from USD 33800/MT to USD 38200/MT, up by about 13.01% between 17th December to 27th December. Soaring prices in the Chinese Lithium market were not only driven by tightened supply and the strong downstream demand but also rapidly increasing feedstock costs.

The prices of metals skyrocketed in 2021 due to the disruption in global supply amid huge demand. According to market sources, the spike in Lithium Carbonate prices came on the back of an increase in the production of LFP (Lithium Iron Phosphate), which utilizes lithium carbonate as opposed to other types of Lithium-ion batteries. Prices for technical grade Lithium Carbonate have also soared significantly as consumers are utilizing it to produce Lithium Hydroxide.

Continuously increasing demand for Electric Vehicles (EV) due to their high sales is primarily a significant reason behind the huge rise in Lithium Carbonate prices. EV sales have surged mainly in China, the US, and Europe by more than 100% during the H1 2021, with Beijing accounting for 12% of the  sales. As per industry leaders, EVs are highly sensitive to the price of lithium batteries, hence there are strong indications of  buying resistance ahead. As per Chinese quotations, prices of some lithium battery materials have risen effectively in Q4 of 2021 triggered by the demand for stocking at the end of the year. In the long run, it is somewhat certain that demand will continue to exceed next year, and lithium prices are expected to continue to hit new highs.

What lies ahead?

According to ChemAnalyst, the prices of Lithium Carbonate are expected to remain high in 2022, and the price turning point will not appear in the near term. As per market players, the lithium salts price centre in 2022 is anticipated to be significantly higher than 2021, which will further increase the performance of lithium sector companies significantly. The players with a high self-sufficiency rate of lithium mines and a high degree of performance are recommended to boost their production as the demand push will sustain.