Domestic Production Initiatives Seek to Offset Challenges As US Lithium Carbonate Market Faces Bearishness

Texas, USA: The lithium carbonate market in the USA remains sluggish, with prices consistently declining on a weekly basis due to weak consumer demand and an oversupply scenario in major global markets. The only recorded market transactions for lithium carbonate involved the fulfillment of long-term orders, and bulk freight transactions were also minimal during this period. As of January 5th, 2024, the assessed prices of Lithium Carbonate Battery Grade DDP USGC were USD 16,750/MT.

The supplies of lithium carbonate from Chile and Argentina, which comprise the majority of overall lithium carbonate imports (more than 90%), have also been affected by poor demand and plummeting manufacturing costs.

One of the major reasons for the poor performance of the lithium carbonate market globally is the slump in the Chinese market. The cost of the chemical used in batteries has experienced a 77% decline in China, the world's leading producer. This drop occurred during the year 2023 following Beijing's reduction of subsidies for electric vehicles starting in January. Consequently, lithium ore prices have been negatively impacted, affecting the profit margins of global miners and creating a pessimistic environment in the lithium carbonate market.

However, in recent times, with the aid of the US Inflation Reduction Act, a number of projects related to the domestic production of lithium carbonate have been executed in the nation. Recently, China-based lithium-ion battery manufacturer Gotion High-Tech has successfully manufactured its inaugural battery pack at the newly established facility in California's Silicon Valley. The company is presently in the process of constructing two significantly larger facilities within the country. One of these is an electric vehicle (EV) battery production plant located in Michigan, which is already in the construction phase. The second facility is a split production plant situated in Illinois, designed to have an annual production capacity of 10 gigawatt-hours (GWh) for battery packs and 40 GWh for lithium-ion battery cells. This facility is intended to cater to both the EV and energy storage system (ESS) market segments.

According to ChemAnalyst pricing intelligence, the lithium carbonate market is anticipated to illustrate further weakness in the first quarter of 2024. According to analysts, the increasing supply of lithium carbonate from major producers is surpassing the growth in demand from battery users. The energy storage sector, the second-largest consumer of lithium, is anticipated to experience a decelerated growth rate. This projection is attributed to weakened demand both domestically and internationally. Australia and Latin America, the leading producers, are projected to witness a 22% and 29% increase in output, respectively. Additionally, output in Africa is anticipated to double, propelled by projects in Zimbabwe, as stated by industry experts.