BEIJING: Several major Lithium producers in China, such as Tianqi Lithium and Ganfeng Lithium, agreed to establish a minimum price for Lithium Carbonate at 250,000 yuan ($36,380) per tonne during a meeting held on Tuesday on the fringes of a conference in Nanchang, southern China. The group reportedly included about 10 companies, but the discussion was not public, hence the sources refused to disclose their identities. However, Ganfeng has refuted the existence of such talks.

During a recent meeting, Ganfeng reiterated its stance that product prices should be determined by the market instead of actively controlling them to influence the market. The company stated that it doesn't possess such capabilities, and no other company in the industry does either. Zhicun Lithium, which is one of China's top producers of Lithium Carbonate, was also present at the meeting. The decision was made as Lithium prices continue to decline due to a significant slowdown in the demand for electric vehicles (EVs) in China, which is the biggest market for EVs globally.

Recent developments in China's auto market have wreaked havoc on Lithium Carbonate prices. There has been a significant decline in spot prices, which have plummeted by more than 60% since their peak in late November, with the decline gaining momentum in recent weeks.

However, it remains uncertain how long China's Lithium Carbonate companies, which produce over half the country's output, will continue to abide by the floor price. In the latest market update, spot prices fell to 220,000 yuan per tonne on Friday from 260,000 yuan the week before. Traders looking to clear out their growing stocks have even been offering prices as low as 150,000 yuan. A buyer for a battery manufacturer reported hearing such offers, though they did not attend the meeting of Lithium producers.

Proposing a minimum price for the product could have a positive impact on the market and prevent prices from declining further. Nevertheless, a few buyers expressed doubts about producer compliance with the minimum price, based on the current low demand.