Lithium Carbonate Market Faces Extended Slump Amid Global Oversupply

Texas, USA: The lithium carbonate market in the USA continues to exhibit numbness as prices have been tumbling week-on-week due to poor consumer demand and an oversupply situation in major markets across the globe. The only market transactions recorded were for the fulfillment of long-term orders, and bulk freight transactions were likewise low during this period.

One of the major reasons for the poor performance of lithium carbonate is the impact of the Chinese market. The price of battery-grade lithium carbonate in China has decreased by more than 75% due to a supply glut and higher borrowing rates. As global miners scale up supplies, lithium prices in China, the world's largest source of the critical element used in electric vehicle batteries, are likely to collapse further in the next year.

Additionally, the manufacturing costs of lithium carbonate have also been dropping month on month as spodumene prices have declined by almost 86% since the beginning of this year. However, the rate of reduction has been especially rapid in recent months, with prices falling by 71% since June. Rising domestic lithium carbonate output has also weighed on the downstream lithium hydroxide market.

With the market approaching a seasonally poor phase for pricing and demand for lithium carbonate, this negative trend is expected to continue further. Some market participants believe the gloomy trend will last until next year.

In the latter six months of 2023, worse pricing situations have been a persistent trend across the lithium carbonate business. According to market players, due to high inventories in the market, procurement has slowed down, and consumers have continued to destock their inventories and avoid excess supplies for better performance in their annual financial reports.

On the other hand, the global sales of battery electric cars (BEV) and plug-in hybrid electric vehicles (PHEV) in November increased by 20% year on year, with robust growth in North America and China offsetting reduced sales in Europe. BEV and PHEV sales reached a new monthly high of 1.4 million units, up from 1.1 million in November 2022. Moreover, despite a lot of bad sentiment in the lithium carbonate market, sales of electric vehicles have continued to climb, and according to industry experts, electric vehicle sales are likely to stay high in December as well.

According to the ChemAnalyst database, the lithium carbonate market is poised to demonstrate further weakness in the upcoming weeks as increased destocking has been going on. Moreover, according to a few market players, the downward trend is expected to continue in the first half of 2024.