The European Lithium Carbonate market is experiencing a downturn due to a combination of factors, including increased competition due to cheaper imports, subdued demand from cautious EV manufacturers, and a global oversupply of lithium. This has led to falling prices, impacting the profitability of major producers like SQM despite record sales volumes.

The European Lithium Carbonate market is currently experiencing a period of weakness. Cheaper imports are exerting significant downward pressure on Lithium Carbonate prices. This, coupled with cautious spending by battery manufacturers and EV makers amid tightening regulations in key markets like the U.S. and EU, is creating a challenging environment for the industry.

Chile continues to be a major global producer of Lithium Carbonate, with strong and consistent output. SQM, a leading Chilean producer, has maintained significant production levels, targeting an installed capacity of 210,000 metric tons this year. However, despite record sales volumes, SQM has experienced declining revenues due to the sharp drop in Lithium Carbonate prices.

European car manufacturers are racing to secure supplies of lithium to fulfill this emerging demand. European Governments are backing the initiative to eliminate reliance on China and are actively helping mining firms with approvals and funding for new mines and processing facilities.

This is part of Europe's effort to achieve being the first climate-neutral continent by 2050. It is supported by €500 billion in direct investments across various sectors, including renewable energy, electric vehicles, and farming. The €500 billion allocated for climate-related initiatives accounts for nearly one-third of the total €1.7 trillion budget over seven years.

However, Lithium Carbonate market is facing challenges due to a global surplus, resulting in lower prices. Declining EV demand in major markets and manufacturers' reluctance to expand operations driven by price concerns are further exacerbating the situation. SQM anticipates that pricing pressure on Lithium Carbonate will likely continue to negatively affect average prices in the fourth quarter.

Additionally, the market share for battery-electric vehicles in October 2024 remained consistent at 14.4%. However, year-to-date volumes decreased by 4.9%, and market share also declined to 13.2% from 14% the previous year. Registrations for plug-in hybrid cars in October 2024 also fell by 7.2%. This month, the market share for this type of vehicle stood at 7.7%, marking a drop of 0.7 percentage points from the same time last year.

According to the ChemAnalyst pricing team, some stabilization in Lithium Carbonate prices is foreseen after mid-2025 as supply chains adjust and EV adoption accelerates.