Lithium Carbonate Prices Stall Amid Oversupply, Battery Makers Pessimistic Despite Rising EV Sales

Texas, USA: In the early September, Lithium Carbonate prices have stalled in the US domestic market. Following the marginal strengthening in the Chinese spot prices of Lithium Carbonate due to a minute uptick in Lithium Carbonate futures on the Guangzhou Futures Exchange. The US and European markets have closely followed the price trend in the Chinese market as well.

Moreover, according to the recent reports from Clean Energy Associates, North American battery suppliers are postponing or canceling planned capacity expansions, despite lower raw material costs and supportive U.S. policies.

Though, the prices have stabilized, weakness in Lithium Carbonate prices has persisted as the oversupply situation and lagging consumption speed have been continuously dragging the prices down. Coupled with declining prices of Lithium Carbonate, the market giants have also faced turmoil this year due to depleting profit margins.

Chile’s SQM, the world’s second-largest lithium producer, reported a 63.2% drop in quarterly profit, highlighting the continued downward pressure on lithium prices. Despite record-high sales volumes of lithium, lower realized prices for the metal, driven by declining market rates, significantly impacted earnings. This trend is expected to persist through the remainder of the year, with lithium price indices in China already down nearly 20% compared to Q2 2024. This suggests ongoing challenges in the Lithium Carbonate market, as supply outpaces demand, leading to sustained price reductions.

On the other hand, Tesla recorded a significant rise in its EV sales last month, both in China and in exports to global markets. This growth signals a resurgence in global EV demand, indicating that Chinese EV manufacturers might be able to navigate the regulatory challenges presented by new tariffs from the US, EU, and Canada this year. However, despite international restrictions on Chinese electric vehicle exports, leading Chinese EV manufacturers such as BYD, Li Auto, Nio, and XPeng reported a strong year-on-year sales increase for August.

The ongoing high supply of lithium is significantly dampening market sentiment, driving both Lithium Carbonate and spodumene prices downward. Excess supply is outpacing current demand, leading to price declines for Lithium Carbonate across the market. While there are initial signs of Chinese producers exercising restraint in output, these efforts have not yet been sufficient to stabilize the market. More decisive production cuts are needed to bring supply and demand into balance.

For the week ending on 13th September 2024, the assessed prices of Lithium Carbonate Battery Grade DDP USGC were USD 11700/MT, according to the ChemAnalyst pricing intelligence.

The market analysts anticipate that the weakness in the Lithium Carbonate market might further continue in the upcoming weeks. However, despite the current price weakness, many producers are still planning future expansions. These expansion efforts will be critical as global demand for lithium is expected to grow in the coming years, especially as electric vehicle adoption and energy storage needs rise.