US Lithium Carbonate Market Faces Slump as Demand Stalls and Prices Decline

Texas, (USA): Entering July, the US Lithium Carbonate market has noted a further slump and the prices have dropped further as the influx of cheaper goods continued in the domestic market. In the domestic electric vehicle sector, downstream demand for Lithium Carbonate has remained weak due to an ample supply of materials locally, alleviating supply concerns. Consumer inquiries for lithium carbonate have been notably sluggish, with a significant reduction in new purchase orders.

Recent surveys by market participants indicate a significant drop in U.S. consumer interest in purchasing electric vehicles (EVs), with only a small portion of the population showing interest in buying an EV. This trend has been consistently observed year-over-year in the U.S. market. Moreover, better-than-expected U.S. electric vehicle sales in the second quarter provided a welcome reprieve for investors after a significant slowdown in demand caused by high interest rates. However, EV manufacturers still face challenges ahead.

The growth in EV demand has been slower than anticipated due to high borrowing costs, economic uncertainty, and a consumer preference for gasoline-electric hybrids. Consequently, Tesla and other EV brands have reduced prices or offered greater incentives to attract customers. Analysts noted that the pressure to keep reducing manufacturing and battery costs will persist.

Lithium Carbonate producers are steadily ramping up production, which is expected to increase import volumes from international sources, signaling a general recovery trend on the supply side. However, in the short term, the dispersed sales sentiment within the Lithium Carbonate market has remained largely unchanged, limiting the liquidity of spot market transactions during periods of low prices. The freight charges have remained elevated and the prices are already at their highest this year and are expected to climb further as we enter the peak season months, which could boost the Lithium Carbonate prices in the upcoming weeks.

Congestion, though less severe than in recent weeks, persists at some major hubs, with several carriers announcing significant July Peak Season Surcharge increases or GRIs. Capacity is already strained by longer routes around Africa, and additional delays and backlogs from an ILA strike, or the looming Canadian rail strike in July, could further pressure ocean rates. In positive news, the Panama Canal Authority announced that, with the rainy season restoring reservoir levels to normal, it will ease draft restrictions and restore daily transits to 35 by August, returning to pre-drought norms.

Demand conditions for Lithium Carbonate have remained stagnant, and the procurement of fresh supplies has slowed further due to high domestic inventory. Lithium Carbonate prices in the USA declined, also due to the influence of subdued sentiments in Asia. According to the ChemAnalyst pricing intelligence, the prices of Lithium Carbonate are anticipated to stabilize in the upcoming weeks and improved demand and better market sentiments are expected.