Analysing Latest Price Drop In Lithium Carbonate Market

In the fast-paced world of industry and technology, even the smallest fluctuations in commodity prices can have a significant impact on various sectors. As of 12 September 2023, the lithium carbonate market has been experiencing a downward trend in prices. This decline can be attributed to a combination of supply and demand factors that have created a challenging environment for this essential industrial compound.

Today, let’s delve into the recent developments in the lithium carbonate market, where prices have witnessed a notable decline.

Key Drivers

Here are the details:

1. Supply-Side Challenges: One of the critical contributors to the price drop is the supply-side dynamics. Several lithium salt factories have decided to shut down temporarily for maintenance. The primary reasons behind these closures are the lack of downstream orders and the falling prices of lithium carbonate. While maintenance is a routine aspect of industrial operations, these shutdowns have led to a reduction in market supply. 

2. Sluggish Demand Recovery: On the demand side, there has been a slow recovery among end-users of lithium carbonate. Factors contributing to this sluggish recovery include weak stockpiling by consumers and limited support from upstream purchasers. The uncertainty in the market has caused many players to adopt a cautious approach.

Price Trends & Analysis

A closer look at the numbers reveals the extent of the price decline. Both industrial-grade and battery-grade lithium carbonate have witnessed reductions in their average prices.

On 12 September, the average domestic mixed price of industrial-grade lithium carbonate was approximately $24,900/ton Ex China, reflecting an 8.18% decrease from the average price of $27,123/ton Ex China recorded on 5 September.

Similarly, the average domestic mixed price of battery-grade lithium carbonate on 12 September was approximately $26,290/ton Ex China, indicating a 7.8% decrease from the average price of $28,514/ton Ex China on 5 September.

Market Outlook

The lithium carbonate market is expected to continue facing downward pressure in the coming weeks. As of now, the supply and demand dynamics remain largely unchanged, with most downstream manufacturers maintaining cautious purchasing attitudes. The oversupply situation in the spot market persists, with little variation in the production output of lithium salt factories.

While there is frequent inquiry from downstream players, actual transactions remain limited due to the prevailing uncertainty. The continuous decline in lithium carbonate futures prices adds to the challenges, keeping spot prices on a downward trajectory. As a result, it is anticipated that lithium carbonate prices will continue to fluctuate at lower levels in the short term, presenting challenges and opportunities for market participants.

OFB’s Insight

The recent drop in lithium carbonate prices can be attributed to a complex interplay of supply and demand factors. While supply-side challenges, such as factory shutdowns for maintenance, have led to reduced market supply, demand recovery among end-users has been slow. This imbalance has caused prices to decline, affecting various industries dependent on lithium carbonate.