Emotions Cool Down, Lithium Carbonate Prices Face Downward Pressure

March 23rd, News

According to the commodity market analysis system: Recently, the price of lithium carbonate has been on a downward trend. As of March 23, the benchmark price for battery-grade lithium carbonate is 142,000 CNY per ton, down 8.4% from the same period last week (March 16), down 2% month-over-month, and up 86% year-over-year.

Multiple pressures resonate downward

Supply has increased significantly, with ample supply weighing on price increases.

This round of lithium carbonate price decline is mainly due to the supply growth far exceeding the speed of demand digestion, resulting in a significantly more relaxed supply and demand situation. Recently, a large amount of lithium salt has arrived at Chinese ports, and Chinese smelting companies have gradually resumed production. Previously shut-down facilities are being restarted one after another, leading to a continuous increase in market-available supplies, with the pressure on the supply side becoming increasingly evident.

Downstream demand recovery is weak, and rigid demand is insufficient to support high levels.

Demand-side weakness is a significant reason for the pressure on lithium carbonate. The growth in new energy vehicle sales in China has slowed, and battery manufacturers are being cautious with their production plans. Positive electrode material companies are mainly purchasing according to demand and replenishing inventories at low levels, showing little interest in stockpiling.

The energy storage sector has not yet significantly boosted the demand for lithium batteries, and the downstream market in China is characterized by a strong wait-and-see sentiment, with a prominent "buy on rising prices, not on falling prices" mentality, leading to generally low transaction volumes. The lack of support from the demand side makes it difficult for lithium carbonate prices to remain at high levels, resulting in continued downward adjustments.

Macro sentiment and capital flows intensify the short-term downward price pressure.

At the macro level, the strengthening of the U.S. dollar index is weighing on the overall valuation of commodities, and there’s a noticeable diversion of capital away from the new-energy sector. Some funds are taking profits and exiting the market, while short-selling forces are growing stronger, putting significant downward pressure on lithium carbonate futures.

The profit-taking accumulated during the previous modest rebound was concentratedly cashed in after sentiment turned weaker, causing both futures and spot prices to weaken simultaneously and further amplifying the magnitude of this round of price declines.

Lithium carbonate data analysts believe that the current situation of ample lithium carbonate supply is unlikely to change in the short term, and the progress of inventory reduction remains the key factor influencing price trends. If the demand for downstream power batteries and new energy vehicles in China remains weak, lithium prices may further decline, with specific developments still dependent on changes in market supply and demand.