China: After an unprecedented surge of over 1,300% in just two years, the frenzied demand for Lithium has started to rapidly stall out. Chinese prices of Lithium carbonate, the benchmark product, have plummeted 50% since their record high last November. The retreat is attributed to two factors: accelerated global supply and decreasing growth of China's electric-vehicle sector.
The prices of lithium and other battery materials, which had been soaring for the past two years, have seen a much sharper decline recently as the supply expectations for this year clash with weaker demand sentiment. This has caused disruption for EV-supply chain companies and battery manufacturers and carmakers who must now compete to secure supplies.
Although Lithium prices have declined, they remain high compared to their 2020 lows. This year will see a major increase in Lithium supply due to an influx of new projects and expansions, but there are still questions surrounding the ability of some less-established companies to deliver promised output given regulatory, technical and commercial complexities.
Lithium prices will "quite likely" fall to 200,000 yuan or lower in the fourth quarter of 2020. Furthermore, it indicates that the price of spodumene - a mineral containing Lithium - has significantly decreased.
