Chinese Lithium Carbonate Market Will Observe Supply Deficit

Singapore: The sluggish sentiments prevailing in China’s automotive market have significantly impacted the critical battery raw materials amidst the oversupply atmosphere of Lithium raw materials in the domestic market. The regional operations at the Internal Cumbustion Vehicle (ICV) and Electric Vehicles (EV) automotive assembly facilities in northeast China remain restricted post-COVID shutdown.

However, the current pace of new inquiries from the domestic and overseas players will likely create a deficit in the supply outlook of Lithium Carbonate in the spot market, as the new inquiries were majorly on a long contractual basis. In contrast, spot trading was restricted in the domestic market, and the producers were running low on inventories as they were more focused on releasing the last batch to start the new production cycle.  

The shutdown was primarily motivated due to the necessary changes that were likely to introduce in the automotive assembly facilities of Electric Vehicles to increase the optimum efficacy due to the rising popularity in the Chinese domestic market. The Chinese authorities were also prompting people in distant places to switch to EVs to achieve the net carbon emission or carbon neutrality target assessed by the government of China. 

In the past several months, the Lithium market has been a much-debated topic amongst the market participants across the regions. The disruption of the downstream value chain suppressed the domestic market of Lithium Carbonate, Lithium Hydroxide, and Lithium Hexafluorophosphate in China. The offers witnessed a steep decrease for the first time amidst the COVID-related shutdown in the Chinese domestic market after the prices had consistently soared since the start of 2021.

As per the ChemAnalyst pricing intelligence, the bubble of the Lithium Market is in the last stage, and the prices are likely to observe a prominent surge in the quoted offers within the third quarter of 2022. The demand outlook is likely to surpass the supply capabilities creating a significant deficit besides widening the supply-demand gap.