Lithium Carbonate Prices Plunge Amidst Weak Demand and Supply Glut in February 2024

Texas, USA: Following a consistent trend over the past few months, the prices of Lithium Carbonate have continued to decline, driven by weak support from upstream spodumene ore and other raw materials, alongside weak demand from downstream industries. As of February 23, 2024, the prices of Lithium Carbonate Battery Grade DDP USGC were assessed at USD 14,000/MT.

In the second half of February, Lithium Carbonate prices further decreased in the US domestic market due to imports of cheaper goods. According to sources, Lithium Carbonate spot prices in Europe and the United States have largely remained fragile due to ongoing bearish market conditions. Market participants observe sluggish spot market activity and anticipate clarity on a potential reversal in the bearish trend of Lithium Carbonate following the conclusion of the Lunar New Year celebrations in China. It's noted that the traditional premium of lithium hydroxide prices over Lithium Carbonate prices has recently diminished in both European and US markets, mirroring trends seen in Asian spot markets.

Market participants attribute this shift to the more significant weakness observed in hydroxide compared to carbonate in China's domestic market. Additionally, Albemarle, the largest Lithium Carbonate producer globally, reported an adjusted quarterly profit that exceeded expectations. This was attributed to significant cost reductions, which counteracted the sharp decline in prices for Lithium Carbonate, a key component in electric vehicle batteries. The slowdown in the global adoption of electric vehicles, coupled with excess lithium production in China, has led to a decrease in lithium prices, impacting the financial performance of Albemarle and other companies in the industry. Albemarle, a supplier to Tesla and other automakers, predominantly distributes its lithium via long-term contracts linked to prevailing market rates.

This year, the lake critical to the operation of the Panama Canal has reached its lowest water level ever recorded at the beginning of the dry season. Consequently, significantly fewer ships can navigate through the canal. The severe drought, worsened by the ongoing El Niño phenomenon affecting Gatún Lake and the surrounding area, is expected to persist until May. To alleviate the consequences, the Panama Canal Authority has decreased daily traffic through the narrow passage by almost 40% compared to the previous year. Many vessels have already opted for longer sea routes, leading to increased expenses and carbon emissions. Additionally, Maersk, a global shipping company, has announced plans to transfer some of its cargo to rail transport. As a result, shipments of Lithium Carbonate have been delayed.

According to the ChemAnalyst database, the prices of Lithium Carbonate are anticipated to stabilize in the upcoming weeks backed by increased demand and improved overall market sentiments.