Lithium Market Remains Stable Despite Improved EV Sales in China

Singapore: In the last week of June, the Lithium offers in the Chinese domestic market staggered upwards gradually, presenting an overall stable trend in the quotations of Lithium Hydroxide and Lithium Carbonate. The spot transactions were active, whereas most of the inquiries were in the form of a long-term or contract basis. Overall restocking activities started last month after the Chinese authorities announced to curb the COVID restriction leading to a healthier public and market movement.

In recent terms, the market players have enough inventories of Lithium hydroxide and Lithium Carbonate to cater to the downstream inquiries in July and August. Although, the demand outlook is terming through the seasonal low in the electronics and small-EV markets such as E-bikes, LCO (Lithium Cobalt Oxide) Vehicles, and LMO (Lithium Magnessium Oxide) Vehicles. Whereas the supply outlook is increasing steadily as the production of the brines lakes stabilized in the mid of the second quarter, uplifting the producer's sentiments to ramp up production in the new lines. There is intense speculation in the domestic market that several producers are keening to increase the production capacity to maintain a supply-demand balance while catering to domestic and overseas inquiries.

The LFP (Lithium Ferrous Phosphate) Vehicles battery manufacturer's active participation supported the Lithium producers' sentiments and offered in the Chinese domestic market. Therefore despite the swindling demand outlook, the June offers for Lithium Carbonate observed an increment of (+4.34%) on a month-on-month basis and the proposals for Lithium Hydroxide remain stable. Post the COVID shutdown, EV sales have also rebounded tremendously. The recent data released by MIIT showcased that automobile sales witnessed a V-shaped recovery after the consistent effort of the authorities to push the improvement in the supply chain.

As per ChemAnalyst pricing intelligence, it has been anticipated that the demand outlook from the downstream industries is likely to be bolstered in the next quarter. It further, coupled with the sanctions on Russia, may hinder the availability of essential battery raw materials and add additional costs to EV battery raw material prices in the upcoming terms.