Chinese lithium prices fall below RMB 200,000 a tonne, putting pressure on domestic mines 

Chinese lithium prices slipped below RMB 200,000 ($28,810) per tonne mark for the first time in five months, as battery producers seek discounts from suppliers amid worsening sentiment in China.

Battery-grade lithium carbonate prices in China declined 7.3% in the week ending September 13, from a week earlier, to RMB 196,000 ($26,850) a tonne, according to Benchmark’s Lithium Price Assessment. Chinese lithium carbonate prices are down 63.4% year-to-date.

Spot prices for Chinese lithium hydroxide fell 7.2% to RMB 181,000 (24,800) during the assessment period and are down 67% so far this year.

Lower spot lithium prices will put more pressure on higher cost Chinese lepidolite lithium producers, who may have to halt production if prices fall further.

“While margins for producers and converters will be squeezed, especially for producers near the top of the cost curve, such as lepidolite producers in China, the bulk of operations will remain profitable at these price levels,” said Adam Megginson, a Benchmark analyst.

At the same time, battery producers are pushing for discounts on lithium prices, which could help lower battery cell costs. The global weighted average price for lithium ion cell prices has dropped below $100 per kilowatt-hour for thefirst time in two years, according to Benchmark’s Lithium ion Battery Cell Price Assessment.

EV rebound

The latest price decline comes just ahead of the fourth quarter, which is considered the strongest period for electric vehicle production in China.

China’s battery electric vehicle sales reported a rebound in August. China’s battery electric vehicle sales increased 14.4% year-on-year in August to 597,000 units and increased 10.4% over July, according to the China Association of Automobile Manufacturers.

“There are some macroeconomic headwinds developing in China which could tighten discretionary spending and may limit how much electric vehicle sales rise — but they are still set to rise in the fourth quarter both quarter-on-quarter and year-on-year,” said Megginson.

Seaborne market

Outside of China, stronger cathode demand from the energy storage sector has led to a $1,000-a-tonne premium for lithium carbonate over lithium hydroxide.

Lithium carbonate prices fell more moderately, by 3.2% w-o-w to reach an average of $30,000/tonne (CIF Asia), compared to a 7.2% fall for lithium hydroxide to $29,000/tonne (CIF Asia), according to Benchmark’s Lithium Price Assessment.