Lithium prices react to news of Chilean shutdown, but real supply impact may be limited

Lithium supply concerns are mounting in early August, following reports this week that Albemarle suspended operations in Chile after an acid tank explosion at a chemical plant in La Negra, in the Antofagasta region.

Despite conflicting reports on the severity of the situation, Benchmark understands from sources close to the operation that the actual impact on production may have been limited to just one of three production lines, which was forced offline for 3 days.

Nevertheless, as reports of a suspension filtered through to the market, Benchmark heard EXW China lithium carbonate offers climbing as high as 80,000–87,000 RMB/tonne ($11,100–12,100) on 12 August.

Should transactions be confirmed at these levels, it would represent a 16% increase on the highest confirmed trade recorded late last week (8 August), according to the Benchmark Lithium Price Assessment. However, so far procurement activity has been slow as participants evaluate the impacts of recent news of supply disruptions.

Indeed, with significant inventories existing in China – estimated by Benchmark at roughly 130,000 tonne LCE as of July – this week’s price movements are primarily being driven by sentiment and reflect the speculative nature of lithium trading in China, rather than signalling a signifcant shift in market fundamentals.

Subscribers to Benchmark’s Lithium Price Assessment can closely monitor this price rally, using accurate, market-led price data and inventory tracking to inform contract and pricing decisions.

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