Guangzhou Futures Exchange’s lithium carbonate futures for January and February deliveries have dropped on Friday, as negativity towards downstream demand prevails until Q1 2024, Kallanish notes. 

The LC2401 January contract fell 1.56% from the previous settlement to CNY 153,800/tonne ($21,022/t), while the LC2402 February contract dropped about 0.80% to CNY 143,150/t.

The spot price for the cathode raw material remains relatively low. The average price of Chinese battery-grade lithium carbonate reached CNY 168,000/t, corresponding to a 2.89% drop during the week 30 October-3 November.  

The upstream and downstream catch-up game is set to continue, as the forecast for end-point demand (NEVs) remains low. While lithium salt firms need to sell more to improve revenues, downstream demand continues to be weak, despite low lithium carbonate prices.

Some industry players have little hope for any sizeable demand recovery in the near future due to flat procurement levels. Battery manufacturers already have accumulated inventories and don’t seem to be in a hurry to purchase.

On Friday, spodumene concentrate (5%, cif China) was reported at $2,080/t, down 0.48% during the day and 3.03% during the week. Overseas mining projects continue ramping up production and growing stockpiles at Chinese ports and warehouses.

The Bikita project in Zimbabwe, for example, has started delivering the first batch of 10,000 t spodumene to China. As of Friday, lithium ore inventories in the Asian nation were reported at 146,000 t – an increase of 15,000 t from last week. The continuous arrival of lithium ore at the port and the downstream resistance to purchasing high-priced ore have mainly caused the accumulation.

Major lithium players Pilbara Minerals, Livent and Albemarle have recently tried to shift the bearish sentiment on lithium demand in their earnings calls. They see the market volatility as short-term, remaining optimistic about the growth of EVs. Livent expects a “rapid return to tight lithium market conditions” once the supply chain destocking ends. It said customers remain focused on securing long-term global lithium supply and demand should also see upside movement from growing energy storage installations (see related story).