Lithium prices in China, the top consumer of the battery metal, sank to a five-month low this week, pressured by lacklustre buying and rising supplies.
The spot lithium carbonate price assessed by Fastmarkets fell to 185,000 yuan (USD 25,423.26) a metric ton on Thursday, breaking below 200,000 yuan for the second time this year after slowing sales of electric vehicles (EVs).
The price has declined 42% in the past two months, continuing a downtrend for much of this year, and is currently at less than a third of last November’s peak.
China’s August EV production and sales totalled 843,000 and 846,000 units respectively, increasing by 22% and 27%, the slowest growth since January.
Meanwhile, overcapacity in the energy storage sector, the second-biggest consumer of lithium, eroded margins, sapping appetite by producers to procure the metal at current prices.
Prices of the most commonly used battery for energy storage fell 44% to 0.51 yuan per watt hours this week, according to information provider Shanghai Metals Market.
“Battery manufacturers have showed no sign of hiking their orders in the third and fourth quarters, leading to cautious buying of lithium, especially as they anticipate prices might fall further,” said Susan Zou, a Shanghai-based analyst at consultancy Rystad Energy.
Last month saw production of lithium carbonate in China grow 56.2% year-on-year to 46,701 tons, SMM data showed.
With little sign that consumption will improve and with inventories at high levels, the market is likely to be under further pressure towards the end of the year, Zou added.
