China’s Lithium Mountain Grows as Oversupply Drags Down Prices Further

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The global lithium industry has had turbulent few years as skyrocketing prices plummeted with a surge in new supplies and a slowdown in the growth of the EV industry

China’s lithium supply glut is worsening, with output expected to expand by 41% this year, fueling a steeper downward trend in prices for this material, a crucial component of electric vehicle batteries.

China’s domestic production of lithium carbonate is expected to reach 650,000 tons, a year-on-year increase of 41%, according to Fan Runze, a senior industry analyst at research institute Antaike. With more supply expected to be released in the second half, lithium prices could drop to their lowest point of the year, said Fan at a Wednesday conference.

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China's domestic lithium carbonate output expected to increase by 41% to 650,000 tons in 2023, further dropping prices.
Lithium carbonate prices fell 70% year-on-year to 82,000 yuan a ton by July 31, 2023, with a forecasted annual excess supply of around 100,000 tons.
Global lithium carbonate supply increase projected at 410,000 tons against a demand increase of 192,500 tons for 2023.

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What Happened When

Late 2022：: Spot price of lithium carbonate approached 600,000 yuan a ton.

2023：: Lithium prices collapsed by more than 80%.

By the end of 2023：: China’s lithium carbonate production capacity jumped to 1.31 million tons.

January 2024 to June 2024：: New energy vehicle (NEV) sales in China rose 32% year-on-year to 4.9 million units.

Mid-June 2024：: Companies processing lithium carbonate from purchased spodumene and mica started facing losses due to higher production costs.

Early July 2024：: Lithium prices fell below 90,000 yuan a ton.

July 31, 2024：: Battery grade lithium carbonate traded at 82,000 yuan a ton, a 70% drop from a year ago, returning to the 2021 level.

2024：: Global lithium carbonate supply is expected to increase by 410,000 tons, while demand will grow by only 192,500 tons, leaving at least 200,000 tons of excess supply.

AI generated, for reference only