2024-11-18 03:15:00
Lithium prices recovered slightly as demand for electric vehicles picked up in China and supply dwindled. However, analysts warn There may still be a surplus of battery metals in 2025.
Spot prices for lithium carbonate in China have risen about 8% since the end of October and are currently at a three-month high. Futures prices on the Guangzhou Stock Exchange have risen 13% so far this week.
“China’s expansion of subsidies to encourage people to trade in used cars is helping a nascent rebound in metals that are crucial to the energy transition. The country’s electric car makers On track to achieve ambitious annual sales targetswhile inventory replenishment activity is increasing,” they said on the Bloomberg website.
There is also speculation that Donald Trump’s election victory could Chinese battery manufacturers encouraged to buy lithium before a potential trade war breaks out.
«Lithium Carbonate Demand Status in November Stronger than market expectations “This is a typical end of the off-season,” said Zhang Weixin, an analyst at China Futures Corp. He explained that China’s subsidies acted as incentives and battery manufacturers rushed to export before trade barriers were implemented.
Leah Chen, head of the battery metals team at S&P Global Commodities Insights, said China’s recent stimulus measures appear to have boosted consumer confidence. “Various cathode manufacturers Returned to the market to replenish inventory It has gradually decreased in recent months,” he noted.
On the supply side, the lithium market will decline for a long time this year Leading mines in Australia, China and other countries to close or cut costs. Notably, prices remain stuck at less than a fifth of their late-2022 peak.
According to statistics from the consulting company CRU Group, since the end of 2023, lithium mine production capacity has been reduced by 190,000 tons, and projects have been delayed by 50,000 tons. therefore, The consultancy cut its supply forecast for next year by 14%Battery market analyst Cameron Hughes explains.
Despite China’s economic rebound, Short-term global electric vehicle demand outlook remains downwardas electric vehicle manufacturers postpone new product launches.
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How might potential geopolitical changes influence the future of the lithium market?
**Interview with Zhang Weixin, Analyst at China Futures Corp.**
**Editor:** Thank you for joining us today, Zhang. Lithium prices have recently shown signs of recovery, especially in China. What factors do you think are driving this increase?
**Zhang Weixin:** Thank you for having me. The rise in lithium prices can primarily be attributed to a boost in demand for electric vehicles (EVs) in China, alongside a dwindling supply. The Chinese government has expanded its subsidies to encourage consumers to trade in their used cars, which has spurred demand for new electric vehicles and, consequently, the metals necessary for their batteries.
**Editor:** That’s interesting. We’ve seen spot prices for lithium carbonate rise significantly—about 8% since late October and reaching a three-month high. Can you elaborate on the current market sentiment?
**Zhang Weixin:** Absolutely. The market sentiment is quite optimistic at the moment. The increase in spot prices indicates a stronger-than-expected demand for lithium. Battery manufacturers are also engaging in inventory replenishment, which signals confidence that they can sell their products at favorable prices in the coming months.
**Editor:** However, you mentioned there’s a possibility of a surplus of battery metals by 2025. Can you explain this potential contradiction?
**Zhang Weixin:** Yes, it might seem contradictory, but there’s a complex interplay of factors. While demand is currently strong, there are concerns that production capacity could ramp up too quickly or that demand from emerging markets may level off. This could lead to an oversupply situation in the market by 2025. It’s crucial for both manufacturers and investors to keep an eye on these long-term projections despite the current optimism.
**Editor:** Recent news also hinted at the impact of political changes, such as the possibility of Donald Trump’s election victory on trade relations. How could this affect the lithium market?
**Zhang Weixin:** Speculation around political changes can create uncertainties. If tensions increase between the U.S. and China, especially regarding trade, Chinese battery manufacturers might rush to secure lithium supplies now to mitigate risks of future trade barriers. This urgency can create short-term price spikes, even as the long-term forecast remains uncertain.
**Editor:** It sounds like the market is navigating a complex landscape. What should stakeholders watch for in the coming months?
**Zhang Weixin:** Stakeholders should closely monitor EV sales trends in China, government policy changes, and global geopolitical developments. These factors will provide insights into supply and demand dynamics. Additionally, understanding production capacities and advancements in battery technology will be key, as they could change the landscape significantly.
**Editor:** Thank you, Zhang, for your insights. It seems like both challenges and opportunities lie ahead for the lithium market. We appreciate your time.
**Zhang Weixin:** Thank you for having me. It’s an exciting time for the market!
