Lithium carbonate prices have stabilized around CNY 72,500 per tonne in Stember, marking the lowest levels seen in over three years. This stability comes as persistent concerns about an oversupplied market loom large. Miners and producers in China continue to enhance their capacity and seek out new reserves, fueled by expectations that global supply will increase by almost 50% this year. The current oversupply situation is exacerbated by a battery glut originating from government subsidies aimed at firms across the entire supply chain.
In response to these market conditions, Chile has announced intentions to double its output over the next decade, while China's expansion projects in Africa reflect the fierce competition for essential battery metals. The situation has been further complicated by the European Union's recent decision to impose a 9% tariff on Tesla electric vehicles manufactured in China, alongside elevated trade barriers affecting various China-based EV manufacturers, which now face duties ranging from 36.3% to 17%. Meanwhile, the United States has raised tariffs on Chinese EVs to an unprecedented 100%, impacting the market for battery input materials significantly.
Since the start of 2024, lithium prices have dropped by CNY 24,000, reflecting a 24.87% decrease, as tracked by a trading contract for difference (CFD) that monitors benchmark pricing. Analysts and global macro models predict that lithium will trade at CNY 73,837.50 by the close of this quarter, with a forecasted price of CNY 70,455.00 projected for the following year.