In October, lithium carbonate prices dropped to CNY 71,500 per tonne, marking the lowest level since March 2021. This decline was driven by an oversupply of electric vehicle (EV) batteries in China, prompting producers to reduce asking prices for raw materials throughout the supply chain.
Lithium prices drop in October
Aggressive subsidies from the Chinese government have led to a significant oversupply of EV batteries, resulting in a 23% decline in carbonate prices this year, following an 80% plunge in 2023.
Despite this surplus, market participants anticipate a nearly 50% increase in global lithium supply this year, spurred by the expectation of eventual market balance and producers’ efforts to explore new projects. Chile has indicated plans to double its lithium output over the next decade, while China is actively expanding its battery metal projects in Africa. Additionally, Rio Tinto has announced its intention to enter the lithium market by acquiring U.S.-based Arcadium Lithium for $6.7 billion.
EU put tariffs on China
Compounding the bearish sentiment, the EU has implemented a 9% tariff on Tesla EVs produced in China, adding to the existing trade barriers for China-based EV manufacturers, which range from 36.3% to 17%.
