High-flying lithium has come crashing back to earth.
A super-charged two-year rally, which saw Chinese spot lithium carbonate prices rise by tenfold, went into brutal reverse over the first part of this year. The spot price slumped by 70% between November and its low point in April.
The price impact looks outsize to what was a short-term mismatch of supply and demand in the Chinese domestic market, where the spot price is already bouncing back hard. The company has around 70% of its 2023 sales committed to fixed-price annual contracts, many including take-or-pay terms, and has "a high degree of confidence around a 40% average expected price increase across these volumes".
The collapse in China's spot price has far exceeded the decline in the price of Australian spodumene, another closely tracked market indicator. The result has been the crushing of converter margins in China, leading to temporary closures.Wuxi's ascendancy as a lithium market signal is down to the fact that it has provided a rare point of price transparency in a highly opaque market.
France Dernières Nouvelles, France Actualités
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