Spot lithium hydroxide prices in China averaged 355,000 yuan ($51,627) a tonne in March, down 40% from an average 590,000 yuan a tonne in November when the market hit an all-time high, according to data from Fastmarkets. The sharp downtrend was driven by weakening demand from China's electric vehicle (EV) market after Beijing ended its national subsidies this year, as well as high lithium stocks.
"In the wake of poor domestic demand, exporters are offering bigger discounts of their material to overseas buyers to destock," Vicky Zhao, a Beijing-based senior analyst at Fastmarkets, said ahead of the data's release. China's overall exports showed a surprise jump in March because of the rising demand for lithium batteries as well as electric vehicles and solar products, officials said earlier this month. Spot prices for lithium hydroxide delivered to China, Japan and South Korea assessed by Fastmarkets dropped to $40.50 per kg on April 20, less than half of the peak price of $85 per kg last December. Although higher overseas prices and robust demand lured Chinese producers to export more, only a few have product-certification to sell to top buyers Japan and South Korea.
Japan, accounting for 23% of China's exports in the first quarter, relies heavily on imports.
Japanese imports from China will likely increase by about 10-20% this year to meet rising demand, according to Junichi Tomono, primary metal corporate officer at Japanese trading company Hanwa Co Ltd.
Products made with lithium hydroxide in Japan, such as cathodes used in EV batteries, are often exported to Europe and the United States where EV sales are rising, he said. Global lithium demand is expected to reach 1 million Lithium Carbonate Equivalent (LCE) tonnes this year, up 23.5% from 81 LCE tonnes in 2022, the China Nonferrous Industry Association said in a lithium industry paper released in March.
($1 = 6.8762 Chinese yuan) (Reporting by Siyi Liu, Amy Lv and Dominique Patton in Beijing; Additional reporting by Yuka Obayashi in Tokyo; Editing by Sonali Paul, Christian Schmollinger & Shri Navaratnam)
