China's lithium prices retreat after rising in early July on EV, energy demand

China's lithium carbonate prices retreated after rising in early July as traders weighed resilient demand from the electric vehicle and energy storage sectors against expectations of rising supply, leading to mixed views on the market's near-term direction.

Downstream demand indicators remained relatively constructive, China-based producers, traders and analysts said July 9.

Platts, part of S&P Global Energy, assessed battery-grade lithium carbonate at Yuan 157,000/metric ton ($23,102/mt) DDP China on July 8, down 1.9% day over day and week over week, following a drop to Yuan 146,000/mt on June 29, the lowest level since March 24.

China's EV sales reached 1.64 million units in June, rising 9.8% month over month and 23.6% year over year, according to data from the China Association of Automobile Manufacturers, or CAAM, July 9. EV production reached 1.6 million units, up 2.8% from May and 26% year over year.

EVs accounted for 58.5% of total new vehicle sales in June, hitting an all-time high, CAAM data showed.

For the first half of 2026, EV production and sales rose 6.7% and 7.3% year over year to 7.44 million and 7.45 million units, respectively.

Overseas demand for Chinese EVs remained strong. EV exports totaled 523,000 units in June, rising 17.2% month over month and 1.6 times year over year, while first-half exports increased 1.2 times from a year earlier to 2.36 million units, the data showed.

China's automotive industry continued its transition toward new growth drivers, with the traditional fuel vehicle market shrinking further and EVs posting stable growth, according to Chen Shihua, deputy secretary-general of CAAM.

In the second half of the year, the continued implementation of the country's trade-in stimulus policies is expected to create new growth opportunities in the automotive aftermarket, Chen added.

Mixed views on market direction

Market participants had mixed views on China's lithium carbonate market in early July.

Some participants said domestic lithium carbonate prices continue to find support from relatively healthy downstream demand expected in the coming months, particularly from the energy storage sector, while others pointed to subdued sentiment and a generally weak trading environment.

"The market fundamentals are still solid. Downstream players are factoring in a potential rush in battery exports during the fourth quarter, which could support demand," a China-based producer said.

According to a China-based trader, demand remains fairly healthy, but the market is weighed down by abundant inventories and ample supply.

Spot trading activity remained subdued as downstream consumers refrained from active purchases amid fears of further price declines, while concerns over rising supply continued to pressure the market, participants said.

The most actively traded lithium carbonate futures contract on the Guangzhou Futures Exchange closed at Yuan 153,020/mt on July 9, down 5.4% from the previous settlement, exchange data showed. The contract declined for the fourth consecutive day, GFEX data showed.

The continued weakness in GFEX reflected market expectations of increased lithium supply in the third quarter, coupled with concerns that downstream demand may fall short of earlier expectations, some sources said.