China's lithium price gain persists as futures hit 1-year high, spot prices rise

Lithium prices in China on Aug. 13 continued to strengthen for the third straight day, with futures prices hitting more than a one-year high despite a decline during the day after Albemarle confirmed operational continuity at its lithium mine in Chile.

China's lithium futures prices rose 2% on Aug. 12 after reports indicated Albemarle's lithium operations in Chile could take a hit due to safety inspections, China-based industry sources said. Albemarle is the world's largest lithium producer.

Albemarle spokesperson late Aug. 12 confirmed to Platts, part of S&P Global Energy, that its "La Negra facility is currently operational following an incident last week [that ended Aug. 8]" and the company did not "expect sales to our customers to be impacted."

While the most-active lithium carbonate contract on China's Guangzhou Futures Exchange slipped 0.6% day over day Aug. 13 to close at Yuan 85,100/mt ($11,862/mt), the prices still reached the highest level not seen since July 29, 2024, exchange data showed.

The contract had breached the daily trading limit on Aug. 11 by rising 8% from the previous close, while prices rose about 2% day over day Aug. 12.

The contract reached an intraday high of Yuan 88,840/mt on Aug. 12, but retreated as confirmation around Albemarle's lithium operations could not be verified, sources said.

Lithium prices have been on an uptrend in China in recent days, mostly due to frequent supply-side disruptions, making the Chinese lithium carbonate market increasingly sensitive to any supply-related news, sources said.

China has already been witnessing supply chain disruptions at its end after CATL, the world's largest battery maker, temporarily suspended mining operations at its Yichun project in the Jiangxi province Aug. 9. The timeline when production could restart remains unclear.

The development stoked concerns about whether the rest of the lithium mines in Jiangxi might face production suspensions due to mining license approval procedures, which could potentially impact domestic lithium carbonate output, sources said.

China's lithium market had gained sharply when news around the CATL-owned mine emerged.

Sources said the industry is closely watching whether the rest of the mines in Jiangxi can submit supporting documentation for their reserve verification reports before the Sept. 30 cut-off date. They added that the focus is also on the CATL-owned mine.

Physical market

The physical lithium chemicals market also showed an uptrend, driven by the recent gains in the GFE futures contract.

Platts assessed battery-grade lithium carbonate at Yuan 82,500/mt Aug. 13 on a DDP China basis, up Yuan 1,500/mt day over day and 18,000/mt from a month ago. This was the highest level seen since Nov. 14, 2024, Platts data showed.

While both futures and spot prices have risen in recent days, lithium prices were still down from the highs seen in 2022, as no fundamental changes to demand have been witnessed.

"[Chinese lithium carbonate] futures have increased too much, but no trades for the spot market," a Chinese producer said.

The Chinese lithium carbonate spot market is unlikely to face acute shortages in the near term, some market sources said.

Despite a price rally in both the futures and spot markets, upstream and downstream participants remained on the sidelines, resulting in thin trading volumes, they said.

Fundamental drivers will ultimately dictate the trajectory of lithium carbonate prices. Some of the market sources said the pace of low-grade capacity phase-outs will determine whether these fundamentals improve.