BEIJING (Reuters) – Chinese lithium prices recovered on Friday after a powerful earthquake hit Chile’s key lithium-producing region, although rising demand concerns weighed on the metal used in electric vehicle batteries.
The most traded November lithium carbonate futures on the Guangzhou Futures Exchange rose 2.9% to 89,800 yuan ($12,356.89) per tonne on Friday, after hitting a seven-month low of 86,450 yuan in the previous session.
An earthquake with a magnitude of 7.3 struck northern Chile. The Latin American country has the largest lithium reserves in the world, 90% of which are located in the Atacama Desert, close to the epicenter.
The news sparked supply fears as Chile is a major exporter of lithium chemicals to China.
That reversed some losses earlier this week, when investors bet that Donald Trump would win the US presidential election in November. The Republican has vowed to undo much of President Joe Biden’s work to combat climate change, including rules promoting electric vehicles.
“A less favored Trump administration added to demand concerns given the already much lower-than-expected sales of electric vehicles in the US and Europe this year,” Zhang Yuan, an analyst at CITIC Futures, said on Friday.
In Europe, monthly sales of fully electric and plug-in hybrid vehicles fell 7% in June, according to market research firm Rho Motion, while monthly sales in the US and Canada grew 6%.
Macquarie analysts said in a note last month that electric vehicle sales growth in China, the key driver of the sector, will slow to 24.6% this year from 30.2% last year.
Rising stocks are also weighing on the market. China produced 303,200 tonnes of lithium carbonate in the first half of the year, up 57.4% from the same period a year earlier, Mysteel data showed.
“Better lithium carbonate prices since March have boosted production. However, producers may curb production as recent price declines put pressure on their margins. Production is likely to decline in August,” said Zhang.
A growing surplus caused prices to fall, which reached a record high in November 2022.
In its latest forecast, CRU expects a global surplus of 90,000 tonnes of lithium carbonate equivalent this year.
Citing falling prices for lithium products, Chinese producers Ganfeng Lithium and Tianqi Lithium last week warned of losses in the first half of this year.
($1 = 7.2672 renminbi)
