CRU: Lithium Prices Crash Through $10,000 as Hype Meets Reality

LONDON, Aug. 21, 2019 /PRNewswire/ -- Lithium prices have steadily declined since the end of Q1, finally crashing through the $10/kg LCE mark at the end of July. Weaker-than-expected demand in China is partly responsible, but the main driver has been the ongoing avalanche of new supply into the market, as plentiful cheap spodumene meets ample conversional capacity in China.

Many market players continue to forecast long-run prices for lithium in the mid-teens LCE, citing refinery bottlenecks and the potential for ramp-up delays in the mining and refining sector. Based on previous experience in other commodities, CRU finds this argument unconvincing. We continue to forecast that lithium prices will be governed by cost fundamentals and that this will result in sustained lithium prices in the single-figures ? the same message which we have continually conveyed to CRU clients since November 2017.

Lithium prices tumble as disappointing demand growth meets ample supply

Lithium carbonate prices in China have dropped by nearly 20% since the beginning of 2019 to RMB 65,000/t, equivalent to $9.25/kg LCE. Lithium hydroxide has fallen by 30% to RMB 74,500/t, according to CRU's price assessments. China is the world's largest user of lithium, accounting for 57% of global demand in 2019, and is also the biggest supplier of lithium converted products. Many market players look to Chinese lithium spot prices as a bellwether of market health and therefore the continued decline of lithium prices in China has put mounting pressure on the global lithium market.

Subdued demand drags China's lithium market

CRU calculates that the Li-ion battery sector accounts for 60% of lithium demand in China, of which EV and portable electronics have the largest share. Portable electronics have long been the mainstay of lithium demand ? but with 4G handsets now representing 95% of domestic sales, market saturation has resulted in mobile phone sales through to July dropping by 5% year-to-date.

Read the full story:
https://www.crugroup.com/knowledge-and-insights/insights/2019/lithium-prices-crash-through-10-000-as-hype-meets-reality/

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About CRU

CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.

Since our foundation by Robert Perlman in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China.

CRU employs over 280 experts and has more than 11 offices around the world, in Europe, the Americas, China, Asia and Australia ? our office in Beijing opened in 2004 and Singapore in 2018.

When facing critical business decisions, you can rely on our first-hand knowledge to give you a complete view of a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.

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SOURCE CRU