FX.co ★ Lithium Extends Drop to Over 4-Year Low

Lithium carbonate prices have plummeted to below CNY 68,000 per tonne, marking their lowest level in over four years, as supply continues to exceed demand. Recent data from the China Passenger Car Association indicates that sales of new energy vehicles in China rose by 38% year-on-year in March, reaching 991,000 units. However, these figures fell short of the association's expected 1,000,000 units, despite ongoing government subsidies designed to encourage vehicle exchanges and the adoption of energy transition technologies. This outcome aligns with the recent trend that China's electric vehicle (EV) market has not grown as rapidly as anticipated following the surge at the start of the decade. Such circumstances have prompted Beijing to offer subsidies to battery producers, leading to a surge in production and an oversupply. As a result, battery inventories are expected to remain high, with EV manufacturers showing little urgency to secure new deals. Nevertheless, the supply is unlikely to align with market demand, as lithium miners are hesitant to halt operations in order to maintain their market share and continue building relationships with governments and battery manufacturers.