FX.co ★ Lithium Falls to 4-Year Low

In April, lithium carbonate prices dipped below CNY 71,000 per tonne, marking their lowest in four years as supply continued to outstrip demand. According to the China Passenger Car Association, sales of new energy vehicles in China surged by 38% year-over-year to 991,000 units in March. However, this figure fell short of the association's projection of 1,000,000 units, despite ongoing government incentives aimed at encouraging vehicle upgrades and supporting energy transition technologies. This data aligns with ongoing trends indicating that China's EV market has not expanded at the anticipated pace following the initial surge at the start of the decade. This stagnation has prompted Beijing to provide subsidies to battery manufacturers, resulting in increased production and a subsequent oversupply. Consequently, battery inventories are projected to remain high as EV manufacturers show little urgency to secure new agreements. Meanwhile, supply isn't anticipated to decrease at the same pace, as lithium miners opt to keep operations running in order to maintain market share and sustain relationships with both government bodies and battery producers.