FX.co ★ Lithium Halts Downturn at 4-Year Low

Lithium carbonate prices were recorded at CNY 61,300 per tonne in July, marking a pause in this year's sharp decline but remaining close to their lowest levels since 2021. This situation unfolded as the market juxtaposed ample supply with seemingly robust demand. Increased lithium production in countries like China, Indonesia, and the Democratic Republic of the Congo has intensified selling competition. The International Energy Agency (IEA) has estimated a 35% increase in lithium supply last year. This trend is expected to continue as mining companies avoid shutting down operations to maintain their share of the market and uphold relationships with governments and battery manufacturers. Meanwhile, in China, electric vehicle sales experienced an annual growth of over 28% in May, bolstered by government incentives to exchange traditional automobiles for new energy vehicles. Despite this significant growth, it aligned with recent trends indicating that China's electric vehicle market has not expanded at the anticipated rate after the early-2010s surge. This has resulted in subsidies for battery manufacturers, prompting an increase in output and leading to a supply surplus.