Lithium stocks tumble amid declining prices

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Lithium producers have seen their stocks tumble in 2023 following the gradual collapse of lithium prices.

Lithium carbonate prices in China have plummeted to approximately $22,900 per tonne, marking a significant decrease from their peak in June, which was nearly twice as high. This contrasts sharply with the record-setting prices of nearly $83,600 per tonne reached last year.

In China, Ganfeng Lithium and Tianqi Lithium have plunged 51% and 32% respectively since January.

Albemarle stock has dropped 27.7% year-to-date, while SQM fell 28%.

Demand for lithium typically picks up in the fourth quarter in China – the world’s largest EV market – because of strong battery cell production and installation, and manufacturers usually replenish their feedstock ahead of that.

But this year, that hasn’t happened. Sizable restocking has yet to materialize, Susan Zou, an analyst with researcher Rystad Energy told Bloomberg. Battery makers still have plenty of inventory to draw down, she said.

“The price drop is fundamentally explained by an increase in supply driven by greater rock and brine production in China, the start of operations at Sigma Lithium’s Grota do Cirilo rock project in Brazil, and the Cauchari Olaroz brine project of Lithium Americas in Argentina. Expectations of more production, in the short and medium term, in Argentina, Brazil, and Africa also have an impact,” Andrés González, senior mining industry analyst at Plusmining, told BNamericas.

For González, China’s slowdown was only a secondary factor compared to the increase in supply.

Goldman Sachs analysts including Aditi Rai see lithium carbonate prices falling further over the next 12 months.

“For the rest of the year, the fundamental focus appears to be on a seasonal uptick in Chinese EV sales, and we think any disappointment relative to historical norms could put accelerated downward pressure on prices,” they wrote in a note dated Sept. 21.

(With files from Bloomberg)