.....the question people have is why are they producing so much if demand is down?
My answer:
1. Chinese lithium output serves domestic market, EV demand in China is still strong
2. Factories have to continue producing because despite lower prices for lithium, it still covers their low variable cost. Fixed cost is sunk (i.e they don't disappear if they don't produce- still have to pay for property taxes etc, interest on equipment). If they don't produce, they have to layoff staff and they hope the lithium price weakness is temporary. So they make money by producing more to get the cashflow to sustain operations, despite weaker prices.
It also means lithium prices are not low enough for them to abandon operations as their operational costs are much lower (wages are low).
But of course what they are doing only serves to keep a cap on lithium prices.
