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• Lithium carbonate prices fell Yuan 110,000/mt on month
• Supply glut adds further pressure to prices

Chinese battery-grade lithium prices continued their downtrend in the week of March 3 on tepid downstream demand and mounting inventories.

Platts assessed battery-grade lithium carbonate at Yuan 350,000/mt on March 3 on a DDP China basis, down Yuan 4,000/mt on the day and Yuan 30,000/mt on the week.

Tradable levels heard in the week to March 3 were significantly lower than the previous week, largely centered around Yuan 300,000-350,000/mt DDP China, down Yuan 50,000/mt.

Prices for battery-grade lithium carbonate have fallen Yuan 110,000/mt, or 24% in a month since Feb. 3.

Market sources described current market as "messy," as there were sparse trades done at Yuan 320,000/mt, 330,000/mt and 340,000/mt, with a wide range of offers in the market as well.

"As long as there are people throwing stocks out, you'll see all sorts of prices around," a Chinese refiner said.

However, larger Chinese refiners are holding firm to their offers at Yuan 350,000-360,000/mt range.

Inventory levels in the market remained sufficient due to tepid downstream demand from precursor and cathode makers.

"Downstream hasn’t been operating at full capacity since the start of the year," a Chinese precursor maker said.

A Chinese analyst estimated the inventory level for lithium carbonate in China was holding at 40,000 mt as of Jan. 31, which is a historic high. This level will be equivalent to the two months’ worth of backlog.

"Even last year’s inventory has not been digested for some," he added.

Platts assessed battery-grade lithium hydroxide at Yuan 401,000/mt March 3 DDP China basis, down Yuan 1,000/mt on the day and down Yuan 3,000/mt on the week.

Prices for lithium hydroxide have been inching down marginally compared with lithium carbonate due to the smaller spot market.

Domestic market sources look toward the "Two Sessions" -- annual meetings of the National People's Congress (NPC) -- China's parliament and the Chinese People's Political Consultative Conference (CPPCC) starting March 5 for guidance on potential EV measures, sources said.

Upstream, Platts assessed spodumene concentrate with 6% lithium oxide content at $4,800/mt FOB Australia March 3, down $100/mt on the week.

While lithium salt prices are continuing its downtrend, consumers are more reserved in buying spodumene due to expectations of further price drops.

Considering the loading and delivery period, some consumers said they will not accept raw materials above $6,000/mt as it will not cover the cost of producing lithium salts.

Spodumene at $6,000/mt is equivalent to Yuan 404,890/mt cost of producing lithium carbonate, inclusive of 13% VAT as well as refining costs of about Yuan 30,000/mt. This is more than Yuan 50,000/mt higher than the current lithium carbonate spot prices.

Platts is part of S&P Global Commodity Insights.