LONDON- Slowing demand in China due to COVID-19 restrictions has put the brakes on lithium’s red-hot rally to record highs, but long-term demand from makers of electric vehicle batteries is expected to sustain prices.
China’s “zero-COVID” policy means restrictions to limit infections are still in place, hobbling factory activity and disrupting supply chains.
Electric vehicle batteries can use lithium carbonate or lithium hydroxide, but the industry typically talks of lithium carbonate equivalent (LCE) which contains both.
Spot prices for lithium carbonate used in batteries in China were at $68,850 per ton on May 11, according to Benchmark Mineral Intelligence, down from a record $79,550 in March.
Prices have more than doubled since the start of 2022.
“These very strict lockdowns in China have meant that many electric vehicle plants have ceased production, which in turn has reduced near term demand (for lithium),” said Benchmark Mineral Intelligence analyst Daisy Jennings-Grey.
She added supply was “still very tight and demand is robust”.
A surge in electric vehicle sales after previous lockdowns were lifted saw a scramble to secure battery raw materials which boosted prices.
