Chinese lithium and cobalt sulfate prices fell this month as strict COVID-19 lockdowns in Shanghai and elsewhere limit demand in the world’s largest electric vehicle market. Chinese battery-grade lithium prices fell by 5% this month to a mid-point of RMB 478,000 (US$72,600) per tonne, according to Benchmark Mineral Intelligences’s Lithium Price Assessment—the first fall since June 2021. Prices for cobalt sulfate fell by 6%, according to Benchmark’s Cobalt Price Assessment.
China’s “zero-COVID” policy could slow sales of electric vehicles this month as consumers in the country’s biggest city remain at home. At the same time logistical difficulties caused by the lockdowns in Shanghai and elsewhere are disrupting supply chains for automakers and battery producers.
Shanghai, a city of 25 million people, has been in lockdown for more than a month, impacting auto factories and the transportation of parts and supplies in the city and neighboring Zhejiang and Jiangsu provinces.
Automakers including Tesla, Nio and Volkswagen were forced to halt production temporarily earlier in the month. Tesla has said it had resumed “limited production” at its plant in Shanghai.
Consultancy Rho Motion now forecasts Chinese EV sales of 5.6 million this year, down from an earlier forecast of 5.8 million.
Chinese cathode producers are drawing down on their inventories of battery raw materials rather than making new purchases, according to George Miller, an analyst at Benchmark.
Prices for cobalt sulfate fell by 6% in April to RMB 112,500 (US$17,100) a tonne as lockdowns halted downstream cathode production, weakening demand, according to Benchmark’s Cobalt Price Assessment.
Still, battery producers including CATL and LGES said this week they were confident about global sales this year. Lost EV demand due to the lockdowns could be pushed into later this year, according to Miller.
Upstream raw material price increases have started to ease, and demand still remains exuberant. So I’m naturally positive on the industry and prospects for the company.
China’s Passenger Car Association said it expected retail sales of passenger cars to fall in April by 32% but said it was still optimistic on sales of new energy vehicles, saying it expected them to maintain their 25% market share.
Ken Brinsden, chief executive of Australian lithium producer Pilbara Minerals, said this week that the automotive shutdowns in China had not impacted lithium demand.
Demand has been consistent now with respect to our ability to sell for the best part of 12 months and we haven’t seen any change. There has been a little bit of softness in pricing. But in part, that doesn’t surprise me, because the market had obviously run very, very hard and fast in the period prior, the fact that it’s taking a reather, it really is no surprise.