Chinese lithium producers set floor price as demand for the metal drops
04/07/2023 // Kevin Hughes // Views

China's top lithium firms agreed to set a floor price for the metal amid dwindling demand, six individuals confirmed.

Ten companies – including Tianqi Lithium and Ganfeng Lithium – that met on the sidelines of a conference in the city of Nanchang in Jiangxi province agreed on the lowest minimum price of 250,000 Chinese yuan ($36,350) per metric ton (MT) of lithium carbonate. One person who attended the March 28 meeting and five others informed of the discussions confirmed the move on condition of anonymity.

"Setting a floor price should strengthen the market sentiment and hold the prices from falling further," said the anonymous source who attended the March 28 closed-door talks.

Participants at the meeting also mentioned the planned launch later this year of lithium carbonate futures on the Guangzhou Futures Exchange. The move confirmed by two sources could also help stabilize the prices of lithium – a crucial component of batteries for electronic devices and electric vehicles (EVs).

Ganfeng denied any negotiations on the floor price in an emailed reply to Reuters. A representative for the company stated that Ganfeng "always insists that product prices should be determined by the market, and will never take the initiative to control prices to influence the market."

Tianqi refused to comment, while Zhicun Lithium could not be reached. Zhicun, one of the leading lithium carbonate producers in China, was represented by four people during the March 28 meeting.

The move to set a floor price comes as lithium prices drop on a critical slowdown in demand for electric vehicles (EVs) in China, the world's biggest EV market. Spot prices have dropped by more than 60 percent since their peak in late November, with the decline picking up pace during the past few weeks. (Related: Lithium production setback will hinder EV growth; locals revolt over lithium mining impacts on water supplies.)


Companies not likely to adhere to the floor price

Based on a weekly price assessment by Fastmarkets, lithium spot prices fell to 220,000 yuan ($31,988) per MT on March 31 compared to 260,000 yuan ($37,804) a week prior.

But it is still not clear how long the 10 companies, which account for more than half of China's lithium carbonate output, will keep the floor price. A buyer for a battery manufacturer, who did not attend the meeting of lithium producers, said offers as low as 150,000 yuan ($21,810) have also emerged as traders wanted to offload mounting stocks.

Nevertheless, some buyers were doubtful that the producers would adhere to the floor price given the low demand. "If we don't buy, someone will eventually drop the price," said a lithium carbonate buyer informed about the decision.

Lithium prices had skyrocketed more than 10 times from early 2021 to a record 597,500 yuan ($86,876) per MT in November 2022, driven mainly by strong demand for EVs and limited supply of the metal. However, lithium prices are now down due to decreasing demand for electric cars and rising supplies of the metal.

EVs that use lithium for their batteries are also facing intense competition from conventional vehicles. Several carmakers, including SAIC Volkswagen Automotive Co. and Geely Automobile, slashed prices on more than 40 models before stricter emissions rules in China take effect on July 1. Dealers and manufacturers of traditional, gas-powered vehicles are also reducing prices to clear their inventories of vehicles that do not meet the latest standard. has more stories about lithium.

Watch this G News report about how energy rationing in Sichuan, China's lithium mining hub, pushed up prices of the material to near-record highs.

This video is from the Chinese taking down EVIL CCP channel on

More related stories:

Lithium supply not large enough to not meet ambitious global EV deadlines, mining CEO warns.

Automakers slashing EV prices after government subsidies fail to prop up the industry.

Lithium shortage spells disaster for Biden admin's ill-fated crusade against gasoline-powered vehicles.

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