Lithium Price Analysis: China Futures Rise Amid Weak Spot Demand

Futures for lithium carbonate closed up for Mysteel, following news of a postponed resumption at its Jianxiawo mine. The update was good for sentiment as market participants considered whether supply recovery could be slower than anticipated.

The market discussion was also opened by Zimbabwes government, which announced that 14 minerals, including lithium, nickel, cobalt, and graphite, are critical. The declaration establishes a compulsory minimum state interest via a special purpose vehicle.

The action comes in the wake of broader resource control activity in the critical minerals sector. The addition of another policy layer over global supply expectations for lithium comes on top of other factors, such as the increasing importance of governments to have tighter control of battery raw materials.

Buyers Stay Selective Before June

Downstream buyers were not in a hurry to build inventories, Mysteel said. Trading volumes were low over the day, but prices were improving during the session. That suggests that its not a matter of aggressive restocking but selection.

Nevertheless, the demand side is not nonexistent. Several LFP cathode plants are still increasing new capacity, suggesting increased production volumes could be seen in June. This may help drive lithium carbonate demand if battery material production is as anticipated.

Chinas push to invest in the power grid also provides a long-term demand backdrop. The National Development and Reform Commission unveiled a 15th Five-Year Plan project that will invest over 5 trillion yuan in extending and modernizing the grid.

More resilience in the grid, which relates to both energy storage expansion and integration of renewables, is related to battery demand.

For the time being, lithium is used in a mix daily. Futures are looking good at around 178,000 yuan, but it is only with more buyer interest in the spot market that the recovery is becoming more well-rounded.