Lithium carbonate prices in China have soared more than 400 percent over the last 12 months, in June prices were at 477,500 yuan/tonne, above the three-month lows of 457,700 that held through May amid a rebound in demand projections as strict Covid lockdowns in Shanghai were relaxed.
As cases were seen lower in major Chinese cities, investors ramped up bets that electric vehicle manufacturers will return to increased capacity after lockdowns halted auto production during April, as lower demand during the period saw new energy passenger vehicles plummet 40 percent when compared to March.
However, benchmark prices for this commodity may be about to experience a sharp correction as demand for the light metal is weakening and there is an oversupply of lithium.
Despite the blip during the start of Q2, carbonate prices remain nearly 70 percent higher year-to-date on the back of a global effort to reduce carbon emissions, while gasoline prices are at all-time highs.
To match the soaring trend in the industry, Beijing called for an increase in output from lithium smelters and miners to relieve the rally that saw prices reach record-highs of 497,500 in March.