China's top lithium producers, including Tianqi Lithium and Ganfeng Lithium, have reportedly agreed to establish a minimum price of 250,000 yuan or $36,380 per tonne of lithium carbonate to slow down the plummeting price of the crucial raw material for batteries.
The agreement was met at a gathering of roughly ten firms in Nanchang, southern China, on Tuesday this week amid the backdrop of slowing demand for electric vehicles, particularly in China, which has weighed on lithium prices.
Since November, lithium prices have shed more than half their value, with the drop accelerating in recent weeks. Offers reportedly fell to 260,000 yuan per tonne, as Chinese traders raced to dump mounting supplies.
The meeting attendees, who comprise more than half of China's lithium carbonate output, have yet to indicate how long the minimum prices will be in place.
One representative from Ganfeng Lithium said in an email statement, "Ganfeng always insists that product prices should be determined by the market, and will never take the initiative to regulate prices to influence the market."
Tianqi Lithium declined to comment.
According to one participant, the proposed price floor aims to halt the bleed in markets and improve market sentiment.
Another buyer voiced doubts that the price floor would hold due to sluggish demand, adding, "If we don't buy, someone will eventually drop the price."
The conference participants also discussed the upcoming launch of lithium carbonate futures, slated for later this year on the Guangzhou Futures Exchange, hoping this move could potentially stabilize prices.
Lithium carbonate is a critical component of batteries for electronic devices and EVs. The slump in prices inflicted heavy damage on producers globally, as China's EV sector contracted following hefty subsidy cuts that Beijing initiated last year in order to foster technological advances in the automotive industry.
By Michael Kern for Oilprice.com
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