China cuts lithium production to raise its price
Companies in China's major lithium hub have cut back on lithium production following the recent price crash and weak demand for electric vehicles (EVs), according to a Chinese publication cited by Bloomberg . Here is a graph into the recent prices of lithium carbonate, the base ore for China's lithium industry traded in Yuan
In Yichun, the main lithium production center in China, some producers – including some major ones – have reduced supply, as reported by the Chinese newspaper The Paper. This is a similar strategy to the one OPEC+ applied, cutting production by one million barrels a day, to lift prices, and it seems to have worked.
Earlier this year, it emerged that China began overseeing the mining of lithium from lepidolite, the most abundant ore of lithium, and Yichun is often dubbed the "Lithium Capital of Asia," due to its huge reserves of the sought-after mineral. However, this control of the illegal production of lithium has not had a long-term effect and prices have continued to fall.
Lithium prices have recently plummeted due to weak Chinese demand for electric vehicles. The price crash could be good news for consumers, as battery costs could follow the decline in lithium prices, at least in the near term.
However, analysts see price increases in the lithium market over the medium to long term as demand for lithium in the energy transition is set to grow.
China accounts for a large part of global lithium supply and dominates the lithium-ion battery supply chain. UBS predicts that China will eventually control nearly a third of the global lithium supply by 2025. Beijing-controlled mines, not only in China but also in Africa, will see their total lithium production more than triple in just three years : from 194,000 tons in 2022 to 705,000 tons by 2025, UBS said in a note last month, reported by Bloomberg.
According to the bank, this surge in supply would lift China's share of global lithium supply to 32% in 2025, up from 24% in 2022 . According to BloombergNEF (BNEF), China is currently home to 75% of all battery cell manufacturing capacity and 90% of anode and electrolyte manufacturing.
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The article China cuts lithium production to raise its price comes from Economic Scenarios .
This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/la-cina-taglia-la-produzione-di-litio-per-aumentarne-il-prezzo/ on Fri, 07 Apr 2023 07:00:19 +0000.