Over the past few years, the lithium markets exploded as the electrification drive went into overdrive. EV makers like Tesla Inc. (NASDAQ:TSLA) have been scrambling to secure supplies amid rapid EV growth and tight lithium supplies, sending lithium carbonate prices up more than six-fold and spodumene up nearly tenfold in the space of a few years.
But as the old adage in the commodity markets goes, the cure for high prices is high prices, or in more common parlance, what goes up must come down: lithium prices have crashed spectacularly over the past four months, reversing years of gains.
After hitting an all-time high of CNY 595,000 per tonne ($86,170 per tonne) in November 2022, lithium carbonate prices in China have sunk to a 13-month low of CNY 362,500 per tonne ($52,500 per tonne) in March 2023, good for a nearly 40% correction as a confluence of negative catalysts conspired to end lithium’s biggest rally ever.
First, a rare slowdown in EV demand in the pivotal Chinese market has taken the markets by surprise. According to the China Passenger Car Association (CPCA), sales of new energy vehicles, including pure battery EVs and plug-in hybrids, fell 6.3% in January, a sharp contrast to a blistering 90% growth in 2022.
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