Lithium suppliers negotiate tougher terms on price

Lithium buyers and sellers are having important annual supply discussions through 2025 as demand dynamics in the battery industry change. Producers are aiming for better terms after a challenging year for this important battery component. More details on the ongoing negotiations can be found here.

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While lithium prices are on track to fall for a second consecutive year, the steep decline seen previously appears to have reached its lowest point. IndexBox data shows that China’s lithium carbonate exports in 2023 will be US$518.3 million, and imports will significantly exceed exports, reaching US$6.3 billion.

The ongoing negotiations, involving major customers in the cathode, battery and electric vehicle industries, aim to limit discounts previously offered to battery supply chain customers. This strategic focus is intended to be consistent with modest improvements in market conditions over the coming year. Current deals are being discussed at discounts of 0 to 2% to the spot price index, in contrast to previous discounts of 5% to 10%.

China remains an important market player, accounting for the largest share of global lithium consumption. The main export destinations of China’s lithium carbonate include South Korea (USD 273.8 million), Japan (USD 161.3 million) and Germany (USD 32.2 million). Instead, China mainly imports lithium carbonate from Chile ($5.8 billion) and Argentina ($478.6 million), illustrating its crucial role in the global supply chain.

This negotiating phase marks a significant shift from fixed-price contracts of the past as the industry adapts to the volatility of the electric vehicle era. Battery makers now use annual agreements to deal with price swings, similar to what they do with metals such as copper, taking advantage of terms that include premiums or discounts relative to third-party spot price indexes.

Source: IndexBox Market Intelligence Platform