Lithium Prices Plunge 37% in Seven Weeks as Bearish Demand Consensus Accelerates
nashnova research
Chinese lithium futures have plunged 37% over seven weeks, briefly breaking below RMB 100,000 per tonne; an EU–China deal curbing hybrid-car exports and Goldman Sachs' call for a two-year surplus are cementing a bearish consensus on EV and storage demand.
How far and how fast has lithium fallen?
The most active contract on the Guangzhou Futures Exchange dipped below RMB 100,000/t (≈$14,900) intraday Thursday before recovering slightly.
The weekly drop is roughly 14%; the cumulative seven-week decline reaches 37%, with the sell-off running since late August.
This means → this is not a routine pullback but an accelerating slide — losing more than a third of its value in seven weeks signals sellers are dumping without waiting for a bounce.
Why does the EU–China deal hurt lithium?
The EU and China reached an agreement this week to restrict hybrid-vehicle exports to the EU.
In plain terms = hybrids are the main vehicle category Chinese automakers use to enter Europe; narrowing that export channel directly cuts a slice of expected battery installations, dragging upstream lithium demand with it.
The deal also weighs on large-scale energy storage — markets fear that slower EV penetration will delay the build-out of associated storage projects.
What is Goldman Sachs forecasting for supply and demand?
Goldman predicted last week that the lithium market will shift from a supply deficit to rough balance in Q4, then tip into surplus over the following two years.
The bank noted that growth momentum in EVs and energy storage has slowed, weakening downstream restocking demand.
This means → if Goldman's call proves right, lithium prices lack strong supply-demand support for the next two years — stabilisation hinges on EV penetration accelerating faster than expected.
Is the macro backdrop helping or hurting?
Lithium's decline is not purely a supply-demand story; it is also caught in a broader equity-market pullback.
Three forces are pressing simultaneously: profit-taking on richly valued chip stocks, persistent AI-infrastructure cost pressure, and rising bets on further Fed rate hikes.
In plain terms = the entire risk market is contracting, pushing manufacturers' funding costs higher — more expensive capital cools expansion plans, which in turn curbs lithium procurement.
What would it take for lithium to stabilise?
Futures analyst Zhang Weixin noted: "As the price decline accelerates, a bearish consensus is forming across the industry."
Goldman's two-year surplus call makes the prerequisite for stabilisation very clear: EV penetration must accelerate beyond expectations.
This reflects a growing risk of self-reinforcing pessimism — EU policy tightening and demand-slowdown signals are simultaneously eroding that very prerequisite.
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