China lithium futures plunge to five‑month low as oversupply looms

On Tuesday, China’s most active lithium carbonate contract on the Guangzhou Futures Exchange fell to its lowest level since February, dropping about 4.5% to 141,280 yuan per tonne – roughly a one‑third decline from the year‑to‑date peak.

Analysts say the slide reflects growing expectations that global lithium supply will exceed demand by 2027. A resumption of production at CATL’s Jianxiawo mine is projected to add up to 25,000 tonnes in the second half of the year, and a 2% consumption tax on battery products effective 1 September, rising to 4% in 2027, is prompting forward‑looking pricing.

Spot prices for battery‑grade lithium carbonate in China fell to 152,200 yuan per tonne on 20 July, down 7,200 yuan from the start of the month, even as near‑term demand remains solid. The market also notes that lithium concentrate from Zimbabwe has not yet been shipped in large volumes, keeping short‑term supply tight while participants price in anticipated future slack.