China extends measures to boost trade-in program; lithium carbonate market muted

China has announced extended measures to boost its trade-in program in 2025 as expected, which industry sources say will further drive electric vehicle sales and increase demand for lithium-ion batteries this year.

However, China's lithium salts market remains muted and is expected to remain rangebound in the short term amid weak supply and demand, the sources said.

The National Development and Reform Commission and the Ministry of Finance released joint statements Jan. 8 on the extended measures to boost large-scale equipment renewals and replace aging consumer goods.

China will increase the amount of funds for ultra-long-term special treasury bonds to support the upgrading of equipment in more fields over 2025, the statements said.

Moreover, the country will expand the scope of scrapping and renewal subsidies for old service trucks and passenger vehicles, raise subsidies for new energy city buses and power batteries replacement as well as further improve subsidies standards for scrapping and renewing passenger vehicles.

Thanks to the measures to boost the trade-in program, more than 2.9 million vehicles were scrapped and more than 3.7 million units replaced in 2024, according to a regular State Council policy briefing on Jan. 8.

Lithium salts market

Chinese lithium chemical prices remained in a downtrend throughout 2024 due to weak demand and abundant supply, although EV sales maintained decent growth.

Platts, part of S&P Global Commodity Insights, assessed battery-grade lithium carbonate at Yuan 75,500/mt ($10,297/mt) on a DDP China basis Jan. 8, up Yuan 1,500/mt week over week but down Yuan 14,500/mt from a year earlier.

According to market participants, several lithium refiners will carry out maintenance starting in January and ending in February, which could cut lithium carbonate production by around 10%.

However, sources said the impact of the maintenance news was not yet evident in the market as only a few refiners have officially announced maintenance plans, while several refiners have decided to carry out maintenance but have not made those plans public.

On the demand side, there has been scant restocking activity from cathode makers and most consumers have restocked lithium salt in sufficient quantities before the new year, sources said.