A downturn in the Chinese lithium carbonate price had only a slight impact on sales in the first quarter, executives from US and Australian lithium producers said during quarterly earnings calls.

The lithium carbonate EXW China Battery price fell 41% from its November 2022 high of $79,650 to $46,975 per metric ton on March 22, according to S&P Global Market Intelligence data. The price drop accelerated in the final month of the quarter, dropping 25% from February 22 to March 22.

Lithium prices outside China fluctuated far less, with the lithium carbonate CIF Europe price rising 6.8% from $58,500/t in November 2022 to $62,500/t in March and the lithium hydroxide Europe price rising 19% to $72,000/t over the same period, Market Intelligence data indicated.

The downturn in the Chinese market can largely be attributed to weak internal demand for raw materials from lithium refiners that are still working through existing inventories, S&P Global analyst Alice Yu said in a March report.

Executives from lithium producers sought to assure investors during first-quarter earnings calls that their exposure to the Chinese market was not a detriment to profits or planned investments.

"There's a lot of noise at the moment regarding the Chinese spot prices," Christian Barbier, chief sales and marketing officer for Australian lithium producer Allkem Ltd., said during an earnings call April 20, weeks before Allkem announced a merger with US-based Livent Corp. "I think what is important is to look at the strong market fundamentals. ... We're talking about 30% to 35% increase year on year for [electric vehicle] sales growth this year, and that will impact the whole industry. So we see a number of buyers now thinking they need to restock."

The weak demand in the Chinese market can be attributed to a number of factors, said Dale Henderson, managing director and CEO at Pilbara Minerals Ltd., during an earning call April 27. "There was a seasonal variation in the Chinese New Year. There's been the end of China's EV subsidies. There's also been a war underway between [internal combustion engine] vehicles and EVs. ... And then lastly, there's a category of what we call buying behavior and sentiment."

Hydroxide pricing has had a pullback, but "it's been nothing near the pullback we've seen in the lithium carbonate pricing," Henderson said. "Does the gap close? We'll find out."

Henderson said Pilbara did not withhold supply during the quarter due to the low prices and offtake contracts are "broadly weighted to hydroxide." During the first quarter, the company's shipments of spodumene concentrate decreased by a modest 3% quarter over quarter to 144,312 dry metric tons while sale prices were down 15% to US$4,840 per dry metric ton.

"Pilbara Minerals remains bullish and on the long-term outlook for the market. We remain committed to our expansions ... enjoying, hopefully, strong margins for many quarters and many years to come," the executive said.

Allkem's Barbier also said Chinese spot prices "are not representative of all lithium price transactions. ... Our own weighted average price has remained stable during the quarter, slightly above the guidance."

Allkem's sales slid 7% from the previous quarter to 3,131 metric tons. The company held back lithium carbonate supply "at the end of the December quarter, which has been maintained during the March quarter" to support the startup of the Naraha lithium hydroxide plant in November 2022, Barbier said.

When a portion of supply was not used, the company chose to keep it off the market.

"We're not pushing volumes into the Chinese spot market for carbonate ... at the moment because prices are not representative of the medium-term value that we should be able to get for this product," Barbier said. Allkem's carbonate sales are split mostly between South Korea, Japan and China, according to Barbier.

US-headquartered lithium giant Albemarle Corp. adjusted its 2023 guidance to reflect current lithium market pricing, Scott Tozier, the company’s executive vice president and CFO, said during an earnings call May 4.

"On average, lithium indices are down about 50% to 60% since the start of the year," said Tozier, who also reminded investors that "most of our volumes are sold under long-term contracts with strategic customers."

Only 10% of Albemarle's supply is fed into China's lithium carbonate spot market, Eric Norris, the company's lithium president, said during the call, avoiding the low prices there. As a result, Albemarle had a strong quarter with net sales of $2.6 billion, more than double the same quarter in 2022.

Norris said "destocking has to do with a temporal effect in China. It has nothing to do with fundamental demand. ... We're looking at a 40% year-on-year growth in demand, our customers need the supply."

Livent similarly had a strong quarter, with $253.5 million in net sales, up 77% year over year.

Lithium prices in the markets that Livent participates in "were actually better than our forecasts had assumed" considering the company did not sell any lithium carbonate to China in the first quarter, President and CEO Paul Graves said May 2 in an earnings call.

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