A reduction in lithium carbonate stocks on the Guangzhou Futures Exchange (GFEX) pushed the market further into backwardation, driving up spot prices in China.
Prices of 99.5pc-grade lithium carbonate were assessed at 62,000-63,500 yuan/t ex-works on 8 July, up from Yn60,800-62,500/t ex-works on 1 July.
On-warrant stock at the GFEX-registered warehouses was 2,900t lower at 12,655t on 8 July from a day earlier, down from 22,628t in the beginning of the month.
The most actively traded September lithium carbonate contract closed at Yn63,880/t on 8 July, compared to the Yn65,100/t for the current-month contract.
The backwardation is likely to attract more deliveries to the exchange, as the lithium market continues to remain in surplus.
Miners up hedging
Chinese lithium producers have been actively taking advantage of the liquid futures market to hedge prices.
In May, Qinghai Salt Lake, a Chinese lithium carbonate producer that extracts from brine, announced plans to allocate up to 54mn yuan to futures trading to hedge against price risk.
Brine producers, because of their cost advantage, entered the market later than hard rock lithium miners, who are more readily exposed to price declines.
Yahua, a spodumene offtaker of Pilbara Minerals and a supplier to Tesla and, said in its annual report that hedging activities generated a profit exceeding 20mn yuan in 2024.
