© Reuters. Employees work on a production line manufacturing lithium battery products at a factory in Yichang, Hubei province, China, May 28, 2019. REUTERS/Stringer
By Siyi Liu and Dominique Patton
BEIJING (Reuters) -China’s top lithium producers agreed this week to set a floor price of 250,000 yuan ($36,380) per tonne of lithium carbonate, six people familiar with the matter said, in an effort to slow a plunge in the price of the battery raw material.
The price was agreed on Tuesday by around 10 companies including Tianqi Lithium and Ganfeng Lithium that met on the sidelines of a conference in Nanchang in southern China, said one person who attended the meeting and five others briefed on the discussions.
The people declined to be named because of the sensitivity of the topic, which was discussed in a closed-door meeting.
Ganfeng said in a response to Reuters that no discussions on a floor price had taken place.
“Ganfeng always insists that product prices should be determined by the market, and will never take the initiative to control prices to influence the market,” a company representative said in an email.
It added that no company in the industry has such capabilities.
Tianqi declined to comment.
Zhicun Lithium, one of the top lithium carbonate producers in China, was also represented at the meeting, said four of the people, but could not be reached for comment.
The move comes as lithium prices plunge on a significant slowdown in demand for electric vehicles (EV) in China, the world’s largest EV market.
Spot prices have slumped by more than 60% since their peak in late November, with the decline picking up pace in recent weeks on a growing price war in China’s auto market.
It is not clear how long the companies, which account for over half China’s lithium carbonate output, will follow the floor price.
Spot prices dropped to 220,000 yuan a tonne on Friday, according to a weekly price assessment by Fastmarkets, down from 260,000 yuan a week earlier.
Offers as low as 150,000 yuan were also heard in the market this week as traders sought to offload mounting stocks, said a buyer for a battery manufacturer who did not attend the meeting of lithium producers.
“Setting a floor price should strengthen the market sentiment and hold the prices from falling further,” said the person who attended the meeting.
However, some buyers were sceptical that producers would stick to the floor price, given the sluggish demand.
“If we don’t buy, someone will eventually drop the price,” said a lithium carbonate buyer briefed on the decision.
Participants at the meeting also discussed the planned launch later this year of lithium carbonate futures on the Guangzhou Futures Exchange, according to two of the people, another move that could help stabilise prices.
($1 = 6.8718 Chinese yuan renminbi)