Lithium futures in China have dropped over 25% this month, with the Guangzhou exchange’s lithium carbonate contract falling below 120,000 yuan ($17,900) a ton from more than 160,000 yuan at the start of September. The sharp decline reflects growing concerns over weakening demand for electric-vehicle batteries and energy-storage systems, despite a strong rally earlier in the year. A year ago, the same contract traded around 74,000 yuan per ton.

Analysts cite oversupply in battery production and lagging consumption as key factors. Adam Megginson of Benchmark Mineral Intelligence noted mounting doubts about whether demand can keep pace with cell output through year-end. The Chinese government recently suspended new battery project constructions, and a consumption tax on lithium-ion batteries adds further pressure. Global trade barriers and tighter US monetary policy also threaten demand outlook.

A private survey revealing unexpectedly large lithium stockpiles in China has sparked industry debate, while shares of Contemporary Amperex Technology Co. Ltd. have declined. Some industry players, including Ignacio Mehech of Clean Tech Lithium Plc, argue the sell-off is driven by sentiment rather than fundamentals, pointing to ongoing supply deficits expected through 2027.

Despite near-term volatility, Jordan Roberts of Project Blue noted that underlying supply-demand balances still suggest monthly deficits for the rest of the year, which may help stabilize prices over time.