ASX lithium shares slide as increasing supply pushes prices down in China

Lithium prices might take a breather … for now.

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ASX lithium shares are falling on Wednesday amid a broad-based selloff taking place across the S&P/ASX 200 Index (ASX: XJO).

Large cap ASX lithium shares lead the declines

The Pilbara Minerals Ltd (ASX: PLS) share price is currently down 3.16% at $2.00, threatening a 2-month low. The Orocobre Limited (ASX: ORE) share price is also in the red, down 2.62% to $8.54.

Explorers are showing mixed results so far today, with Piedmont Lithium Inc (ASX: PLL) flat at 70 cents, and Core Lithium Ltd (ASX: CXO) and Lake Resources NL (ASX: LKE) edging slightly lower, down 1.27% and 0.85% respectively.

Meanwhile, the likes of Liontown Resources Limited (ASX: LTR) and AVZ Minerals Ltd (ASX: AVZ) have managed to stay afloat, up 2.64% and 0.58% respectively.

Lithium prices ease from record highs

S&P Global yesterday reported an increase in traders selling industrial-grade lithium carbonate, keeping surging prices at bay in China.

Spot offers headed south towards yuan 175,000 to 180,000/mt on 28 September compared to yuan 185,000/mt on 24 September.

ASX lithium shares have been running hot this year thanks to a strong rebound in lithium prices.

In the case of Pilbara Minerals, its digital lithium auction received bids as high as US$2,240/dry metric tonne for its 5.5% spodumene concentrate.

Just two months ago, the highest bid at its inaugural digital auction came in at US$1,250/dmt.

But lithium prices might have hit a near-term top, after S&P Global reported a Chinese trader as saying:

Spot liquidity has been thinning with ongoing term contract negotiations for October delivery cargoes and some sellers think that the peak for near term spot prices is near, leading to the higher number of spot offers in the market.

It is understood that the selling pressure on industrial-grade lithium carbonate may not necessarily have an impact on prices for battery-grade lithium carbonate.

S&P pointed out that China’s demand was expected to slow down during its Golden Week National holiday between 1-7 October. However, its sources said that spot demand for battery-grade lithium carbonate would likely resume once term contract negotiations for October were settled.

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