Chinese lithium carbonate prices showed minimal movement on Tuesday, with the SMM battery-grade index settling at 134,406 yuan per metric ton. Spot transactions averaged approximately 136,000 yuan, though market activity remained subdued due to weakened downstream demand and logistical constraints.
In a significant development, Australia's PLS Group announced a two-year agreement to supply 150,000 tonnes of spodumene concentrate to China's Canmax Technologies. The contract establishes a price floor of $1,000 per tonne, with final pricing linked to prevailing market rates. The arrangement requires a $100 million interest-free prepayment from Canmax and provides PLS with downside protection while maintaining exposure to potential price increases.
U.S.-listed lithium producers displayed mixed performance. Albemarle shares advanced 1.4% to close at $165.76, while Chilean competitor SQM edged down 0.4% to $71.15. PLS Group shares surged as much as 5.3% in Australian trading following the contract announcement.
Market participants are closely monitoring whether physical demand will strengthen following recent inventory replenishment cycles, or if battery and cathode manufacturers will maintain existing stockpiles to exert downward pressure on prices. Floor-price agreements like the PLS-Canmax deal help producers manage cash flow volatility but underscore the challenges of securing both volume and price commitments in uncertain markets.
The current market pause is particularly notable given its reliance on limited supporting factors—supply discipline and emerging battery-storage demand. Analysts warn that price stability remains fragile, with potential for rapid declines if battery orders weaken or supply rebounds more quickly than anticipated.
Industry executives emphasize the importance of long-term contracts for new production projects. Sibanye Stillwater CEO Richard Stewart noted that securing offtake agreements can be as crucial as spot prices for preventing new output from being overwhelmed by potential oversupply. He also indicated that European supply chains could benefit if the Keliber project transitions to battery-grade material production.
Market attention now turns to China's futures market for directional cues, with physical buyers monitoring spot discounts as activity slows. Albemarle's fourth-quarter 2025 earnings report, scheduled for release after Wednesday's market close, is expected to provide important insights into pricing trends, contract developments, and demand outlooks that will influence lithium market sentiment through late February.
