(Yicai Global) July 25 -- China’s first batch of lithium carbonate futures, which debuted on the Guangzhou Futures Exchange on July 21, saw their price rebound today after sliding in their first two days of trading. But futures prices are likely to fall again as a supply surplus of lithium carbonate comes on the market next year, analysts said.

Lithium futures contract LC2401 surged by the exchange-imposed daily trading limit of 7 percent today to hit CNY225,900 (USD31,623) a ton. However it is still 8 percent below the benchmark price of CNY246,000 a ton set on the first day of trading.

The price of lithium carbonate has been in flux all year, and there is likely to be oversupply next year, Jinrui Futures said in a research report released today. The cost to produce lithium carbonate could drop to under CNY200,000 a ton which will affect the price of futures.

The spot price of lithium carbonate is now around CNY290,000 a ton, half of the historic high set in November last year, as a slow down in the electric car market dampens demand.

Although China’s EV sales are expected to surge 35 percent this year, the supply of lithium is still likely to increase faster than demand, commodity trading information provider Mysteel said. So supply and demand will change from a tight balance this year to a supply surplus next year, and prices will likely fall in the long run.

Following the introduction of lithium futures, lithium carbonate options debuted on the Guangzhou Futures Exchange yesterday and logged turnover of CNY20.7 million (USD2.9 million) on the first trading day.

Editors: Dou Shicong, Kim Taylor