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Lithium prices are showing promise of breaking a downward spell that has spanned almost three year after rising for the first time this year, according to Benchmark Mineral Intelligence.

The move is driven by Chinese domestic chemical prices throughout the end of last year, with Benchmark’s prices for lithium carbonate jumping by nearly 12 per cent to an average of $US6700 ($8668) per tonne in December.

The price reporting agency also noted a more modest increase of 2.6 per cent in Chinese lithium hydroxide prices to $US7950 per tonne by the end of last year.

The trend in these increases is distinct from previous rises, which were “isolated” and “not sustained”.

It now credited this year’s rises to the strong growth in lithium iron phosphate cathode, which was finding renewed interest in passenger electric vehicles in addition to electric buses.

“As was demonstrated in the industry’s previous price spike, which began in late 2015, demand growth at a rate that exceeds industry expectations can have profound implications for the future growth trajectory, and China has often proven a bellwether for the direction of global prices, with greater liquidity in the domestic market making pricing more responsive to market imbalances,” Benchmark stated.

“While it is too early to say whether this could be replicated in 2021, a reversal in the relationship between carbonate and hydroxide in China’s domestic market has often marked the peaks and troughs of lithium’s price cycle.

“The turnaround in pricing in (the) late-(fourth quarter) could be an indicator of more turbulence in 2021.”

Pilbara Minerals last week reported record December quarter shipments at its Pilgangoora lithium-tantalum project in Western Australia.

The company opened at $1.105 this morning after a previous close of $1.095 on Friday.

Fellow ASX-listed Lithium Power International also flagged last week its plans to restart lithium exploration in the state’s South West region, while AVZ Minerals secured its first offtake with China’s GFL International before the close of 2020.