Benchmark Mineral Intelligence said yesterday "escalating demand and anxiety surrounding raw material supply" had placed further upward pressure on lithium chemical prices in China in the first half of September.

It said EXW China technical-grade lithium carbonate rose 21.4% over the period to an average US$18,900 per tonne, while battery-grade material gained 22.2% to an average $19,600/t.

EXW China lithium hydroxide rose 14.2% to an average $21,150/t.

The stage is set for a further rally in spodumene demand, the battery supply pricing and research firm suggested.

"Market participants indicate to Benchmark that hydroxide supply may begin to contract if [the] carbonate-hydroxide price differential narrows; this would make converting carbonate to hydroxide uneconomic, likely leaving the few chemical producers with stable spodumene supply to meet hydroxide demand," it said.

The comments come as ASX-listed producer Pilbara Minerals achieved a record price this week for its second spodumene concentrate digital auction.

It intended to accept the highest bid - of US$2,240 per dry metric tonne, for 8,000t of 5.5% spodumene free-on-board Port Hedland basis - which was more than double the peak of the previous rally, Benchmark's head of price and data assessments Caspar Rawles noted.

Years of underinvestment due to low prices was driving the current dynamics, he tweeted.

Pilbara's first digital auction in July had achieved $1,250/t (FOB Australia) for 10,000t of 5.5% spodumene, well above the other July transaction prices of $600-$750/t tracked by Benchmark.

The company expected the latest Pilbara auction result to mutually reinforce the chemical and feedstock price rally.