After experiencing a "expectation-driven correction" in July, the price of lithium carbonate has shown signs of stabilizing recently. On August 10th, the main contract LC2609 of lithium carbonate futures closed at 146,360 RMB per ton, with a cumulative increase of 6.24% over the past six trading days.

Prices have stabilized these days," commented a person familiar with the lithium carbonate futures market. In July prior to this, lithium carbonate futures prices had fallen by nearly 20% due to bearish expectations of excess supply in the long term.

The ups and downs in the futures market have not dampened the booming situation on the industrial side. "Production and sales of lithium carbonate are normal," said an official from a lithium salt enterprise in Sichuan. The downstream demand remains strong, and the company has almost no inventory left. The status of this enterprise basically represents the whole industry — since July, enterprises such as Tianhua New Energy and Jiuling Lithium Industry have successively entered maintenance periods, yet the downstream production scheduling of lithium batteries in August has exceeded expectations. Securities companies analyzed that the pace of destocking of lithium carbonate is accelerating, and the overall supply and demand pattern remains tight.

Bad news fully digested, lithium prices surge over 10,000 RMB in a week

Many industry insiders told the Shanghai Securities News that the previous decline in lithium prices was not due to weakening demand, but because the market had priced in the incremental future supply in advance.

News such as Zimbabwe's resumption of lithium concentrate exports, CATL's resumption of production at its Jiangxi lithium mine, and the decline in new‑energy vehicle manufacturers' first‑half performance have stimulated the nerves of the trading side, and the pessimistic sentiment surrounding long‑term supply surplus has spread rapidly, becoming the core factor suppressing lithium prices.

After entering August, the price of lithium carbonate futures ushered in an upward trend. The main contract LC2609 rose from the lowest point of 136,000 RMB per ton at the beginning of the month to the current highest point of 146,000 RMB per ton, with an increase of more than 10,000 RMB per ton in a week. Meanwhile, the spot price of battery-grade lithium carbonate also stabilized above 140,000 RMB per ton.

Hengyin Futures believes that the current lithium carbonate futures market is caught in a game between strong fundamentals and weak expectations. At present, the biggest disturbance factors on the supply side are the overseas mining end and the incremental output of CATL's Jiangxi lithium mine. In fact, this part of the "increment" seems to fall short of expectations.

Statistics show that after Chile's lithium carbonate exports to China hit a peak of 23,000 tons per month in April, the volume plummeted to 13,600 tons in May and only rebounded slightly to 15,100 tons in June. "The 15,100 tons represents a 11% month-on-month increase, but the absolute volume is still at a low level for the year, a decrease of about 34% compared with 23,000 tons in April," according to Mysteel. Combined with Argentina's import data, it is expected that the net import volume of lithium carbonate in July will see a slight decline, and the import side is shifting from ample replenishment in the first half of the year to a marginal tightening.

On the domestic front, industry insiders believe that although CATL's Jianxiawo Lithium Mine is progressing with the procedures related to resumption of production, the progress of large-scale mining is slow, and the release of effective production capacity is likely to be delayed until the fourth quarter.

Resilient Demand Highlights Destocking Cycle to Support Spot Prices

Setting aside market sentiment, from the perspective of industrial data such as current spot supply, downstream procurement and inventory changes, the overall supply-demand pattern of domestic lithium carbonate still remains tight at present.

Although prices have fallen, we haven't seen any signs of weakening demand," said an insider from a lithium salt manufacturer listed on the A-share market. The demand side remains quite robust, and the production side has almost no inventory.

From the supply side, "contraction" has become the key word. Lithium carbonate production lines under China Minmetals Resources, Tianhua Xinneng and Jiuling Lithium Industry successively announced maintenance shutdown plans from August to September, which will directly affect the incremental supply. According to the analysis by Shanghai Nonferrous Metals Network, affected by various types of maintenance, the total affected output of lithium carbonate in August is 9,000 to 9,500 tons, and about 2,500 tons in September. "Overall, the recent concentrated maintenance will cause a phased reduction on the supply side," said an insider from an A-share lithium salt production enterprise.

According to statistics from Shanghai Nonferrous Network, the output of lithium carbonate has maintained a week-on-week decline. African raw materials have not yet arrived at ports in concentrated batches, and smelting capacity has not been significantly improved. In the week ending July 30, the output of lithium carbonate was 22,841 tons, a month-on-month decrease of 1,027 tons.

On the inventory side, destocking continues. According to Shanghai Nonferrous Metals Network, the lithium carbonate market has been in a destocking phase for 12 consecutive weeks. As of the week ending July 30, the spot inventory stood at 86,911 tons, a month-on-month decrease of 2,726 tons. Among this: smelters' inventory was 13,291 tons, a month-on-month increase of 18 tons; downstream inventory was 50,708 tons, a month-on-month decrease of 934 tons; and other inventories were 22,912 tons, a month-on-month decrease of 1,810 tons.

On the demand side, downstream production scheduling remains robust and demand is continuously rising. According to the latest forecast by Xingle Lithium, the production scheduling of domestic battery sample enterprises in August is 203.76 GWh, a month-on-month increase of 8.73%, and the growth rate of production scheduling data exceeds expectations.

From a short-term perspective, the demand for lithium carbonate is highly certain. At present, the month-on-month growth rate of battery production scheduling in August surveyed by many mainstream institutions in the market has maintained at 6% to 8%." said an industry insider. Now that the incremental space for energy storage has been opened, leading battery companies have basically maintained full production, with a strong ability to absorb the actual consumption of lithium carbonate.

No oversupply in sight; the tight supply-demand balance remains unchanged

Will the market's "worries" about oversupply become a reality? Combining the actual supply and demand in the industrial chain and the medium- and long-term judgments of institutions, the tight balance between supply and demand of lithium carbonate will continue to remain stable from the second half of 2026 to 2027.

An institution forecasts that the total global demand for lithium carbonate will reach 2.32 million to 2.41 million tons in 2026, with the annual supply at approximately 2.202 million tons, resulting in an overall supply gap in the industry.

According to the latest research report by CSC Financial, the demand peak season will arrive in the second half of the year, and it is expected that the supply gap of lithium carbonate will gradually widen, reaching a peak in the fourth quarter. Considering the advance stock preparation of the industrial chain, the high point of the price within the year may be at the end of the third quarter to the beginning of the fourth quarter.

From a medium-to-long-term perspective, demand is expected to remain robust in 2027, and it is hard to say that there will be a comprehensive surplus in supply. According to a research report by CSC Financial, the global incremental supply of lithium carbonate in 2027 is about 640,000 tons, while the incremental demand during the same period can reach 540,000 to 620,000 tons. The annual supply-demand gap will remain at 15,000 to 99,000 tons, and overall, it is still in a state of supply exceeding demand.

Energy storage remains the core engine driving the growth in demand for lithium carbonate. Some analysts predict that the installed capacity of energy storage batteries will grow year-on-year by 54% to 72% in 2026 and 29% to 32% in 2027 respectively. Considering the increase in power demand and energy storage duration, the elasticity on the capacity side has been significantly amplified. Meanwhile, the effective window period for capacity electricity prices at high yield levels is only 2 to 3 years. It is expected that energy storage installed capacity will maintain high growth in 2026 and 2027.

Regarding the impact that sodium batteries may bring, a person from a battery company listed on the A-share market said that restricted by energy density and mass production costs, sodium batteries may be difficult to replace lithium batteries' market share in one or two years and cannot yet have a substantial impact on the demand for lithium carbonate.

 

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