Weekly Review of the Lithium Carbonate Market: Spot lithium carbonate price center moved further downward during 9.28-9.30 [SMM Weekly Review]

This week, spot lithium carbonate prices fell steadily, with the price center shifting further downward. The most-traded futures contract 2701 price range drifted lower from 118,800-124,200 yuan/mt at the start of the week to 117,700-120,500 yuan/mt, closing at 119,100 yuan/mt over the weekend, with a cumulative weekly decline of about 3.8%. Open interest first decreased and then increased, as the tug-of-war between longs and shorts continued.

In market trading, pre-holiday stockpiling neared its end, and the pace of inquiries and transactions continued to slow down. Downstream material plants had largely completed their pre-holiday stockpiling, with some enterprises adopting a cautious wait-and-see stance and only making just-in-time procurement at low prices; some downstream players were waiting for long-term contract shipments to arrive gradually at the start of the month. Upstream lithium chemical plants maintained a strategy of holding prices firm and holding back from selling for spot orders, mainly executing long-term contracts and additional long-term contract volumes, with limited spot order shipments. Overall, market inquiry and actual transaction activity declined from the earlier period.

On the supply side, September production edged up, and October is expected to be basically stable MoM. In September, China's lithium carbonate production edged up: spodumene-based production recovered as ore arrived at ports; lepidolite-based production increased as enterprises resumed production after maintenance; salt lake production declined as some enterprises controlled output; recycling-based production decreased slightly as some enterprises halted production for maintenance; and slag-based lithium extraction saw production cuts at some enterprises due to raw material supply impacts. Entering October, increased spodumene ore arrivals at ports will continue to boost production; lepidolite-based production is expected to decrease due to low ore inventory; salt lake and recycling-based production are expected to remain basically stable; and slag-based lithium extraction production will continue to pull back due to maintenance at some enterprises. Taking all segments into account, China's total lithium carbonate production in October is expected to be basically stable MoM.

Looking ahead, lithium carbonate prices may maintain a fluctuating trend on a subdued note in the short term. Pre-holiday stockpiling has neared its end, and downstream players will mainly consume earlier stockpiles and receive long-term contract customer supply shipments during the National Day holiday. Going forward, close attention should be paid to the pace of downstream restocking after the holiday, the actual fulfillment of October production schedules, spodumene arrivals at ports, and lepidolite-based production conditions.