Lithium Carbonate: In July, supply increased slightly, with the fundamental issue of significant oversupply continuing

Supply Side: July remains the peak production season for lithium salt factories in salt lakes, with most factories in the lithium ore sector operating at or near full capacity. Additionally, some lepidolite lithium salt smelters and recycling plants plan to reduce their scheduled production due to the losses. Despite these adjustments, overall production of lithium carbonate in China is expected to remain high in July, with an estimated total of 66,705 mt, up 0.7% MoM. Furthermore, Chilean Customs data shows that Chile exported about 17,400 mt of lithium carbonate to China in June. These shipments are expected to arrive at Chinese ports sequentially from July to August, providing a substantial boost to China's domestic lithium carbonate supply.

Demand Side: As the mid-year surge in demand from new energy vehicle and energy storage markets tapers off, production at cathode material factories decreased in June. Entering July, cathode material factories are expected to continue the weak scheduled production trend from June. Specifically, scheduled production for LFP in July will mirror June, with an expected down 4% MoM. In contrast, scheduled production for ternary cathode materials is projected to up 16% MoM. In addition to the benefits of increased production, some ternary factories, having previously reduced their inventories, are expected to engage in restocking in July, which could boost overall purchasing demand for lithium carbonate. However, given the previously low ternary cathode production, overall demand for lithium carbonate from cathode materials in July is expected to continue the weak trend observed in June.

From the perspective of supply, demand, and price dynamics, the domestic lithium carbonate market in July continues to be marked by strong supply and weak demand. Lithium salt manufacturers are likely to maintain firm pricing, while weak purchasing demand from cathode material manufacturers persists due to increased client-supplied volumes and sufficient long-term agreements. This has widened the psychological price gap between buyers and sellers, suggesting that the domestic lithium carbonate spot trading market may continue the sluggish transaction conditions observed in June. In July, spot prices for lithium carbonate are expected to continue trending downward due to an oversupply situation.