【SMM Analysis】Weekly Review of the Lithium Carbonate Market: Demand Falls Short of Incremental Expectations, Weekly Drop Exceeds 1,000 Yuan!

This week, the spot price of lithium carbonate saw a significant decline, with the weekly average price dropping by approximately 1,300 yuan/mt WoW.

Demand side, the demand in May did not meet the previous incremental expectations. When the price of lithium carbonate was at a low point earlier, downstream material plants generally engaged in stockpiling and purchasing, thus it is expected that there will be no large-scale stockpiling behavior before the Labour Day holiday. Supply side, some upstream lithium chemical plants have recently reduced or halted production, leading to a decrease in lithium carbonate output. However, the total output remains high, and the surplus situation continues. But once the market sentiment shows positive signals, the lithium chemical plants that have reduced or halted production may quickly resume production, indicating significant elasticity in supply.

In terms of market news, a lithium chemical plant is considering adjusting the volume of long-term contract shipments as the previously set floor price has been broken. In an extreme scenario where all long-term contract shipments are terminated, the apparent demand for the month may cause short-term supply disruptions. However, considering the cumulative inventory level of lithium carbonate in the domestic market, the spot price of lithium carbonate still lacks upward momentum. Additionally, attention should be paid to the price trend of raw materials. If ore prices show a significant downward trend, the cost pressure on non-integrated lithium chemical plants will be alleviated to some extent. As the cost center shifts downward, the price of lithium carbonate will also be dragged down.