Lithium Carbonate: June Supply Increases Significantly, Fundamentals Still Show Surplus

Supply Side: Entering June, some smelting and recycling companies are expected to reduce production due to factors such as high costs and poor profits. However, with some companies maintaining production ramp-up and the maintenance of major local producers ending, China’s lithium carbonate output in June is expected to be 648,680 mt, a 4% MoM growth. Additionally, market reports indicate that the current round of environmental protection inspections in Jiangxi will end in early June, and preliminary results may affect the actual production of some companies in June. Future inspections will remain a key factor for affecting production in Jiangxi. Furthermore, Chilean lithium salt producer SQM has increased its 2024 sales target from 180,000 mt to 200,000 mt. After deducting the shipments made in H1, it is expected that there will still be about 15,000 mt of shipments per month. Together with the exports from other producers to China, the subsequent imports are expected to remain at the level of 17,000 to 20,000 mt.
Demand Side: According to the June production schedule of cathode materials, the output of LFP began to see a slight MoM decline. LFP increased by 18% MoM in May, but may seean 8% MoM decline in June. The production of ternary cathode material continues to decline in June, with an expected 4% MoM drop. The total demand for lithium carbonate from downstream cathode material manufacturers in June is expected to be 68,053 mt, a 7% MoM decrease.
From the perspective of supply, demand, and price performance, the supply of lithium carbonate in China is expected to continue growing in June, but demand has begun to weaken significantly. Downstream cathode material manufacturers are maintaining a low sentiment towards purchasing spot lithium carbonate due to the decline in discounts for long-term orders and the increase in customer-supplied lithium carbonate. Many major cathode producers have even stated that they have no demand for spot purchases in June. Therefore, although lithium carbonate prices in June have some support from earlier costs, prices may still go down.