Current Inventory Analysis:
Overall direction: According to an SMM survey, as of May 31, 2024, the total market inventory stood at 92,646 mt, up 13% MoM, continuing the surplus trend from the previous month, and the surplus escalated. However, from the perspective of inventory structure, the inventory changes showed a reverse trend compared to April. Smelter inventories shifted from a drop of 4,970 mt to a rise of 14,469 mt, while downstream cathode segment inventories changed from a rise of 7,418 mt to a fall of 4,448 mt. This is mainly because some downstream cathode material manufacturers stocked up in advance at the end of April for the Labour Day holiday due to anticipated logistics difficulties during the holiday, lifting downstream inventory levels and to a certain extent preemptively consuming May's downstream purchase demand. Additionally, in May, lithium carbonate prices entered a downward track, together with an increase in lithium carbonate supply from battery cell makers to cathode manufacturers, resulting in weakened willingness for spot orders and long-term order pick-up of lithium carbonate by cathode manufacturers, who mainly consumed their existing inventories due to weakening subsequent orders. Smelting enterprises faced poor sales, leading to a gradual accumulation of inventories. Meanwhile, as lithium carbonate prices continued to drop, some battery makers and traders picked up goods at low prices, pushing inventories to rise slightly.
Days of inventory: As of May 31, 2024, upstream smelter inventory was 51,768 mt, averaging about 25 days, while downstream cathode material manufacturers' inventory was 22,140 mt, averaging about 10 days.
Future inventory forecast:
Overall direction: In June, as the mid-year stocking and production ramp-up in the downstream NEV and energy storage markets ends and the traditional off-season approaches, battery cell makers will step up destocking efforts. It is expected that in June, the scheduled production of ternary and LFP cathode segments will decline, downstream demand for lithium carbonate will continue to drop, and the sluggish buying sentiment will persist. It is expected that the pressure to sell for smelting enterprises will further increase, with inventories mainly accumulating, while cathode segment inventories are expected to maintain current levels, and the total market inventory will continue to rise.
