SMM analysis on China June lithium carbonate output and July forecast

According to SMM statistics, China's lithium carbonate production in June was 66,243 mt, up 5.93% MoM and 61% YoY. From January to June, the cumulative production was 298,464 mt, up 46.71% YoY. By raw material, most lithium salt plants using spodumene maintained stable production in June. Except for a few lithium salt plants with reduced outsourcing orders, the operating rate of some leading lithium salt plants remained high. Together with the continuous ramp-up of production lines by some smelters and the switch from lepidolite to spodumene for lithium carbonate production, the output of spodumene smelters in June still showed a significant increase. For lepidolite smelters, although some smelters experienced varying degrees of losses in June, there was no significant reduction in production due to cash flow considerations. Additionally, the production of some leading lithium salt smelters was still in the ramp-up stage in June, and some small and medium-sized lepidolite smelters received increased outsourcing orders, leading to a rise in the total output of lithium carbonate from lepidolite in June. For salt lakes, most companies were at their production peak in June, with no recent changes in production, resulting in stable output.

Entering July, some lepidolite smelters and recycling companies are expected to reduce production due to losses or declining profits. However, with the continued increase in production by some spodumene smelters and the ramp-up of new capacities, the expected lithium carbonate production in China for July is 66,705 mt, up 0.7% MoM.

Currently, lithium salt plants maintain a strong sentiment to hold prices. Futures and spot traders are active recently, but downstream spot procurement remains sluggish. Downstream, some cathode material plants reported that their current lithium carbonate inventory is sufficient to sustain production for the month, and their long-term contracts and customer supplies remain stable, with only certain demand for spot purchases at low prices. However, some buyers reported difficulty finding cheap supplies, leading to a slight increase in market prices. Overall market trading sentiment has improved, but there is still a significant gap between the intended prices of upstream and downstream, resulting in low spot trading volumes. Future price trends will still need to focus on the market's expectations for concentrated restocking in August driven by the sales growth of NEVs.