SMM analysis on China June LMO output and July forecast

SMM data showed that China's LMO output in June was 9,691 mt, down 34.03% YoY and 13.36% MoM. According to the SMM survey, raw material side, as the spot prices of lithium carbonate dropped, the industry adopted a wait-and-see stance. The market remained dominated by long-term contracts, with a subdued trading atmosphere. Demand side, in the traditional off-season, downstream battery cell manufacturers experienced sluggish transactions and the growth rate in the digital market slowed down. The new energy and energy storage markets were weak, with transactions mainly based on rigid demand and few new orders. Additionally, the overall LMO market was highly competitive, with price suppression and persisting overcapacity. Therefore, LMO producers were more cautious about scheduled production and mostly produced based on sales. It is expected that the price of lithium carbonate will continue to fluctuate in July, and downstream battery demand will remain in a low-growth state. The supply surplus will persist. With companies continuously operating at a loss, the overall LMO output is likely to further decline, with an estimated total output of 9,072 mt in July, down 9.93% YoY and 6.39% MoM.