Supply side: Spot prices for lithium carbonate continued to weaken. Most lithium salt smelters had stabilized their operations after adjustments, with no significant changes in output. September remained the peak season for salt lake lithium carbonate production, with cost advantages for lithium salt smelters in this area. It is expected that the operating rates will remain high. For spodumene, some lithium salt smelters maintained their operating rates to fulfill long-term contracts, while other non-integrated smelters had already reduced their output but now have stable production. Lepidolite saw a significant increase in production as a leading lithium salt smelter ramped up production. Some recycling smelters increased their output slightly, preparing for Q4 processing orders. Overall, China's total production of lithium carbonate in September is expected to increase by 1%-2% MoM. Import-wise, data from Chilean customs indicated that Chile exported approximately 12,100 mt of lithium carbonate to China in August, marking a continuous decline for four consecutive months MoM. Considering the shipping cycle, these imports are expected to arrive at Chinese ports in August-September, with reduced levels but still maintaining a high volume.
Demand side: Entering September, the downstream material and battery cell manufacturers entered the "September-October peak season". There was a significant increase in downstream production schedules. LFP material manufacturers are expected to increase production by 10%-11% MoM in September. Although the ternary cathode material manufacturers slightly reduced their production, given their market share, this did not significantly impact downstream demand, which continued to rise compared to August.
From the perspective of supply-demand and price forecast, the supply surplus of lithium carbonate in September could narrow. The supply side will remain stable at high levels, with significant production increases on the demand side. However, in addition to focusing on the monthly surplus, consideration should also be given to cumulative lithium carbonate inventories. Based on actual supply-demand circumstances, the oversupplied nature of lithium carbonate remains challenging to alter, and spot prices are likely to decline further. Some lithium salt smelters facing cost pressures may continue to support prices. Moreover, due to quality inconsistencies in spot goods held by futures traders, some material manufacturers may increase their purchasing ratio from lithium salt smelters, potentially supporting lithium carbonate prices. Additionally, the peak season stocking may lead to increased downstream restocking, driving up spot prices.
