The lithium carbonate spot prices saw a notable decline this week, with the weekly average down by around 1,300 yuan/mt WoW. The average price of battery-grade lithium carbonate has fallen below 70,000 yuan/mt.
Demand side, May's demand failed to meet previous incremental expectations. As downstream material plants had already engaged in stockpiling purchases when lithium carbonate prices were at low levels earlier, large-scale pre-Labour Day holiday stockpiling is unlikely to follow. Supply side, some upstream lithium chemical plants recently reduced or halted production, leading to a decrease in lithium carbonate output. However, total output remains high, and the surplus situation is continue. Yet, if market sentiment turns positive, the lithium chemical plants that reduced or halted production may quickly resume operations, indicating significant supply elasticity.
On market news, a lithium chemical plant is reportedly considering adjusting long-term contract shipment volumes after its previously set floor price was breached. In an extreme scenario where all long-term contract shipments are terminated, it could cause short-term supply disruptions based on apparent demand for the month. However, considering the accumulated inventory levels of lithium carbonate domestically, spot lithium carbonate prices still lack upward momentum. Additionally, attention should be paid to the price trends of raw materials. If ore prices show a significant downward trend, the cost pressure on non-integrated lithium chemical plants will be somewhat alleviated. As the cost center shifts downward, lithium carbonate prices will also be dragged down accordingly.
