After a brief rebound, lithium carbonate futures prices resumed their downward trend. On May 16, the most-traded LC2407 lithium carbonate futures contract fell by 4.19%, closing at 61,800 yuan/mt, hitting a new low since its listing.
In response, Yang Fei, a senior researcher from the Non-Ferrous Metals and New Materials Team at CITIC Futures, stated in an interview with the Futures Daily reporter that the weakness in lithium carbonate futures prices was due to a supply-demand imbalance. The current lithium carbonate market is in a phase where demand recovery and social inventory reduction are pending.
Lin Jiani, an analyst at GF Futures, also believes that the current fundamentals of lithium carbonate are weak. With the decline in integrated production costs and the drop in externally purchased raw material prices, the cost-side support for lithium carbonate is gradually weakening. Although the easing of tariff disruptions has brought some favourable macro front, there is still a lack of substantial support in the short term. Coupled with recent negative news disruptions, the price boost has been limited.
The "continuous downward shift in the price center of lithium carbonate" is seen as a signal of accelerated industry exit.
Cost side, lithium ore prices have loosened significantly recently, with spodumene prices accelerating their decline, leading to a notable drop in externally purchased costs. Data shows that on May 16, the average CIF price of 6% spodumene concentrates was $712/mt, down $13/mt WoW. The average price of lepidolite (1.5%–2% grade) fell by 1.3% WoW to 760 yuan/mt, while the average price of lepidolite (2%–2.5% grade) dropped by 4.56% WoW to 1,360 yuan/mt.
"The rapid decline in lithium ore prices has further driven down the cost of lithium chemicals, lowering the pressure point for industry exit," explained Yang Fei. The unexpected drop in port transaction prices, when converted to lithium chemical prices, has exacerbated market pessimism. As lithium ore prices continue to decline and gradually approach the cash cost of mines, more capacity will be forced to exit, accelerating industry exit.
Data shows that for the 2025 fiscal year, the FOB cost guidance for Australian ore ranges from A$870/mt to A$970/mt, equivalent to a CIF China cost of $650/mt to $700/mt. In Q1, the FOB cost of Australian ore fell to A$708/mt. After considering freight costs, the CIF China cost ranges from $550/mt to $580/mt. "After the Qingming Festival holiday, the price support from Australian mines ended, and ore prices accelerated their decline. The current lowest transaction price for Australian spodumene concentrates is below $650/mt, indicating a pessimistic market sentiment," said Yu Shuo, an analyst at Chuangyuan Futures. He believes that there is still room for Australian ore prices to decline in the future.
Supply side, the weekly production of lithium carbonate remains at a high level. According to SMM data, as of the week ending May 16, the weekly production of lithium carbonate was 16,630 mt, a decrease of 1,719 mt WoW. Despite this decrease, it still maintained a high level of around 16,600 mt/week. "Although some upstream lithium carbonate enterprises conducted maintenance and production cuts or suspensions in April and May, overall supply increased after they gradually resumed production. Coupled with the increase in imported ore arrivals, supply pressure persists." Lin Jiani believes that currently, the commissioning of lithium extraction from various raw materials is stable, and it is difficult to foresee large-scale production cuts or suspensions in the upstream sector amid the trend of integrated cost reduction.
Demand side, the downstream demand for lithium carbonate is currently stable. According to data from SMM, in April, the demand for lithium carbonate was 89,627 mt, an increase of 2,625 mt MoM and up 33.9% YoY. The demand for May is expected to be 88,623 mt. In terms of production scheduling, in May, the production schedule for LFP cathode was 276,000 mt, up 40% YoY and 4% MoM. The production schedule for ternary cathode was 64,000 mt, up 23% YoY and 3% MoM.
Lin Jiani stated that currently, the demand side has limited driving force after seasonal factors are stripped away. As the market enters the off-season for demand later, the supply pressure on lithium carbonate may intensify.
Against this backdrop, lithium carbonate has returned to an inventory buildup trend. Data shows that as of the week ending May 16, the inventory of lithium carbonate was 131,900 mt, an increase of 351 mt WoW. In terms of warrants, as of May 16, the total number of lithium carbonate warrants was 36,624 lots, with new warrants gradually increasing.
Lin Jiani believes that recently, the Guangzhou Futures Exchange has been gradually promoting the registration of lithium carbonate brands, and the pressure on new warrant registration may significantly ease in the short term.
Looking ahead, Yang Fei believes that with ore prices approaching $700/mt, cost support will be further weakened. In the later period, amid expectations of weakening demand and increasing supply, it is expected that the social inventory of lithium carbonate will continue to accumulate, putting pressure on prices. The market should pay attention to signs of production cuts or suspensions in mines, such as mines reducing output and enterprises controlling the pace of shipments.
Zhang Weixin, an analyst at China Securities Futures, reminds that although the current futures price of lithium carbonate is in a downward trend, it is relatively at a low level. It is expected that the decline will slow down in the future, and it is not advisable to be overly pessimistic.
