[SMM Weekly Review] Marginal Improvement in Lithium Carbonate Supply and Demand Fails to Offset High Inventory and Weakening Cost Support; Lithium Carbonate Prices Continue to Fall

This week, the spot price of lithium carbonate continued its downward trend, with the center of market transactions shifting lower. The average price of battery-grade lithium carbonate fell from 60,300 yuan/mt to 60,200 yuan/mt, with a weekly decline of 100 yuan/mt. The average price of industrial-grade lithium carbonate dropped from 58,700 yuan/mt to 58,600 yuan/mt, also with a weekly decline of 100 yuan/mt.

Supply side, the phased rebound in the futures market in late May created a favorable hedging window for non-integrated lithium chemical plants. Some enterprises gradually increased their operating rates after locking in profits from the futures market. It is expected that industry supply will experience restorative growth in June. Meanwhile, the prices of lithium concentrates continued to weaken, and port inventories remained high, further eroding the cost support for lithium carbonate. On the demand side, growth was limited. Affected by the adjustment of US tariff policies in mid-May, there was an installation rush for ESS battery cells in exports, which will continue to drive an upward trend in the production schedule of ESS battery cells in June. However, as NEVs have entered the off-season for sales, the production schedule of power battery cells has pulled back. Overall, supported by the growth in ESS battery cells, downstream demand in June will remain relatively stable.

In summary, the current lithium carbonate market maintains a fundamental pattern of "increasing supply and stable demand." Under the dual influence of the expected recovery in supply and the weakening of cost support, it is expected that prices will continue to exhibit a fluctuating trend in the doldrums in the short term.