[SMM Analysis] Lithium Carbonate Q1 "N-Shaped" Oscillation: Tight Balance Pattern Amid Tug-of-War Between Upstream and Downstream

In Q1 2026, China's lithium carbonate market entered a phase of fluctuating at highs, building on the sharp rally at the end of 2025. Prices exhibited a typical "N-shaped" wide-range pattern: a significant rise in January, a slight pullback in February, and another sharp rise in March. Behind this trajectory was the ongoing tug-of-war between upstream spot order holders holding back from selling and downstream dip-buying for restocking.

In January, SMM battery-grade spot lithium carbonate prices fluctuated upward significantly, with the monthly average reaching 156,000 yuan/mt, up 55% MoM. Supply-side output was basically stable, but affected by a decline in the proportion of long-term contracts signed, lithium chemical plants saw reduced delivery volumes, and the sentiment of holding back from selling and holding prices firm on spot orders grew stronger. Demand side, downstream material plants had rigid demand for stockpiling ahead of Chinese New Year, but their acceptance of high prices above 150,000 yuan/mt was limited. Most adopted a "buy the dip" strategy, forming strong support around 140,000 yuan/mt. This stalemate of "upstream unwilling to sell low, downstream unwilling to buy high" pushed prices higher in a volatile manner.

In February, prices first fell then rose, with the SMM battery-grade lithium carbonate monthly average at 149,600 yuan/mt, down 3.5% MoM. At the beginning of the month, downstream dip-buying released some demand. By mid-month, as stockpiling largely concluded, the market turned cautiously to the sidelines, and prices pulled back under pressure. However, in late February, the sudden news of Zimbabwe banning lithium concentrates exports broke the wait-and-see atmosphere, expectations of supply contraction heated up rapidly, and prices bottomed out.

In March, prices once again fluctuated upward sharply, with the SMM battery-grade lithium carbonate monthly average up 5% MoM. As maintenance ended, supply gradually recovered, and lithium chemical plants showed significantly stronger willingness to sell at the relatively high level of 170,000 yuan/mt. However, demand remained robust, with downstream showing strong purchase willingness in the 140,000–150,000 yuan/mt range, and some enterprises restocked heavily at low levels. The significant divergence in psychological price levels between upstream and downstream made it difficult for prices to achieve a one-sided breakout, resulting in wild swings within a wide range.

Overall, the lithium carbonate market maintained a tight balance in Q1. Social inventory stayed low, leaving the market with insufficient buffer capacity, and any marginal change in supply and demand was quickly amplified. Until the psychological price levels of upstream and downstream converge, prices in Q2 are expected to continue to hover at highs, with strong bottom support near 150,000 yuan/mt.