[SMM Analysis] Supply Concerns Weigh on July Lithium Carbonate Prices, Sideways Movement Expected for August

In July 2026, the lithium carbonate market experienced a persistent downward trend, with the overall price center of gravity shifting lower. The tug‑of‑war between strong spot fundamentals and weak forward expectations persisted throughout the month.

Price: Early in the month, prices rebounded from lows on supply‑contraction expectations, with the main contract LC2609 surging from around RMB 145,300/ton to RMB 167,800/ton—a weekly gain of approximately 8.4%. Thereafter, the market weakened under the combined pressure of anticipated Zimbabwean ore arrivals, progress on domestic lepidolite mine restarts, and expectations of warehouse receipt cancellations. The main contract opened July at RMB 164,000/ton and closed on July 31 at RMB 137,760/ton, falling nearly RMB 30,000/ton over the month with an intra‑month amplitude of 21.55%. In the spot market, the price center for battery‑grade lithium carbonate moved notably lower compared with June. By mid‑July, the futures curve shifted into backwardation, with the spread between near‑term and forward contracts widening further.

Supply: Domestic lithium carbonate output edged down month‑on‑month in July, with actual production of approximately 105,000 tons. The decline was mainly attributable to concentrated maintenance at spodumene‑ and lepidolite‑based smelters—temporarily suspended Zimbabwean concentrate exports delayed raw material arrivals, reducing spodumene‑based lithium carbonate output. Salt‑lake operations entered their peak production season, with a modest output increase that partially offset the reduction. Upstream lithium salt producers maintained a strong reluctance to sell spot cargoes, with persistently low willingness to offer, keeping their in‑house inventories at low levels.

Demand: Downstream activity remained robust. In July, domestic lithium battery production rose 5.6% month‑on‑month, while LFP cathode material production increased 6.85% month‑on‑month. Downstream material producers continued their strategy of buying on dips as needed, showing strong willingness to purchase for rigid demand below RMB 145,000/ton, but with limited acceptance of higher prices. No large‑scale concentrated restocking emerged.

Inventory: Lithium carbonate inventories accelerated their drawdown in July, with social inventories declining for twelve consecutive weeks. Large‑sample inventory data showed a roughly 8% decline over the month, with the weekly drawdown rate accelerating from 2.68% to 4.46%. Structurally, inventories shifted from upstream to downstream, as strong end‑consumption effectively absorbed spot stocks.

Outlook: In the near term, lithium carbonate prices are likely to remain in a range‑bound, weakly volatile pattern. Ongoing maintenance and tightening raw material flows provide support, while forward supply‑increase expectations—including progress on the Jianxiawo mine restart and scheduled Zimbabwean ore arrivals—continue to cap upside. High downstream production schedules offer rigid demand support, but the impetus to chase prices remains insufficient. Key factors to monitor include the pace of smelter maintenance resumption, August downstream production expectations, and the actual release rhythm of ore‑side supply.