Weekly Lithium Carbonate Market Review: Spot lithium carbonate prices rose then fell during Sep. 21-24 [SMM Weekly Review]

This week, spot lithium carbonate prices showed a pattern of rising first and then falling, with overall consolidation. At the beginning of the week, spot prices edged up, reaching a relatively high level for the week by mid-week, before pulling back over the weekend. The most-traded futures contract 2701 swung wildly in the range of 123,200-135,300 yuan/mt, opening near 126,000 yuan/mt at the start of the week, then rising for two consecutive days to 134,400 yuan/mt, turning lower mid-week, and closing at 124,400 yuan/mt over the weekend. Intraweek fluctuations were relatively large, with open interest rising first and then falling, as the tug-of-war between longs and shorts continued.

In market trading, downstream buyers engaged in pre-holiday stockpiling and dip-buying, with the pace of transactions varying with price fluctuations. At the beginning of the week, downstream buyers showed relatively strong willingness to stockpile by buying the dip, and market inquiries and actual transactions were relatively active. As prices drifted higher, some material manufacturers turned cautious and adopted a wait-and-see stance, with purchase willingness weakening slightly and the pace of transactions slowing down. Over the weekend, as prices fell rapidly, downstream willingness to buy the dip remained, but overall inquiry and actual transaction pace slowed compared with earlier in the week. Upstream lithium chemical plants continued to hold spot order prices firm and hold back from selling, with some enterprises selling at monthly average prices listed on websites, resulting in limited overall spot order shipments.

On the supply side, production declined this week. The decline was mainly due to spodumene-based enterprises seeing raw material arrivals fall short of expectations and undergoing maintenance, which led to lower production. Some lepidolite-based enterprises reduced operating rates due to intensifying cost pressure. Production from other raw material sources remained stable. From the perspective of market transactions and inventory, upstream lithium chemical plants continued to deliver long-term contracts, maintained a stance of holding spot order prices firm and holding back from selling, and some enterprises engaged in spot order selling, resulting in a destocking trend this week. Downstream cathode material manufacturers and battery cell manufacturers continued to buy the dip for pre-holiday stockpiling, leading to inventory accumulation. At the trader level, as upstream shipments slowed and downstream buying continued, inventory was significantly absorbed.

In terms of news and sentiment, the continued decline in warrants combined with market confidence in short-term demand resilience shifted sentiment from earlier pessimism to a slightly more positive tone, though prices still faced some selling pressure after shooting up, and overall sentiment remained cautious.

Looking ahead, short-term lithium carbonate prices are likely to maintain a consolidating pattern. Pre-holiday stocking demand provides some support to prices, but the tug-of-war between supply-side production cuts and downstream procurement pace continues. Going forward, close attention should be paid to the sustainability of pre-holiday stockpiling, changes in the pace of upstream spot order shipments, warrant destocking, and expectations for post-holiday demand recovery.