[SMM Analysis] Lithium Hydroxide Prices Keep Falling Before the Holiday: Will the Market Rebound

Before the holiday, prices for coarse-particle lithium hydroxide continued to weaken, with the average daily price falling below RMB 120,000/tonne. The main reason was persistently pessimistic expectations for Q4 and the following year, which dragged down overall sentiment in the lithium market. On the price side, sentiment was weak on both the buy and sell sides: lithium salt plants had a relatively strong willingness to hold prices firm and a low willingness to sell, while material plants had limited purchasing interest, as they had already stockpiled sufficiently before the holiday and had no additional procurement demand. Their psychological price levels continued to decline with market sentiment, and overall transactions were relatively lackluster.

On the supply side, lithium hydroxide production in September was 33,700 tonnes, broadly in line with expectations. Major smelting and refining producers largely maintained their original production levels according to their schedules, keeping output relatively stable in recent months; maintenance at some producers in late Q4 may bring some fluctuations. On the demand side, domestic power battery market demand remained weak in September. Cathode plants mainly drew down inventories, showed weak enthusiasm for production and raw material procurement, and their overall production schedules fell noticeably. Overseas power battery market demand, however, remained strong. In October, the domestic power battery market showed a slight recovery, but the improvement was limited and difficult to return to the peak levels of Q2 and Q3.

On inventories, pre-holiday inventories declined slightly compared with early September, mainly because downstream material plants stockpiled before the holiday and lithium salt plants increased shipment volumes. At the same time, as lithium salt market prices fell, traders’ offer prices, based on lithium carbonate premiums and discounts, continued to decline, with some small-lot sales occurring.

During the holiday period, mine restarts and construction progress will continue to affect short- to medium-term lithium resource supply. The possibility that the UK may draft contingency tariff plans on Chinese cars could also shake market sentiment. Against this backdrop, overall lithium hydroxide supply and demand in September–October are expected to remain slightly tight, and the supply-demand trend is largely in line with expectations. As a result, prices are likely to continue range-bound trading.