Inventory Pressure Concentrated Release, Lithium Carbonate Plunges 18%

June 9th News

According to the commodity market analysis system: recently, lithium carbonate has experienced a sharp decline. As of June 9, the benchmark price for battery-grade lithium carbonate is 162,000 CNY/ton, a significant drop of 18% from the previous high of 199,000 CNY/ton (May 12). The favorable supply-side logic has completely collapsed, and inventory pressure has been released in a concentrated manner. Multiple factors have collectively contributed to the reversal of the market trend.

The sudden change in inventory data is the core logic triggering the price decline.

Previously, the market generally viewed "low inventory and tight supply" as the core logic for a bullish outlook. However, the amount of lithium carbonate warehouse receipts at the Guangzhou Futures Exchange has been continuously surging recently, reaching 56,000 tons on June 3, equivalent to half a month's total production in China. Due to the spot price being lower than the futures price, holders are registering their physical goods as warehouse receipts for arbitrage. At the same time, the market is reacting that the quality of the warehouse receipts is poor and does not meet production needs, leading to weak purchasing interest. This results in further accumulation of warehouse receipts, creating a vicious cycle of "price drop — increase in warehouse receipts — further price drop."

Overseas lithium mine supply recovery alleviates concerns over raw material shortages in China

This February, Zimbabwe announced a suspension of lithium concentrate exports, which once triggered market panic and pushed up lithium prices. However, since mid-May, Chinese companies that have been approved in the area have gradually started shipping lithium ore, with the actual reduction in supply far lower than market expectations. Australia has also accelerated its capacity release, with Mineral Resources' Bald Hill lithium mine announcing a resumption of production, capable of producing spodumene concentrate by July, a much faster pace than previously predicted by institutions. Driven by high prices, many lithium mines around the world that had been shut down are accelerating their restarts, completely dispelling the previous market panic over a potential lithium ore supply disruption, and the premium from the supply shortage is rapidly declining.

Energy storage demand benefits, supporting the bottom of lithium prices in China

The new-energy vehicle market is showing a trend of "declining volume but rising per-vehicle consumption." In May, the estimated wholesale volume of new-energy vehicles from passenger car manufacturers nationwide reached 1.36 million units, representing a year-on-year increase of 12% and a month-on-month increase of 11%. Although the total installed capacity of power batteries managed to eke out a slight increase, the industry can no longer rely on sales volumes alone to drive an explosive growth in lithium demand. Meanwhile, the storage sector—the largest source of incremental demand—has been the key catalyst behind the recent rebound in lithium carbonate prices. Currently, leading battery companies are largely operating at full capacity, with some firms already having orders scheduled through early next year. Both upstream and downstream segments of the industrial chain are running at full load. From the perspective of cell production, demand for energy storage projects remains robust, and these projects are currently insensitive to material price fluctuations, providing solid bottom support.

Overall, the current decline in lithium carbonate prices is the result of a simultaneous shift in supply and inventory dynamics. However, the robust demand for new energy vehicles and the explosive growth in energy storage needs may limit the downward space for lithium prices. The future price trend will mainly depend on the pace of new supply additions in the third quarter and the sustainability of energy storage demand. It is expected that prices will continue to fluctuate in the short term.