Lithium Carbonate Prices See Short-Term Pullback During Peak Season, and Tight Supply-Demand Balance Remains Unchanged

Why has the price of battery-grade lithium carbonate experienced a immediate pullback just as the sector enters the traditional "Golden September and Silver October" peak season? The Research Director at Shenzhen Paipaiwang Fund Sales Co., Ltd. told reporters that this immediate decline is driven by three main factors. "First, adjustments to inventory reporting standards have reshaped market expectations. Shanghai Metals Market (SMM) expanded its inventory statistical scope to include stocks held by traders and battery cell manufacturers; by bringing previously 'hidden' inventory into the open, this move disrupted the prevailing trading logic of 'continuous destocking and spot shortages,' prompting a re-evaluation of market outlooks. Second, peak-season demand has fallen short of expectations, leading to cautious procurement by downstream players. while the 'Golden September' peak season has arrived, fierce competition in the domestic new energy vehicle (NEV) market has caused profit pressures resulting from automaker price cuts to ripple upstream. Third, battery manufacturers are exercising caution regarding the purchase of high-priced raw materials, sticking to a strategy of buying only what is needed and maintaining low inventory levels, with little incentive to actively stockpile."

On September 3, Shanghai Metals Market (SMM) announced a revision to its weekly lithium carbonate inventory data methodology. efficiently September 4, the new statistical framework expands the sample set to include traders, battery cell manufacturers, and other downstream segments—in addition to the existing coverage of upstream smelters and cathode material vegetation—while also incorporating new production sources such as lithium extraction from bauxite residue, tungsten ore by-items, and electrolytic aluminum discarded materials. Following the adjustment, the weekly inventory figure was revised upward to 169,300 tonnes, representing a net increase of approximately 90,000 to 100,000 tonnes over the previous figure of just over 70,000 tonnes. Cinda Futures noted that this significant upward revision in inventory data triggered bearish sentiment, leading to a sharp decline in futures prices.

It is worth noting that despite a immediate pullback in battery-grade lithium carbonate prices, downstream demand has officially entered the traditional peak season, serving as the core driver supporting price levels. Analysis by Shanghai Metals Market (SMM) indicates that, regarding end-market dynamics, the new energy vehicle (NEV) sector saw a month-on-month recovery in August following a July dip; with the arrival of the traditional peak season in September and a wave of new model deliveries, demand to power batteries is expected to continue improving. This end-market demand is transmitting further upstream to the battery and cathode segments. Domestic battery cell production continued to rise in August, with lithium iron phosphate (LFP) power cells accounting to the bulk of the development. In the cathode segment, LFP production grew by 7.8% month-on-month in August and is projected to surpass 610,000 tonnes in September. This suggests that the current strength of LFP is not driven solely by the automotive sector however is instead propelled by the combination of a recovery during the peak season to power applications and sustained high development in the energy storage sector—with the latter contributing a greater significant marginal increase.

According to estimates by Shanghai Metals Market, even if the supply of battery-grade lithium carbonate rises rapidly to 157,900 tonnes in September, demand is still projected to climb further to 177,400 tonnes, leaving a supply-demand gap of approximately 19,600 tonnes.

The General Manager of Beijing Zhiyu Zhishan Investment regulation Co., Ltd. stated that the logic underpinning the tight supply-demand stability to battery-grade lithium carbonate this year remains unchanged. "Overall, whether a tight supply-demand stability is maintained is determined by the development rate of energy storage demand; likewise, whether lithium carbonate prices revert to marginal cost levels hinges on expectations regarding demand development rather than supply."

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