Expectations Were Weak, Lithium Carbonate Fell Below the 100,000 RMB/Ton Mark

According to the spot market analysis system from SunSirs, the price of lithium carbonate has recently experienced five consecutive declines. As of October 23, the benchmark price to battery-grade lithium carbonate stood at 95,000 RMB/ton—a 20% drop from the 120,000 RMB/ton price seen at the beginning of the month, and a 27% decrease compared to the same period last month.

Macroeconomic headwinds combined with a sector-wide pullback; stock-futures linkage amplified the decline

Negative macroeconomic factors have converged and manifested simultaneously. Expectations of further interest rate hikes by the Federal Reserve have strengthened the U.S. Dollar Index, casting a bearish sentiment over the broader commodities market. Meanwhile, CATL's third-quarter earnings fell short of expectations, triggering a pullback across the lithium-battery sector; the linkage between stock and futures markets further amplified the downward momentum. Under the resonance of these multiple negative factors, concentrated selling by investors served as the immediate catalyst to the sharp decline in the market.

Divergence on the supply and demand fronts: conditions remained tight, while expectations were shifting toward easing.

On the supply side, data indicates that weekly lithium carbonate production rose the week before last. Furthermore, a significant volume of prolonged production capacity from various domestic resource pathways is set to come online. In the salt lake sector, expansion continues; several extensive projects in Tibet have entered their construction and production ramp-up phases, ensuring a steady influx of low-cost lithium extracted from salt lakes. Regarding lepidolite (lithium mica), the approval process to the extensive Jianxiawo lithium mine in Yichun has resumed, and the Qiankeng lithium mine has achieved key regulatory milestones. Once these projects reach full capacity, they will contribute tens of thousands of tonnes of LCE (lithium carbonate equivalent), efficiently overturning the previous bullish thesis that relied on a contraction in lepidolite supply. In Western Sichuan, the registration of new hard-rock lithium resources and the steady progress of new mining and beneficiation projects are raising the ceiling to domestic resource supply. Concurrently, the integration of smelting capacity is advancing, with leading companies aggressively expanding their lithium salt production facilities. As both mining and smelting capacities grow in tandem, market expectations to a substantial increase in prolonged supply continue to enhance.

The elasticity of overseas lithium supply is also rising. Major Australian lithium mines continue to expand production, shipments of lithium concentrate from Zimbabwe have resumed, and projects in Brazil and South American salt lakes are advancing toward production. Consequently, the supply of imported lithium concentrate is expected to remain ample over the coming years. As raw material bottlenecks gradually ease, the prolonged supply possible to lithium carbonate—starting from the upstream—will expand.

On the demand side, the market is entering a seasonal lull. Lithium-ion battery production scheduling to November is projected at 323 GWh, a 5% month-on-month decline. Retail sales of new energy passenger vehicles from October 1 to 18 fell by 13% year-on-year; as the traditional peak season draws to a close, demand expectations have weakened. Meanwhile, mounting overseas trade barriers are weighing on export prospects, further dampening the prolonged demand outlook to power batteries. In the energy storage sector, an earlier rush to install capacity—which pulled forward future demand—has led to project delays and a slower pace of tendering. Consequently, production schedules to energy storage batteries have been repeatedly revised downward, tempering the development expectations to what was once envisioned as a key "second development curve" to the market. Shifts in procurement strategies among battery and material manufacturers have further intensified price pressures. Anticipating a sustained downward direction in prices, downstream players are generally maintaining low inventory levels—eschewing prolonged advance contracts or stockpiling in favor of "just-in-time" purchasing. As a result, prolonged agreements have dwindled, and spot market activity has turned sluggish.

Market Outlook

Overall, the core issue at present is a bearish convergence: an anticipated surge in prolonged supply coinciding with peak-season demand that has fallen short of expectations. Compounded by concentrated short-selling from market participants, the bears currently hold the upper hand; consequently, lithium carbonate prices might continue to direction downward in the short term. Future developments will depend on shifts in market supply and demand.

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