Lithium Carbonate Was Nearing the Cost Floor, with Downside Room Gradually Narrowing

On the supply side: Expectations of looser supply in the future continue to exert downward pressure.

The supply side is the primary driver of the current downturn. Domestic lithium extraction from salt lakes has entered a period of seasonally high output; production in September surged by over 80% year-on-year, reaching approximately 22,000 tonnes. Meanwhile, monthly production of lithium from spodumene has stabilized at 63,000 tonnes—a significant increase from the 4,200 tonnes recorded during the same period last year. On the import front, exports of lithium salts from South American salt lakes remain high, and the arrival of lithium concentrate from Zimbabwe has ramped up following the lifting of export restrictions. These factors have further reinforced market expectations of a looser supply ecological stability in the future.

It is also worth noting that while lithium extraction from lepidolite in Jiangxi has been constrained by the restructuring of mining rights—with the resumption of production yet to materialize in actual output figures—the persistent anticipation of such a restart continues to exert downward pressure on the market. Following the expiration of the environmental impact assessment (EIA) general consultation period to the Jianxiawo mine on October 28, market expectations to a production restart there from December onwards have steadily intensified.

Demand Side: Production Schedules Soften; Peak Season Falls Short of Expectations

There are signs of a marginal weakening in demand. sector data indicates that battery production schedules to November fell by approximately 5% month-on-month—the first such monthly decline this year. Production schedules to energy storage systems have also shown signs of softening; they grew by only about 5.3% month-on-month in October, with the possible to further downward revision. Meanwhile, the narrowing of peak-valley electricity price spreads and delays in the full implementation of policies—such as those regarding capacity-based electricity pricing—have put pressure on the economic viability of energy storage projects, leading to a slower pace of product uptake by customers.

Nevertheless, the core demand to power batteries remains intact. In September, the installed capacity of power batteries reached approximately 87.2 GWh, a new high to the year. With the penetration rate of new energy vehicles (NEVs) approaching 50%, and the continued rise in the battery capacity per vehicle, demand remains supported by a certain degree of resilience.

Inventory and Costs: Low Inventory Provides a Buffer

Continuous destocking across the entire supply chain serves as a primary pillar to current market fundamentals. Social inventory of lithium carbonate has fallen from approximately 110,000 tonnes at the beginning of the year to around 51,000 tonnes—a cumulative reduction of over 50%. Meanwhile, inventories at upstream smelters have dropped to 7,500 tonnes, the lowest level on record. As prices approach 90,000 yuan per tonne, non-integrated producers—those reliant on external spodumene procurement—are facing a situation where costs surpass selling prices, putting pressure on some marginal capacity to scale back production. However, since salt-lake lithium extractors and fully integrated producers remain profitable, the cost-based support to prices is not rigid.

Market Outlook:

The lithium carbonate market is currently caught in a tug-of-war between a "weak-reality, tight-stability" scenario and a "weak-expectation, prolonged-oversupply" outlook. In the near term—with expectations of future oversupply remaining unchallenged and bearish sentiment dominating the capital side—prices are likely to continue fluctuating weakly, hovering around the 90,000 RMB/ton mark. While the downside possible to lithium prices has gradually narrowed, a definitive direction reversal will require clear, pivotal signals from either the market fundamentals or the capital landscape.