Lithium Carbonate Surges to 200,000 CNY/Ton: Why Is It Losing Momentum?

Lithium Carbonate Market Report: Short-Term Correction Amid Tight Ore Supply, Mid-Term Bullish Outlook Intact

Overview
Recently, lithium prices retreated from highs due to the expansion of inventory data and profit-taking by long positions. In the short term, the first shipments of lithium ore from Zimbabwe are not expected to arrive at domestic ports until the end of June, keeping ore supply tight through May and June. Meanwhile, downstream demand remains robust, providing some support to lithium prices. Lithium carbonate is expected to fluctuate within a range. On the operational side, going long with light positions after pullbacks can be considered, with key focus on developments in Jiangxi’s mining sector and changes in warehouse receipt volumes.

I. Market Review

Since April, lithium carbonate prices have risen before falling back. In the early stage, driven by supply constraints and strong downstream demand, lithium prices surged, with the most-active contract (2609) reaching a high of 209,880 yuan/tonne, a new peak for the period. More recently, SMM upgraded its inventory data, making some previously hidden inventories visible, which weakened the low-inventory support narrative. Combined with concentrated profit-taking by earlier long positions, lithium prices corrected sharply.

II. Frequent Mine-Side Disruptions; Jiangxi Lepidolite Developments Still Unclear

The mining sector has seen numerous disruptions, with mixed news of project restarts and delays. The Bald Hill lithium mine in Australia plans to restart; the project has an annual capacity of approximately 165,000 tonnes of spodumene concentrate (SC5.1%). Site operations will begin in late May, with mining and crushing in June, and the first concentrate output expected in July. The first shipment is scheduled for the first quarter of FY2027, with full capacity reached in the second quarter. Additionally, Finiss’ Grants open-pit mine has officially commenced blasting and excavation. Zijin Mining announced that the second-phase project at the Zhabuye Salt Lake in Tibet has been postponed to the end of 2027 due to high-altitude construction difficulties and extended environmental approval processes; the project was originally scheduled to start production in June this year. In the DRC, first lithium product output from the Manono lithium mine will also be delayed until the end of this year. Overall, the scale of supply delays and reductions exceeds that of restarted capacity, putting a squeeze on lithium raw material supply.

The first batch of lithium ore from Zimbabwe began shipping in mid-May and is expected to arrive at domestic ports by the end of June, with bulk arrivals likely not until July, keeping domestic ore supply tight through May and June. Progress at Jiangxi’s lepidolite mines remains slow. The Jianxiawo mine has yet to undergo its second environmental impact assessment public notice, and the restart timeline remains unclear. The other four lepidolite mines have also entered a shutdown-and-license-renewal cycle, leaving regional supply uncertain.

III. Overall Lithium Salt Plant Utilization Rates Edge Lower

Some spodumene-based lithium converters have reduced or halted production due to low raw material inventories, and domestic lithium carbonate output in May is expected to dip slightly month-on-month. According to Fubao Lithium Battery data, domestic lithium carbonate production totaled 397,000 tonnes in the first four months of the year, up 38.8% year-on-year, maintaining rapid growth. April output reached 109,600 tonnes, up 46.9% year-on-year and 3.4% month-on-month. As of May 21, the capacity utilization rate at lithium salt plants had risen to 59.0% from 57.0% at the start of the year. Among the different resource types, utilization rates for spodumene, lepidolite, brine, and recycling were 75.1%, 27.6%, 68.3%, and 21.1%, respectively, with the spodumene utilization rate dipping slightly from the previous month.

On the import side, China’s cumulative lithium carbonate imports reached 116,000 tonnes in the first four months, up 46.9% year-on-year, an acceleration from last year, driven by increased exports from Chile. In April, Chile exported 23,000 tonnes of lithium carbonate and 12,000 tonnes of lithium sulfate to China, up 47.7% and 33.2% year-on-year, respectively. Considering shipping schedules, these are expected to arrive in China gradually from mid-to-late May.

IV. SMM Inventory Data Expanded; Warehouse Receipts Remain Elevated

SMM upgraded its inventory data by broadening the sample coverage for “other sectors,” increasing trader sample coverage to 70%-80% and revealing some previously hidden inventories. Overall, domestic lithium carbonate social inventory continues its destocking trend. As of May 22, total social inventory stood at 100,700 tonnes, a week-on-week decrease of 755 tonnes. Broken down, inventories at smelters, downstream entities, and other sectors were 18,400 tonnes, 39,600 tonnes, and 42,700 tonnes, respectively, with the “other” sector destocking and downstream slightly restocking. SMM officially launched its expanded-sample lithium carbonate inventory data, under which total social inventory decreased by 1,115 tonnes week-on-week to 137,300 tonnes, and trader inventory was 36,600 tonnes higher than the old data.

As of May 22, registered lithium carbonate futures warehouse receipts totaled 53,047 lots, staying at historically high levels. The continuous rise in warehouse receipts is partly due to industry tax inspections, which have strained trader cash flows and weakened their willingness to take physical delivery, and partly due to some previously hidden inventory flowing into the circulation chain, pushing up receipt volumes.

V. Downstream Production Schedules Continue Upward; Energy Storage Demand Soars

Downstream lithium battery production schedules continued to climb month-on-month, with strong energy storage orders. According to Daton Times Think Tank, in June 2026, China’s total lithium battery production (energy storage + power + consumer) is scheduled at approximately 268 GWh, up 7.6% month-on-month. Energy storage cells account for 41.4% of the schedule, while ternary cells account for 11.9%.

According to the China Association of Automobile Manufacturers (CAAM), China’s new energy vehicle sales reached 4.306 million units in January-April, roughly flat year-on-year. In April, domestic NEV sales totaled 1.344 million units, up 9.7% year-on-year, with exports reaching 430,000 units, a 110% surge. Excluding exports, domestic retail sales declined year-on-year. Weak domestic demand reflects persistently low consumer confidence; the relevant index has stayed below the boom-bust line for 15 consecutive months, leading to widespread postponement of large discretionary purchases. Furthermore, the phase-out of NEV purchase tax exemptions has dampened buying willingness. Nevertheless, internal industry restructuring continues to provide multiple growth buffers. Average battery capacity per vehicle is steadily rising, sales of new energy heavy-duty trucks have surged, and the strong export performance has effectively offset the pressure from weaker passenger car sales.

The energy storage sector maintained its high-growth trajectory. In the first quarter of this year, China’s energy storage battery shipments reached 215 GWh, up 139% year-on-year, reflecting robust demand. Domestically, Document No. 114 has officially taken effect, including independent energy storage in the capacity pricing mechanism at the national level for the first time and explicitly establishing an “equal pay for equal work” rule. This gives independent storage a triple revenue model comprising capacity compensation, energy trading, and ancillary services, solidifying the industry’s profitability logic. Large overseas energy storage orders have been signed intensively; according to the CESA Energy Storage Application Branch industry database, Chinese enterprises secured 124 overseas energy storage orders in Q1 2026, with a total capacity of approximately 104.63 GWh. Industry experts estimate that lithium carbonate prices below 200,000 yuan/tonne have a relatively limited real impact on energy storage demand.

VI. Market Outlook

Short-term: The data upgrade has revealed some hidden inventories, weakening the low-inventory narrative. However, with the earliest Zimbabwe lithium ore not arriving until end-June, ore supply remains tight in May-June, while demand is strong. This provides a floor for lithium prices, and lithium carbonate is expected to trade sideways with fluctuations. On the operational front, going long with light positions on pullbacks is worth considering, with key focus on Jiangxi mining developments and changes in warehouse receipt volumes.

Medium-term: According to our calculations, the lithium market is likely to remain in a tight balance this year. In 2027, the industry is expected to initiate active destocking, and the central range of lithium prices should be on an upward trajectory. We maintain a buy-on-dips strategy for the medium term.