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Though the fundamentals of China's lithium carbonate market seemed positive, supported by strong supply and demand as well as smooth destocking, the lithium carbonate prices were still struggling for a direction and moved in the range of Yuan 72,000-75,000/tonne since the middle of September.
On the supply side, China's lithium carbonate production totaled 83,500 tonnes in September, a mild increase of 0.9% compared with the previous month, Mysteel's survey showed. The production is estimated at 84,900 tonnes in October, rising by another 1.7% month-on-month.
From the perspective of raw materials, the spodumene-based lithium carbonate production is projected to keep rising in October, marking the sixth month of consecutive growth, with an estimated production of 56,700 tonnes.
The increase is primarily contributed by some large-sized refineries in Sichuan and Jiangxi which have seen new port arrivals of imported spodumene. In addition, the tollers in northern part of China have also raised the production on more orders received.
For lepidolite, the production is likely to contract around 1,000 tonnes in October with CATL-affiliated mines gradually suspending the production with the depletion of raw material stocks.
The lithium carbonate produced with recycled materials is likely to hit a year-to-date high thanks to lithium carbonate price rebound. The brine lake projects are expected to mostly operate at full capacity, and Zangge Mining is likely to bring some additional production after it resumes the production in early October based on its official notice.
Source: Mysteel
In September, Chile exported 11,101 tonnes lithium carbonate to China, down 14.5% MoM and 33.1% YoY. Chile's lithium carbonate shipments to China have remained at low levels in recent months, primarily due to sufficient domestic supply of lithium carbonate in China. Major battery cell manufacturers have been actively procuring spots in the domestic market, leading to subdued demand for overseas lithium carbonate. Additionally, some lithium resources are being shipped to China in the form of lithium sulfate for further processing and production, as this method offers lower overall costs throughout the entire supply chain.
On the demand end, the monthly production of lithium iron phosphate (LFP) is expected to create a new high of around 373,800 tonnes in October, after registering a monthly increase of 11.62% at 355,800 tonnes in September.
The robust LFP cathode production gains solid support from active demand in the power and energy storage battery sectors, and the increase in October is further powered by the introduction of new products for verification as well as some cathode factories ramping up.
Taken together, October is expected to see a supply gap of 12,597 tonnes with the demand increase outpacing the growth on the supply side.
On the warrants front, the spot-futures spread has been unfavorable since the beginning of September, but most spots were quoted with discounts, creating opportunities for traders to register them as warrants. However, the warrants reduced recently due to ongoing cancellations and withdrawals by downstream players. This suggests that overall inventory drawdown has now extended to the warrants level, and we anticipate further declines in warrants ahead.
On the spot market, the marketable lithium carbonate inventory held by the traders and lithium refineries kept falling since mid-August and has returned to the historical average level, suggesting smooth destocking.
In addition, Mysteel's daily tracking of the spots transaction also indicated that the downstream players purchased actively when the lithium carbonate prices were between Yuan 72,000-73,000/tonne.
Looking ahead, before the resumption of production at Jianxiawo Mine, the monthly supply and demand balance is expected to remain in the negative in the rest of 2025. Strong procurement from downstream players will continue to support lithium carbonate prices. From a medium-term perspective, a sustained price increase may require continued drawdowns of domestic lithium ore inventories and the digestion of some off-balance-sheet old stockpiles.
Source: Mysteel
Written by Aggie Hu, huchenying@mysteel.com
