China's lithium carbonate market is expected to remain collectively supported by low inventory, high cost, and prosperity in the energy storage sector through the first quarter of 2026, according to Mysteel's survey.
Looking back on the first half of February 2026, China's domestic lithium carbonate prices experienced significant volatility before the Chinese New Year (CNY) holiday. In early February, prices came under pressure, with battery-grade lithium carbonate spot prices briefly falling to Yuan 132,500/tonne based on Mysteel's assessment.
However, in the last week before the holiday, the lithium carbonate futures price staged a strong rebound and then hovered high, with the average spot price recovering to Yuan 145,500/tonne.
Nevertheless, trading activity in the spot market gradually wound down approaching the CNY holiday, and the trading sector saw a minor inventory drawdown in the last week before the holiday as the downstream companies purchased on the dip.
On the supply side, Mysteel's survey of the production scheduling suggested that, the domestic lithium carbonate production for February 2026 is estimated at around 88,300 tonnes, a month-on-month decrease of 8.2%.
Source: Mysteel
During the CNY holiday, some spodumene-based production lines began maintenance, while the salt lake projects experienced seasonal production reductions. In addition, with February having fewer calendar days, overall production trended downward, although some production lines maintained high operating rates and continued capacity ramp-ups.
Looking at the first quarter, the support on the fundamentals has been relatively strong. On the supply side, factors such as license renewals for lithium mines in Jiangxi Province and environmental protection-related controls have disrupted capacity release. Meanwhile, energy storage demand remains strong driven by policies. Coupled with the export rush triggered by the adjustment to battery export tax rebate policies, the demand side has demonstrated strong resilience. Collectively, a slow inventory drawdown is anticipated through the first quarter.
Looking ahead, China's lithium carbonate prices are projected to stay firm amidst low inventory, high cost, and the surge in energy storage demand. However, it is necessary to be wary of price pressure from supply release and high prices inhibiting restocking after March. The post-holiday lithium carbonate market is expected to show strong volatility in the near term, range-bound pressure in the mid-term, and demand-driven upward support in the long run.
Written by Aggie Hu, huchenying@mysteel.com
