According to Mysteel's survey, the downstream buyers actively purchased when lithium carbonate prices were near the Yuan 140,000/tonne level, with the current target price range settling at Yuan 130,000-140,000/tonne. Among the lithium converters, stocks for April production have been largely in place, and those for May are also at relatively comfortable levels. Therefore, the procurement has been rather slow when lithium prices were high.
While battery cell manufacturers' production schedules for April and May continue to show month-on-month growth, end-user offtake has slowed. Battery makers have yet to cancel orders, but their physical inventories have accumulated significantly since January, limiting their appetite for higher-priced raw materials.
In addition, data from China Passenger Car Association (CPCA) indicates weaker-than-expected electric vehicle (EV) market performance in the first half of March, challenging the narrative of a seasonal demand pickup.
In detail, the retail sales of electric passenger vehicles reached 285,000 units during March 1-15, down 28% year-on-year but up 36% from the previous month, bringing cumulative year-to-date retail sales to 1.345 million units, a 26% year-on-year decline. In the wholesale segment, shipments totaled 325,000 units over the same period, down 19% year-on-year but up 47% month-on-month, with cumulative wholesale volume reaching 1.914 million units year-to-date, down 10% year-on-year.
At present, the bears are positioning around expectations of an economic downturn and tighter liquidity, while also pointing to sluggish EV demand and ample downstream raw material inventories as factors that give buyers the upper hand in price negotiations. Bulls, on the other hand, are betting on continued supply uncertainty from Zimbabwe and slower-than-expected resumption of production at the Jianxiawo mine, both of which could trigger supply-side disruptions.
Looking ahead, the lithium carbonate prices are expected to trade within a Yuan 130,000-170,000/tonne range. The March market will likely remain in tight balance, with no significant supply-demand mismatch, leaving prices largely driven by macro factors. April is preliminarily forecast to see an inventory drawdown of around 6,000 tonnes (subject to revision), with further destocking anticipated in May. As the year progresses, market focus is likely to shift toward supply-side marginal shifts. Key variables to monitor include developments in Zimbabwe's lithium supply and downstream production schedules for April.
