China's lithium carbonate market has recently remained in a delicate supply-demand balance, with strong cost support near Yuan 150,000/tonne and resistance around Yuan 170,000/tonne as the market lacks a clear catalyst to break out of its rangebound pattern, with participants across the value chain staying cautiously on the sidelines.
Key variables to watch include logistics developments in Zimbabwe, diesel inventory drawdowns in Australia, and the pace of downstream LFP capacity release.
On the supply side, mining disruptions persist. Domestically, the restart of lepidolite mines in Jiangxi has been delayed by environmental compliance requirements, pushing market expectations for resumption to late June or even the second half of the year.
Overseas, reports indicate that Zimbabwe's lithium concentrate exports are beginning to ease, with several Chinese-invested companies already granted export eligibility. Specific quota details are expected to be announced soon.
The logistics lead time from Zimbabwe's concentrators to Chinese lithium refineries is estimated at around two and a half months, and no shipments have yet been dispatched. As a result, actual arrivals of Zimbabwean lithium ore in China could be delayed until July.
In Australia, risks related to diesel inventory drawdown could still potentially disrupt lithium ore supply.
Overall, the lithium ore supply remains tight, and China's domestic lithium refineries have been actively seeking feedstock, with major players having largely secured their Q2 inventory requirements.
Traders' marketable spot lithium ore inventories continue to decline, with stockpiles becoming increasingly concentrated among leading distribution channels. Mysteel's survey suggested that the processing charges for Australian spodumene now stand at around Yuan 18,000/tonne, with traders pressuring the prices. Nevertheless, the processing charges have little near-term upward momentum, though downside room is also limited.
On the demand end, data showed that the electric vehicles (EVs) inventory held by distributors and OEMs both declined in March compared to the same period last year and to January–February levels, indicating improved inventory turnover efficiency and generally firmer demand. Moreover, an auto exhibition scheduled for late April to early May could further boost EV sales.
Meanwhile, China's LFP production schedules for April are expected to rise 2-4% month-on-month, with new capacity continuing to ramp up at facilities in Hubei, Gansu, and elsewhere. Larger-scale capacity additions are expected in the third quarter, with further increases projected for May.
Yet, downstream buyers have shown limited acceptance of current carbonate prices, largely waiting for lower levels, keeping spot procurement subdued.
On the spot market, spot trading remains slow, with volume picking up only on days when lithium carbonate futures prices drop sharply. Currently, the downstream buyers are not actively closing the back-pricing orders at current levels, while upstream producers are also reluctant to unleash cargoes. The traders' inventories, on the other hand, have seen little change.
Meanwhile, the pace of new warehouse receipt generation has accelerated recently, amidst a sustained weakening of basis and widening discounts of spots. Some traders have shifted capital to energy and chemical products, reducing both capital allocation and interest in lithium carbonate.
In summary, China's lithium carbonate prices are currently caught in a tug-of-war between supply disruptions, hesitant demand, accumulating inventories, and cautious capital moves. With price upside capped by inventories and downside supported by costs, a clear directional move is unlikely.
In the near term, lithium carbonate prices are expected to remain rangebound between Yuan 150,000-170,000/tonne. Lithium ore processing fees are holding around Yuan 18,000/tonne, as tight ore supply coexists with relatively ample lithium carbonate availability and downstream wait-and-see sentiment. Key variables to watch include logistics developments in Zimbabwe, diesel inventory drawdowns in Australia, and the pace of downstream LFP capacity release.
Written by Aggie Hu, huchenying@mysteel.com
Join Mysteel's April 30 webinar to explore whether supply disruptions will drive the next leg higher for lithium and nickel markets in Q2 2026.
https://www.mysteel.net/event-listings/100067-q2-2026-lithium-and-nickel-will-supply-disruptions-fuel-further-price-hikes
