On the raw material front, the traders' lithium ore inventory dropped 5,000 tonnes in the session ending May 8, 2026 despite rising port arrivals of Australia's spodumene, suggesting active pick-up by downstream lithium converters.
In terms of pricing, the prevailing quotes are now fully benchmarked against the September futures contract at Guangzhou Futures Exchange. After the contract rollover, traders have intensified pressure on processing fees, pushing them below Yuan 18,000/tonne.
As of May 11, Australia's Li6% spodumene concentrate was quoted at US $2,930-3,040/tonne CIF China, with the daily average transaction price hitting Yuan 200,000/tonne LCE and the 30-day rolling average at Yuan 172,600/tonne LCE.
Additionally, Chinese companies in Zimbabwe had suspended lithium ore shipments for about 80 days. Although shipments have gradually resumed, the sea freight lead times mean arrivals in China are not expected until late July, offering little near-term relief to tight supply.
Unlike the active lithium ore sector, the lithium carbonate transactions have been relatively slow. Due to a shorter statistical period, lithium carbonate spot transactions totaled just 3,866 tonnes in the week ending May 8, down 4,838 tonnes week-on-week. Notably, as of May 8, the marketable inventories held by Mysteel's sampled traders broke through the previous range of 30,000-40,000 tonnes and recorded 42,300 tonnes.
While the lithium converters are eager to sell at current prices, the downstream buyers are pushing back, as the May long-term contract monthly average price has jumped sharply from April. Traders, meanwhile, are more reluctant to take cargoes than anticipated due to cash flow pressures. The resulting supply-demand imbalance has further deepened the discount of lithium carbonate spots.
Source: Mysteel
Nevertheless, the downstream production scheduling has been well supported by resilient end-market demand.
April electric passenger vehicle retail sales came in at 849,000 units, down 6.8% YoY, but the wholesale volumes went up 7.5% YoY to 1.225 million units, with exports soaring 111.8% to 406,000 units.
Over the first four months of the year, cumulative retail sales reached 2.758 million units, contracting 17.2% YoY. On the contrary, the exports amounted to 1.306 million units, booming 118.7% YoY, with wholesale volumes standing at 3.953 million units, a modest YoY drop of 1.1%.
The follow-up recovery in the auto market is set to strengthen with May's working days matching last year's 19 and the trade-in subsidy adjustment already priced in.
Energy storage demand remains in line with earlier high-growth expectations, with some companies' export orders already booked through 2027, offering solid support to the segment.
In this case, the cathode plants generally report a satisfactory order book, and several producers continue to ramp up new capacity. Looking ahead, industry output will hinge on the pace of new capacity additions and the supply stability of key upstream materials, notably iron phosphate.
From the perspective of supply-demand balance, actual lithium carbonate production in April was nearly 3,000 tonnes below early-month forecasts, as some converters relying on outsourced feedstock were already constrained by tight lithium ore supply. This ore-related production constraint is expected to persist for these converters through May and June.
On the demand side, actual April cathode active material production and May production schedules both exceeded expectations, while June cell production schedules are projected to rise 2-3% month-on-month. Taking both supply and demand dynamics into account, the monthly balance sheet points to destocking of over 10,000 tonnes per month in May and June, with a clear trend toward tighter fundamentals.
Overall, China's domestic lithium carbonate prices are expected to remain firm in the second quarter, supported by resilient feedstock cost and a steady recovery in downstream demand. The lithium carbonate prices are expected to move between Yuan 190,000-210,000/tonne in the near term.
Written by Aggie Hu, huchenying@mysteel.com
