With players already fully factoring in sustained inventory drawdown through May-June as well as robust demand, the market focus has shifted to rising supply in the long run, which kept putting pressure on the futures market though the fundamentals remained solid at present.
In addition, high GFEX warrants brought additional pressure. As of June 1, lithium carbonate warehouse receipts registered on GFEX reached 55,215 lots, with a single-month increase of 17,203 lots in May, a record high. For an extended period beforehand, elevated futures margins encouraged upstream producers to register more deliverable warrants. At the same time, weaker downstream and trader willingness to take physical delivery has kept warehouse receipts persistently high, raising market concerns about the spot market's ability to absorb supply in the near term. Yet, the demand end remained active. Aside robust energy storage batteries orders, rising battery capacity per electric vehicle and improving exports supported lithium consumption in the EV sector. Overall, the lithium prices will remained pressured by high warrants, with firm demand offering solid support.
