Downward price pressure persisted across lithium ore and lithium carbonate markets in the run-up to June 9, based on Mysteel's data. While CIF price for 6% spodumene concentrate fell to US $2,385/tonne, battery-grade lithium carbonate was assessed at Yuan 164,350/tonne and industrial-grade at Yuan 161,150/tonne, with the most-traded GFEX LC2609 contract settling at Yuan 165,300/tonne. A key development is the recent decline in warrants inventory, after peaking at record levels, offering a sign that acute supply pressure may be gradually easing.
On the raw material side, lithium ore inventories have drawn down significantly. As of June 5, traders' lithium ore stocks dropped to 114,000 tonnes, a 63.1% drop from the peak of 309,000 tonnes earlier in the year, based on Mysteel's survey of sampled traders. Among lithium converters relying on outsourced ore, their spodumene inventories also declined to 445,000 tonnes by end-May, down 22.5% from their peak year-to-date (YTD).
Source: Mysteel
Lithium mineral supply from overseas sources has also tightened. Tracking of shipping fixture indicated that the shipments of lithium ore from Australia to China fell 12.3% month-on-month to 284,700 tonnes in May, implying relatively low arrivals in June and potentially creating feedstock constraints for some converters.
Shipments from Zimbabwe remain slow, with the risk that cargoes may not arrive in early July in China as expected, potentially delaying lithium carbonate production ramp-up from mid-July onward. In Chile, May lithium carbonate exports recorded a notable month-on-month decline, raising the risk of a marginal supply reduction in the coming months.
Yet, China's lithium ore processing charges have held steady. As of June 5, the processing charges averaged Yuan 18,250/tonne, down 14.1% from its peak. Given that lithium converters have already locked in much of their Q3 feedstock supply, further cuts in processing charges would severely discourage purchasing interest. At the same time, with port inventories still low, there is little room for a sharp rebound in processing charges, which are therefore expected to remain stable in the near term.
Elsewhere, the resumption of production at the Jianxiawo mine remains highly uncertain, and the likelihood that it will not contribute meaningful supply in 2026 is growing. The market may need to reassess the expectations for medium-term supply additions.
On the lithium salt side, the recent price decline has been driven largely by the build-up of warrants inventory to record highs, which made the previously untracked inventories more visible. However, the marginal impact of this bearish factor is now fading.
First, some battery cell manufacturers have begun taking delivery from GFEX exchange warehouses, pointing to stronger appetite for low-priced warrants for spots. Second, with ore supply now tight, some lower-quality warrants may no longer be sold directly to cathode plants. Instead, they are likely to be treated as "refining feedstock" for secondary processing. At the right price, high warrants could thus be absorbed through an industrial reprocessing mechanism, rather than simply weighing on the spot market.
On the demand side, the electric vehicle (EV) market has entered the traditional second-half peak season. According to the China Passenger Car Association, cumulative wholesale sales of electric passenger vehicles from January to May turned positive year-on-year, rising 1.7%. With average installed battery capacity per vehicle up more than 35% year-on-year, the actual demand from the power battery sector alone has shown strong resilience.
Energy storage battery demand has grown even faster, becoming a second growth engine for lithium carbonate consumption. In the cathode active material (CAM) segment, the orderbook is expected to continue rising month-on-month in June, with leading producers ramping up new capacity. LFP production is expected to keep rising in June, with market attention turning to the pace of new capacity additions and the supply stability of upstream iron phosphate.
In conclusion, the lithium carbonate market is in a phase of marginal recovery. While high warrants remain the main factor capping any price rebound, tightening ore supply and steady demand growth are providing a floor. With the warrants build-up nearing its end and industrial absorption capacity becoming visible, the downside potential for lithium carbonate prices appears limited. In the near term, lithium prices are expected to end their continuous decline and transition into consolidation, awaiting fresh directional catalysts.
Written by Aggie Hu, huchenying@mysteel.com
