As the second quarter of 2026 draws to a close, the lithium carbonate market remains caught in a familiar tug-of-war between resilient near-term fundamentals and growing expectations of medium-term supply ramp-up.
Drawing on Mysteel's latest survey, we see the current market as one where solid downstream demand and ongoing destocking of lithium ore inventories provide a firm floor, keeping prices well supported above Yuan 150,000/tonne.
Source: Mysteel
Yet, with new mine supply from overseas projects gradually coming online in the second half, market expectations for an improving supply environment are building, capping the upside potential. This dynamic points to a "soft first, then firm" price trajectory, with the strength of the recovery ultimately hinging on how peak-season demand plays out.
Current end-user demand shows a clear divergence, where the passenger electric vehicles (EV) sales are weaker, commercial electric vehicles are stronger, and while power battery demand is stable, energy storage is booming. This demand structure is the core support behind recent spot lithium carbonate transactions.
In the passenger EV segment, year-to-date retail sales as of June 14 stood at 4.039 million units, down 15% year-on-year, while wholesale volumes reached 5.684 million units, up 2% year-on-year. The retail contraction remains a key source of medium-term uncertainty.
In contrast, commercial vehicle electrification has accelerated sharply. May sales reached 103,000 units (+58.4% YoY), pushing penetration to 40.1%. January-May cumulative sales totaled 382,000 units (+34.9% YoY). The surge is largely driven by high oil prices, which have improved the economics of electric heavy-duty trucks and logistics vehicles, providing a welcome demand boost in Q2 2026.
That said, EV growth remains closely tied to high oil prices. A potential unwind of geopolitical risk premiums, a softening in crude prices, or bottlenecks in overseas charging infrastructure could all weigh on the demand outlook.
On the battery production front, near-term growth remains intact. Power battery production schedules are expected to rise month-on-month through July-September, while energy storage battery schedules are already running full, with new capacity slated for release over Q3-Q4. Energy storage batteries have firmly established itself as the second growth engine after power batteries.
However, procurement so far remains driven by essential restocking, with no signs of panic buying. This provides support at the lower end but is unlikely to push prices out of the current range.
In summary, near-term demand through early Q3 is supported by a dual engine of commercial EVs and energy storage systems, providing a floor under prices. Further out, into Q4 and beyond, the key variables to watch are crude oil price movements, which directly affect commercial EV economics, and infrastructure bottlenecks in overseas markets.
On the supply side, the market focus has shifted from "ore tightness" to "the pace of new arrivals," with focus on shipments from Australia and Zimbabwe. As of June 19, port lithium ore inventories edged lower, while traders' stocks remained broadly stable, based on Mysteel's data. Large lithium converters have already locked in ore supply for the third quarter.
Spot ore prices have tracked lithium carbonate lower in a range-bound manner. The Yuan 150,000-160,000/tonne band has become an active zone for price settlement in back-pricing orders: below this range, essential restocking volumes pick up; above Yuan 170,000/tonne, the price settlement activity drops off sharply, effectively bracketing the near-term price range. (Note: Back-pricing means that the final price of a physical commodity is not fixed at the time the deal is struck. Instead, the buyer is given the right to "set" or "fix" the price later, by referencing a known benchmark or futures price.)
On the lithium carbonate front, spot transactions have picked up and GFEX warrants are gradually declining. On June 22, Mysteel's sampled traders reported 6,116 tonnes of lithium carbonate sales (6,086 tonnes to downstream buyers). The price settlement against the September contract averaged Yuan 155,000/tonne, with downstream buyers showing strong interest when prices fell below the monthly average.
Meanwhile, the GFEX warrants fell 1,560 lots to 50,415, suggesting visible inventory pressure is being gradually absorbed. Still, absolute levels remain elevated, limiting any strong rebound.
With expected new supply from Australia and Zimbabwe in the second half, the market widely anticipates ore supply to gradually ease. This will marginally improve the current "tight ore, ample carbonate" structure. That is, lithium carbonate production capacity is highly elastic; once ore arrives, supply can respond quickly.
Most incremental ore is expected from mid-to-late July onward, meaning spot supply will remain relatively tight through late June to early July, supporting the Yuan 150,000/tonne level. But the forward price curve has already priced in future supply ramp-up, capping any sustained upside.
On the news front, on June 19, Zimbabwe's lithium producers collectively pressed the government to delay the planned lithium concentrate export ban, originally set for January 1, 2027, to March or June 2027. The request reflects the fact that most local lithium sulfate processing plants remain under construction.
Innocent Rukweza, Chairman of the Lithium Producers Association, noted that among the seven major producers, only Huayou Cobalt's lithium sulfate plant has been completed and is making shipment, Projects at Sinomine's Bikita mine and Yahua's Kamativi mine are still under construction, while the state-owned Sandawana project remains at the feasibility stage.
The delay has no material impact on 2026 as the ban is not due until 2027, and the deferral effectively confirms that producers can continue shipping concentrate to China this year and next. It also removes the tail risk of an early tightening in 2026. In the near term, it reinforces the narrative of incremental supply from Zimbabwe as expected in the second half, adding weight to the "supply ramp-up" scenario.
Based on the above supply-demand dynamics and news flow, Mysteel offers the following framework.
In the short-term from late June to mid-July, lithium prices will be subject to Jianxiawo's restart rumors and warrants drawdowns, with an expected rangebound trading between Yuan 145,000-170,000/tonne. The Yuan 150,000/tonne level remains a price settlement sweet spot, while buying interest falls off sharply above Yuan 170,000/tonne, defining the upper end of the range.
Over the medium-term in Q3 and Q4 2026, a "soft first, then firm" pattern is expected. The concentrated port arrivals of lithium ore from Zimbabwe and Australia starting mid-to-late July should ease feedstock constraints, lifting lithium carbonate output month-on-month and putting short-term supply pressure on prices.
However, entering late Q3, the traditional EV peak season and energy storage installation rush should provide support. If commercial EV penetration holds up and EV exports sustain their momentum, prices could rebound in Q4, though the strength of the recovery will depend on peak-season demand fundamentals.
Core variables to track include actual lithium ore port arrivals (Australian and Zimbabwean shipments vs. market expectations); the pace of warrant drawdowns; as well as peak-season demand fundamentals, that is, whether July-September battery production schedules can sustain sequential growth, whether passenger EV retail is catching up with wholesale growth, how crude oil price fluctuations impact commercial EV economics, and whether energy storage battery demand proves sustainable.
Written by Aggie Hu, huchenying@mysteel.com
