In late July, China's lithium carbonate prices edged up but remained pressured, with monthly averages shifting lower. Based on the fundamentals, the price support is seen at Yuan 120,000/tonne and resistance at Yuan 150,000/tonne, with a trend reversal hinging on whether spot basis turns to premium.
In detail, as of July 31, Mysteel's price assessment indicated that the weekly average spot price for battery-grade lithium carbonate (evening session) stood at Yuan 144,700/tonne, edging up 0.05% week-on-week. The closing prices of the most-traded lithium carbonate contract LC2609 on Guangzhou Futures Exchange (GFEX) was showed a weekly average of Yuan 143,484/tonne, down 0.09% week-on-week. On a monthly basis, the prices averaged Yuan 154,400/tonne over July 1-25, against an average of Yuan 144,700/tonne over July 26-August 25, signaling a further downward shift in the overall prices.
Source: Mysteel
For 6%Li spodumene from Australia, the CIF China prices averaged US $2,059/tonne in the session ending July 31, up 0.34% week-on-week. The 30-day rolling procurement cost for lithium converters relying on outsourced feedstock stood at Yuan 149,800/tonne lithium carbonate equivalent (LCE), corresponding to a loss of Yuan 7,190/tonne LCE.
Lithium Ore: Port Drawdowns, Trader Builds, Stalemate in Processing Fees
The lithium ore market has been defined by port destocking, a modest build in traders' inventories, and a standoff over processing fees last week. Most large-sized converters have largely completed their feedstock restocking for the third quarter, with replenishment demand moderating.
Meanwhile, the LC2609 - LC2701 spread has remained in backwardation structure, reinforcing lithium converters' willingness to hold processing fees firm. However, some traders have shown strong willingness to sell against the September contract, leading to signs of a mild increase in processing fees.
Australia's spodumene shipments declined notably in July from the end-of-financial-year peak, while normal offtake by lithium converters led to a modest decline in port inventories, based on Mysteel's database.
In the third quarter, attention will remain on the pace of mine capacity releases and Zimbabwe's ore arrivals, with incremental supply expected mainly in the fourth quarter.
Lithium Carbonate: Supply Contraction Meets Trader Selling Pressure
Mysteel's latest survey July production came in at 101,200 tonnes, a monthly contraction of around 4.0%, below early-month schedules, mainly due to spodumene feedstock shortages and plant maintenance.
August production is scheduled at 108,900 tonnes, rising 7.6% MoM driven by improved ore arrivals from Africa, seasonal peak output from salt lakes, and planned restarts at producers previously idled due to ore shortages. However, the pace of actual feedstock arrivals and maintenance restarts will determine the extent to which these schedules are realized.
Inventories: Broad-Based Drawdown
Based on Mysteel's new lithium carbonate inventory survey across 207 sampled firms, the overall inventory recorded 162,450 tonnes as of July 29, down 6,950 tonnes week-on-week. Downstream buyers, having built ample inventories earlier, largely maintained essential procurement, with volumes picking up only last Friday July 31 when prices broke below Yuan 140,000/tonne.
Demand: Resilient, Capacity-Constrained
LFP order books have remained strong, with August production scheduled at 558,600 tonnes, pointing to a monthly growth of 5.2%. Leading energy storage cell producers have orders booked through Q2 2027, while LFP cathode producers are fully booked through end-2026. Under full-capacity operations, demand growth is now constrained by capacity additions rather than by order intake.
Balance and Price Outlook
Mysteel's monthly balance sheet currently shows a drawdown of 22,000 tonnes in July and an estimated 18,000 tonnes in August, indicating that the destocking trend remains intact but is moderating in scale. Downside support is seen at Yuan 120,000/tonne, corresponding to the cost of lithium extraction from lithium slag. Upside resistance is seen at Yuan 150,000/tonne, corresponding to the 30-day rolling average transaction price for converters relying on outsourced feedstock. A trend reversal will depend on whether spot basis moves from discount to flat or premium, a signal that spot liquidity pressure has been fully absorbed.
Written by Aggie Hu, huchenying@mysteel.com
