Currently, the battery producers' peak-season production schedules are providing solid support, while smelting losses and ore-side costs are limiting downside. However, downstream restocking is largely limited to essential needs, and high downstream inventories and elevated GFEX warrants are capping upside potential. Prices are expected to remain rangebound in the short term, with August lithium carbonate prices projected to trade within Yuan 130,000-160,000/tonne.
Over the medium term, the lithium carbonate balance sheet is expected to sustain a montm-on-month drawdown through the second half of the year, with the year-end inventory-to-sales ratio likely to fall to relatively low levels, providing medium-term support to prices. Going forward, attention should be paid to the sustainability of battery producers' production schedules, the pace of downstream inventory destocking, the cost pass-through effects following the implementation of the consumption tax policy, and the progress of overseas lithium mine capacity releases.
