China's lithium carbonate prices kept bottoming last week. Based on Mysteel's assessment, battery-grade lithium carbonate fell steadily from Yuan 133,800/tonne on September 14, 2026 to Yuan 130,300/tonne on September 16, with September 16 alone seeing a single-day decline of Yuan 3,750/tonne, the largest daily drop of the week.
Futures at Guangzhou Futures Exchange (GFEX) were more volatile. The most-traded LC2701 contract closed the day session at Yuan 132,340/tonne on September 14, then fell sharply for three consecutive trading days. The contract rebounded from overselling to close at Yuan 131,180/tonne on September 17, before bears pressed again on September 18, with the contract opening higher at Yuan 132,000/tonne and then trending lower. The open interest, on the other hand, rose 9,528 lots to 425,377 lots, further intensifying the long-short tug-of-war.
Sources: GFEX, Mysteel
The accelerated decline early in the week was a continuation and intensification of the previous week's "weak expectations" logic, and Friday's renewed pullback indicates bearish sentiment has not fundamentally reversed.
On the one hand, lithium ore prices continued to fall last week, with 6% spodumene concentrate (CIF) prices weakening further from the previous week and processing fees entering an upward trajectory. The shipments from Australia maintained month-on-month growth, and September lithium ore arrivals in China are expected to hit a record high, further reinforcing the consensus that the mine side is shifting away from tightness.
Moreover, demand concerns have been intensifying. Rumors of battery maker's production curtailments continued to disrupt the market. Combined with some cathode material producers having overstocked earlier due to consumption tax policy impacts, expectations have emerged that subsequent destocking pressure will weigh on production, making year-end production schedule uncertainty an important variable capping lithium prices.
Despite the significant futures price decline, structural support indicators on the spot side continued to improve.
GFEX lithium carbonate warrants showed consecutive destocking last week, falling from about 49,000 lots on September 11 to about 41,100 lots on September 18, a cumulative decrease of over 8,000 lots during the week. The destocking mainly came from downstream pre-holiday restocking and delivery, as well as traders taking warrants.
On the spot market, the basis continued to strengthen. The price spread between industrial-grade and battery-grade lithium carbonate narrowed, as industrial-grade lithium carbonate spot availability remained tight. The upstream lithium converters held prices firm and were reluctant to sell on a spot basis, and downstream buyers actively purchased on dips. Spot performance was stronger than futures, providing some fundamental support for prices.
LFP cathode has remained the core support for lithium carbonate consumption. The LFP production is expected to remain above 610,000 tonnes in September, up about 6% MoM, with leading producers holding full order books and capacity ramp-up continuing, while robust energy storage demand continues to contribute marginal growth.
For ternary cathode materials, September production is expected to decline MoM. Weaker-than-expected sales of range-extended high-end electric vehicle (EV) models continue to suppress demand elasticity for ternary cells, with 6-series product schedules revised down MoM. Ternary cathode retains rigid demand only in high-end pure-battery and export models.
Driven jointly by downstream peak-season demand and pre-holiday restocking, lithium carbonate spot trading was active last week, with downstream buying interest strong on dips. However, as trading-segment inventories fell rapidly to low levels, spot transaction volumes weakened passively.
In the near term, lithium carbonate is expected to stay range-bound with a slight upward bias.
Downside support comes from three fronts: peak-season rigid demand and pre-holiday restocking are still materializing; accelerated warrant destocking is sending positive signals, with a strengthening spot basis pulling near-month contracts; and marginal cost support exists around Yuan 130,000/tonne for lithium extraction from slag.
Upside is capped by continued mine-side ramp-up, port inventory accumulation, expectations of incremental lithium carbonate supply, and demand concerns stemming from uncertainties over October cathode production schedules.
A further upside breakout still requires stronger reality to materialize, and key watchpoints being whether inventory destocking can re-accelerate and whether the basis can strengthen enough to trigger faster warrant digestion. Upside resistance is referenced at around Yuan 142,000/tonne, the rolling 30-day outsourced lithium ore averages.
Written by Aggie Hu, huchenying@mysteel.com
