According to Mysteel's latest survey, the production schedules for both LFP cathode and battery cells have been comprehensively revised up in Q4 2026, with December 2026 potentially hitting a new high for the year, thanks to robust downstream orders.
On the supply side, however, incremental release has fallen markedly short of expectations. In October, China's lithium carbonate production is project to rise just 1.1% MoM to 115,900 tonnes. In addition, Chile's September lithium carbonate exports fell to 18,900 physical tonnes, down 21.6% MoM. Combined with low Zimbabwean lithium ore arrivals and lithium converters suffering losses based on outsourced feedstock, the marginal cost-sensitive output will likely contract sharply.
Against this backdrop, Mysteel's inventory survey, based on 207 sampled players, shows continuous draws from 203,000 tonnes in early June to 113,600 tonnes at end-September, a cumulative decline of about 44%, averaging roughly 5,000 tonnes of destocking per week. Traders' inventories, in particular, have fallen sharply from early-year highs to 47,000 tonnes, significantly weakening their buffer function.
Based on the current destocking pace and demand growth, the inventory days could fall to around 15 days in November 2026. Once downstream buyers kick off concentrated stockpiling, low inventories will amplify price volatility, and downstream customers are advised to stockpile on the dip in advance to guard against potential supply disruption risks.
Demand
Demand-wise, Mysteel's survey of downstream production schedules in Q4 shows that production plans for LFP cathode and battery cells have both exceeded prior market expectations. Latest tracking indicates that China's LFP production already reached 603,200 tonnes in September 2026, with October expected to climb further to 625,000 tonnes, up about 3.6% MoM.
Extrapolating this trend, December schedules for LFP cathode could approach 650,000 tonnes, a new high for the year as downstream cathode plants currently hold ample orders and are running nearly at full capacity.
Yet, the survey also shows that the main bottleneck in downstream production is not insufficient demand, but rather raw material procurement pacing and processing margins. On one hand, spot lithium carbonate prices swung sharply in Q3, disrupting downstream procurement rhythms and forcing some cathode plants to passively raise safety stocks. On the other hand, processing margins have remained under pressure, constraining the release of some toll-processing capacity. Overall, the demand resilience in Q4 remains strong, with full-year lithium carbonate consumption maintaining rapid growth.
Source: Mysteel
Supply
However, incremental supply release has clearly fallen short of expectations, with multiple factors converging. According to Mysteel's survey, China's lithium carbonate production is expected at about 115,900 tonnes in October 2026, up only 1.1% from September, significantly below prior market expectations for Q4 supply expansion.
The core reasons lie in two aspects. First, Zimbabwean lithium ore arrivals have remained persistently low, with the spodumene supply bottleneck in Africa directly constraining feedstock security for lithium converters relying on outsourced feedstock. Second, continued lithium carbonate price declines have created severe cost burdens for converters relying on outsourced feedstock, which have squeezed margins, and slowed production schedules.
Meanwhile, Chile's September 2026 lithium carbonate exports totaled about 18,900 tonnes, down 21.6% MoM but up 18.6% YoY. Exports to China were about 13,500 tonnes, down 5.6% MoM but up 21.3% YoY. Exports to South Korea fell sharply to about 2,900 tonnes, down 56.4% MoM, while exports to Japan were about 900 tonnes, down 19.3% MoM.
The decline in Chile's export volumes signals that China's imported lithium carbonate will decrease in stages over the next one to two months, further intensifying domestic supply tightness. Meanwhile, major South American salt lake production areas will experience seasonal fluctuations due to weather conditions, and their impact on forward supply pacing warrants continued attention.
Looking further ahead, the operational status of lepidolite mines in China's Jiangxi province from November 2026 to April 2027, after the Two Sessions, is worth watching. Jiangxi's lithium ore supply tightness will be difficult to ease in the short term, and lepidolite-based lithium carbonate production could come under further pressure if lithium prices remain depressed.
Second, Zimbabwe's lithium concentrate export ban officially takes effect on January 1, 2027, which, according to Mysteel's estimates, could affect about 160,000 tonnes of LCE per year if strictly enforced, reshaping Africa's lithium ore supply landscape and pressuring global lithium concentrate circulation volumes.
Source: Mysteel
Inventory
On the inventory side, destocking has accelerated, with inventory days probing yearly lows. The inventories based on 207 sampled players have drawn down continuously from about 203,000 tonnes in early June 2026 to 113,600 tonnes at end-September, a cumulative decline of about 44%, averaging roughly 5,000 tonnes of destocking per week, with the pace markedly faster than Q2.
Traders' inventories, in particular, have fallen sharply from early-year highs to 47,000 tonnes, significantly weakening the segment's buffer function. Once downstream buyers kick off concentrated restocking, the lithium price volatility will be markedly amplified.
Summary
The Q4 2026 lithium carbonate market is supported by demand exceeding expectations and supply falling short. Downstream LFP and cell production schedules continue to be revised up, with December potentially hitting a new yearly high. Conversely, slowing domestic output growth, declining Chilean exports, and converters suffering losses on outsourced feedstock combine to significantly constrain incremental supply. Against a backdrop of sustained destocking, overall inventory days could fall to around 15 days in November 2026, a yearly low. With traders' buffer function weakening, price sensitivity to supply disruptions has risen markedly.
For downstream players, exposure to supply disruptions is expanding in the current low-inventory environment. It is advisable to lock in supply at relatively low prices in advance and moderately raise safety stocks to avoid higher procurement costs from concentrated restocking. For upstream converters, controlling output pacing under high cost is advisable to avoid exacerbating losses through low-price sales. For traders, a weakened buffer function means inventory turnover efficiency becomes more important, requiring a balance between inventory occupation and price volatility risk.
Meanwhile, there are four variables warrant close attention going forward. First, the actual enforcement intensity of Zimbabwe's concentrate export ban and changes in arrival volumes; second, progress in easing Jiangxi's lepidolite supply tightness; third, whether Chile's export volumes can rebound in Q4; fourth, the actual realization of downstream LFP production schedules and the actual trajectory of inventory days. Any of these factors exceeding expectations could become a key variable breaking the current supply-demand balance.
Risks: Electric vehicles sales falling short of expectations, overseas salt lake commissioning progressing faster than expected, policy enforcement falling short of expectations, etc.
Written by Aggie Hu, huchenying@mysteel.com
