In August, the domestic lithium carbonate market experienced a strong rebound, with prices continuing to rise, rising from 142000 yuan/ton at the beginning of the month to 156000 yuan/ton at the end of the month, with a monthly increase of nearly 10%.
Periodic contraction on the supply side stimulates price increase
The core driving force behind the rebound in lithium prices in August came from the phased contraction on the supply side. During the summer, the industry underwent centralized maintenance and the top enterprises in the three core production areas of Jiangxi, Sichuan, and Qinghai stopped production intensively. Coupled with the maintenance of lithium extraction equipment in salt lakes and insufficient overseas lithium concentrate arrival at ports, the effective supply in China has significantly shrunk. Overall, the production of lithium carbonate in July experienced its first month on month decline of the year. The maintenance in August further affected nearly 10000 tons of production, resulting in a reduction of nearly 10% in monthly effective supply. Additionally, some maintenance capacity continued until September, indicating a clear pattern of short-term rigid supply contraction.
The steady recovery on the demand side provides solid support for price increases
The production schedule data of power battery companies in August exceeded expectations, achieving steady growth on a month on month basis. Coupled with the continuous release of demand in the energy storage industry, downstream dual demand rebounded synchronously, driving the continuous depletion of market inventory. During the month, the social inventory of lithium carbonate continued to decline, with a significant weekly turnover rate. The enthusiasm for terminal stocking increased, and the traditional “golden nine and silver ten” peak season pre stocking began, effectively digesting market stock resources and completely reversing the previous loose supply and demand pattern. Under the mismatch of supply and demand, the market gradually forms a supply gap, laying a solid foundation for the sustained upward trend of prices in August.
September lithium carbonate prices are expected to continue the peak season trend
Looking ahead to the price trend of lithium carbonate in September, the overall market will maintain a pattern of strong volatility and moderate upward movement. The peak season market will continue to perform, but the upward slope will slow down. From the supply side perspective, there are still some maintenance capacity that has not fully resumed production in September, and the fundamentals of short-term supply contraction are still present. Coupled with the tight pattern of overseas lithium mine arrivals, it is difficult to quickly alleviate, and the supply in the near end is still tight. But with the gradual resumption of lithium extraction facilities in salt lakes and the expected increase in market supply recovery, it will continue to constrain the upward space of lithium prices. The demand side will usher in the traditional peak season, and downstream cathode material and battery companies are expected to continue to increase their production schedules. The demand for terminal stocking will be concentrated and released, and the trend of inventory depletion will continue. The supply-demand gap is likely to further expand, providing core support for lithium prices. Overall, the core operating range of lithium carbonate prices in September will maintain high volatility, with the center of gravity steadily shifting upwards. The focus of subsequent core observations will be on the pace of salt lake production resumption, the recovery of lithium ore imports, and the accumulation speed of market warehouse receipts under high prices. Whether demand can continue to absorb supply changes will be the key to determining whether lithium prices can break through a new high in late September.