SunSirs: Lithium Carbonate Experiences a Short-Term Correction, but the Medium-to-Long-Term Fundamentals Remain Unchanged

According to the commodity market analysis system of SunSirs, lithium carbonate has recently undergone a correction after touching the critical threshold of 200,000 RMB/ton. As of May 18, the benchmark price for battery-grade lithium carbonate stood at 190,000 RMB/ton—a month-on-month increase of 13.1% and a year-on-year increase of 198.12%.

The concentrated intensification of bearish news has shattered previous bullish expectations.

1. An adjustment to inventory statistical methodology has triggered bearish market sentiment. A certain institution announced that, effective May 21, it would expand the scope of its inventory statistics for traders; this move was interpreted by the market as a sign that "hidden inventory is about to become visible." This directly undermined the core bullish premise—held previously—that "industry inventory levels are extremely low," prompting some capital to exit the market prematurely out of risk-aversion concerns, thereby becoming the primary catalyst for the subsequent market correction.

2. A surge in futures warehouse receipts has exacerbated market panic. On May 15, warehouse receipts for lithium carbonate futures at the Guangzhou Futures Exchange (GFEX) increased by 1,329 lots month-on-month—equivalent to approximately 14,000 tons of physical cargo—amplifying panic within the high-priced market and driving futures prices into a rapid decline.

3. Rumors of easing overseas supply have unsettled market expectations. Reports circulating in the market suggest that Chile's SQM has raised its full-year shipment forecast for lithium products. This development, coupled with rumors regarding the resumption of lithium ore shipments from Zimbabwe (with actual port arrivals anticipated in July), has heightened short-term concerns regarding increased supply, thereby exerting further downward pressure on prices.

4. Goldman Sachs' Bearish Report Further Amplifies Market Divergence. In its latest research report, Goldman Sachs reiterated its forecast that lithium carbonate prices are expected to fall to 65,000 RMB/ton by year-end. The firm issued a bearish outlook, predicting that the global lithium market will face a supply surplus in the second half of the year—a view that stands in stark contrast to the optimistic expectations of institutions such as Morgan Stanley and UBS, thereby exacerbating market divergence.

5. Concerns over negative feedback on demand trigger a flight to safety among investors. As lithium prices breach the 200,000 RMB/ton mark, some market participants fear that downstream power battery and cathode material manufacturers—facing mounting cost pressures—may slow down production schedules. This potential slowdown in output could subsequently dampen lithium demand, thereby further intensifying downward pressure on prices.

The core logic remains unchanged; demand continues to demonstrate resilience

Sustained resilience on the demand side serves as the core pillar of the medium-to-long-term bullish outlook for lithium carbonate. Despite recent short-term price corrections, the demand landscape—driven jointly by the energy storage and power battery sectors—remains fundamentally unchanged. Moreover, the restocking cycle for the traditional peak season is about to commence, further bolstering positive market sentiment regarding industry prospects. With a concentrated rollout of energy storage projects expected in May and June, demand within the energy storage sector is set to continue its rapid expansion, thereby indirectly stimulating growth in lithium carbonate demand. Concurrently, the traditional restocking cycle for power batteries has officially begun; restocking activities by downstream enterprises are expected to further boost demand for lithium carbonate, thereby alleviating the downward pressure associated with recent short-term price corrections. Furthermore, favorable developments are emerging in overseas markets; specifically, the removal of U.S. retaliatory tariffs—along with the lifting of anti-dumping and countervailing duties on anode materials—is driving export growth across the lithium battery supply chain, which, in turn, is indirectly fueling increased demand for power batteries.

Lithium carbonate currently maintains an upward trend; short-term news-related disruptions have not altered the core fundamental logic driving its rise. It is anticipated that lithium carbonate prices will continue to trend upward amidst some volatility, though specific movements will ultimately depend on changes in market supply and demand.

SunSirs has been continuously tracking price data for over 200 commodities for nearly 20 years, please contact support@sunsirs.com for subscription.