Last week saw a significant decline in lithium prices, primarily pressured by expectations of a marginally looser supply, according to a research report. The anticipated resumption of production at lithium mines in Jiangxi and the arrival of Zimbabwean spodumene concentrate in July are set to materialize, reinforcing this supply-side pressure. However, the concentrate market remains tight in reality, with some lithium salt plants reducing output due to tight raw materials and maintenance, leading to decreased production of spodumene and lepidolite and a continued weekly decline in output. Concurrently, inventory levels continued to draw down, with some spot sellers holding back supply to support prices.
On the demand side, there are no major concerns. In primary consumption, numerous new production capacities are expected to be initially completed and ramped up in the second half of the year, amplifying downstream restocking effects and providing marginal demand growth. For end-user demand, the phase-out of new energy vehicle subsidies by 2027 is expected to solidify a rush for installations within this year, boosting production schedule expectations for the latter half. Commercial vehicle growth is optimistic, with a year-on-year increase of 36% in the first half. From January to May, pure electric vehicle exports reached 1.833 million units, a year-on-year surge of 114.4%. Looking at the third quarter, production schedules for July and August are anticipated to show sequential growth month-on-month, indicating a traditionally slow season that may not be weak, with a promising peak season ahead.
Lithium: According to BaiChuan YingFu, the average market price for industrial-grade lithium carbonate last week was 155,000 yuan per ton, down 3.1% from the previous week; the average price for battery-grade lithium carbonate was 158,000 yuan per ton, also down 3.1%. On the supply side, lithium carbonate production last week is estimated to have decreased slightly, mainly due to output reductions at some lithium salt plants caused by tight raw materials and maintenance. Shipments of Zimbabwean spodumene concentrate have been dispatched and are expected to arrive in port in mid-to-late July. Signals for the resumption of production at mines and related salt plants in Jiangxi have strengthened, creating supply-side uncertainty. Customs data shows that Chile exported 15,095 tonnes of lithium salts to China in June, with an average export price of $18,814 per ton, showing a sequential recovery.
Inventory-wise, stockpiles are expected to have continued their drawdown trend last week. Long-term agreement shipments from lithium salt plants remained stable, while some spot sellers holding back supply may have led to minor inventory accumulation. Trading volume among merchants increased sequentially last week, with more downstream buyers purchasing on dips, shifting inventory mostly from trading channels to end-users. Futures warehouse receipt volumes remain relatively high, standing at 43,640 tons as of the previous trading day.
On the demand side, downstream demand maintained high activity last week, with overall July production schedules expected to show a slight sequential increase. Lithium iron phosphate production schedules for July show a larger increase, estimated to be up about 7% month-on-month. According to a survey of 26 battery manufacturers by BaiChuan YingFu, total planned production for Chinese battery enterprises in July 2026 is 296.6 GWh, a sequential increase of 7.83%. Following the price decline, downstream material manufacturers have shown increased willingness to inquire and purchase on dips, but large-scale stockpiling intent remains insufficient, with actual transactions primarily focused on essential restocking.
Regarding resources, the significance of securing domestic lithium supply chains has become more prominent.
Nickel: Last week, the LME nickel price was $16,655 per ton, up 1.8% from the previous week; the SHFE nickel price was 128,180 yuan per ton, up 0.5% from the previous week. Last week, SHFE nickel inventory was 99,100 tons, LME nickel inventory was 274,600 tons, with combined inventory totaling 373,700 tons, down 0.7% from the prior week.
On the supply side, overall domestic nickel sulfate supply decreased last week, with the industry's average operating rate declining. Some nickel sulfate producers, facing downstream price pressure and squeezed cost-profit margins, proactively reduced production loads, with a few idle production lines undergoing phased maintenance shutdowns. A recovery in operating rates may need to wait until mid-to-late August when downstream pre-stocking for Q3 begins.
Demand for nickel sulfate remained in a seasonal lull last week. Downstream enterprises primarily consumed their own inventories, only executing long-term agreement purchases for essential needs, with no large-scale, concentrated restocking activities in the market. Price suppression during procurement was common. Stable, essential demand from the electroplating sector was insufficient to offset weakness in the battery segment, keeping nickel sulfate demand soft in the near term.
Rare Earths & Magnets: Rare earth prices increased last week. As of last Thursday, the average market price for praseodymium-neodymium oxide was 767,500 yuan per ton, up 0.79% from the previous Thursday; the average price for dysprosium oxide was 1.425 million yuan per ton, up 0.35%; the average price for terbium oxide was 6.775 million yuan per ton, up 3.83%.
From a fundamental supply-demand perspective, supply is unlikely to increase. Entering the third quarter, separation enterprises have not yet seen production impacted by quota allocations, maintaining stable operations. Environmental assessment capacity limits constrain significant production increases. Some separation plants using chloride flakes as feedstock have temporarily halted production. Operating rates at scrap recycling producers remain persistently low, with the issue of taxed raw materials difficult to resolve in the short term. Overall market supply continues to be tight, with no expectation of incremental supply in the near term.
Demand is gradually improving. The second quarter showed clear seasonal weakness downstream, but market expectations for third-quarter demand have increased. Most major magnet manufacturers have stable long-term agreement orders, maintaining steady production. There is a positive outlook for new export orders. The main dynamic lies in the stalemate between end-user acceptance prices and upstream raw material prices, with overall market demand viewed favorably.
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