Shares in the lithium sector have continued their downward trend.
At the time of writing, Ganfeng Lithium Group Co.,Ltd. (HKG: 01772) shares were down 5.3% at HK$46.8, while Tianqi Lithium Corporation (HKG: 09696) shares had fallen 3.69% to HK$39.2.
On the news front, the Jianxiawo lithium mine, owned by Contemporary Amperex Technology Co., Ltd. (CATL), successfully obtained its work safety production license on June 29, a process that significantly exceeded market expectations. However, it is anticipated that the ramp-up to full production capacity will still require time.
West China Securities believes that the slow pace of supply increases in the short term will continue to support the fundamental market, with lithium prices expected to fluctuate within the range of RMB 150,000 to 170,000 per tonne until mid-July. However, the growth rate of demand during the peak season in the second half of the year remains unclear, warranting attention to the risk of a lithium price decline in the third quarter.
It is noteworthy that the U.S. Defense Logistics Agency has initiated a five-year special procurement plan for lithium carbonate, aiming to purchase up to 16,167 tonnes of high-purity battery-grade lithium carbonate, with a total contract value ceiling of $300 million, to replenish the National Defense Stockpile. This marks the first time in U.S. history that lithium carbonate has been included in the defense strategic stockpile system on a large scale.
Analysts point out that the average annual procurement volume of approximately 3,200 tonnes accounts for less than 0.3% of global demand and is unlikely to directly cause a significant supply-demand tightening or drive a sharp surge in lithium prices.
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