According to a research report, the recent rapid decline in lithium prices has intensified upstream reluctance to sell, with a noticeable effort to support prices. Some spot market quotations remain above 160,000 yuan per tonne. Concurrently, downstream buyers are engaging in bargain purchases, with material manufacturers showing active interest in procurement below 150,000 yuan per tonne, although their actions remain cautious and primarily driven by immediate needs.
On the supply side, lithium carbonate production is declining. Some lithium salt plants have entered scheduled maintenance, leading to a significant reduction in spodumene production lines. Regarding demand, production schedules for July are expected to continue their growth trend, with material plant operating rates remaining high. A month-on-month increase exceeding 5% is anticipated, and August schedules are forecast to maintain positive sequential growth. The typical seasonal lull is not materializing, and with expectations for a year-end rush for installations and exports, a strong fourth-quarter peak season is anticipated.
Lithium: According to industry data, the average market price for industrial-grade lithium carbonate this week was 148,000 yuan per tonne, down 4.5% from the previous week. Battery-grade lithium carbonate averaged 151,000 yuan per tonne, down 4.4% week-on-week. Supply is expected to see a slight decrease this week, mainly due to short-term reductions from some lithium salt plants affected by tight raw materials and maintenance. However, newly commissioned production lines are still ramping up, offsetting some of the decline and maintaining overall stable supply. Zimbabwean lithium concentrate shipments have been dispatched and are expected to arrive in concentrated volumes by mid-to-late July. Signals for the resumption of mining operations in Jiangxi and overseas mines are strengthening, increasing expectations for future supply increments.
Inventory is expected to continue declining this week. Long-term contract shipments from lithium salt plants are stable, but reluctance to sell spot lots has led to some inventory accumulation at factories. Traders continue to offload stock, and downstream bargain purchases are relatively active, shifting inventory from traders to downstream users, who now hold ample raw material stocks. Futures warehouse receipt volumes remain relatively high, and with the concentrated cancellation window approaching at the end of July, warehouse receipts stood at 42,420 tonnes as of the previous trading day.
Downstream demand remains robust, with July production schedules expected to continue growing. Lithium iron phosphate plant operating rates remain high, with an estimated sequential increase of about 7%. A survey of 26 battery enterprises indicates total Chinese battery production scheduling for July 2026 at 296.6 GWh, a month-on-month increase of 7.83%. Downstream material manufacturers are increasing inquiries for low-priced material, but restocking remains cautious, with actual transactions primarily driven by immediate needs. The significance of securing domestic lithium resources is becoming more prominent.
Nickel: The LME nickel price this week was $17,045 per tonne, up 2.3% from the previous week. The SHFE nickel price was 128,890 yuan per tonne, up 3.7% week-on-week. Combined SHFE and LME nickel inventories totaled 384,500 tonnes, up 2.9% from last week. Domestic nickel sulfate supply decreased this week, with the industry's average operating rate declining. Some domestic nickel sulfate producers have reduced operating loads due to cost and margin pressures, with a few halting production, although overall spot supply in the market remains ample.
On the demand side, the downstream ternary precursor sector for nickel sulfate remains in its off-season. Enterprises are only purchasing for essential security needs, with no large-scale advance restocking. Lithium iron phosphate continues to erode market share, limiting growth for high-nickel materials. Precursor manufacturers are pressing for lower prices when procuring, resulting in generally quiet spot market transactions. The electroplating industry is operating steadily based on rigid demand, providing only minor market support, insufficient to counterbalance the demand weakness stemming from the battery sector's softness.
Rare Earths & Magnets: Rare earth prices fluctuated this week. As of Thursday, the average market price for praseodymium-neodymium oxide was 767,500 yuan per tonne, unchanged from last Friday. Dysprosium oxide averaged 1.425 million yuan per tonne, also flat. Terbium oxide averaged 6.875 million yuan per tonne, down 0.72% from last Friday. From a supply-demand perspective, supply remains tight. Recently, some primary ore separation enterprises have suspended operations due to group restructuring impacts. Scrap recycling enterprises that had previously halted or reduced production have not resumed operations, keeping production persistently low with limited output increases. High costs remain firm, leading to overall tight oxide supply, while metals are relatively ample. However, manufacturer quotes remain firm with little pressure to sell.
Demand expectations are improving. While downstream industries entered their traditional off-season in Q2, market expectations for a demand recovery in Q3 are gradually strengthening. Currently, most large magnet enterprises maintain stable production schedules supported by long-term contracts. For exports, while there is potential for new orders, a tug-of-war persists between terminal purchase prices and raw material costs.
Risk Analysis
1. A severe global economic recession leading to a cliff-like drop in consumption.
2. Uncontrolled U.S. inflation, with the Federal Reserve tightening monetary policy more than expected, and a strong U.S. dollar suppressing equity asset prices.
3. Consumption growth in the domestic new energy sector falling short of expectations, coupled with persistently weak consumption in the real estate sector.
Comments