Everbright Futures: Supply disruptions combined with optimistic demand expectations, lithium carbonate approaches the 200k mark

On Wednesday, the main contract for lithium carbonate opened slightly higher, continuing to rise throughout the day, with a maximum intraday increase of over 6%. Meanwhile, lithium battery-related stocks also moved upward in sync today, showing high sector enthusiasm. According to data from multiple consulting agencies, the lithium industry chain’s production in May exceeded expectations with month-on-month growth. Among them, battery production increased by about 10%, lithium iron phosphate production grew by 5%, and electrolyte production rose by approximately 7%. Under the influence of the futures and spot market linkage, short-term lithium carbonate prices may continue to stay strong.

Fundamentally, supply in May is expected to face some reduction, but the rising prices will also stimulate increased lithium extraction from other raw materials and the ramp-up of other projects, with overall incremental space expected to be limited. Regarding inventory, weekly social inventory increased by 123 tons to 103,593 tons, with downstream inventory decreasing by 2,295 tons to 42,202 tons, other segment inventories increasing by 1,950 tons to 42,560 tons, and upstream inventories rising by 468 tons to 18,831 tons. This indicates that although there are disturbances on the resource side, the impact on total inventory is limited. Based on the projected supply-demand balance table, there may be a phased return to inventory reduction in May and June. In July, attention should be paid to Zimbabwe’s shipping progress. From August to October, due to increased supply, inventory may accumulate, and in November to December, it is necessary to monitor whether demand exceeds expectations before the year-end export rush.

In the short term, the key points to watch are: first, the Jiangxi project may face suspension of production due to license renewal issues, which could lead to reduced operation loads at lithium salt plants; the progress of other projects resuming production remains to be observed. On the other hand, suspension of shipments from Zimbabwe may cause a reduction in spodumene lithium extraction from some projects. Therefore, the trading logic may shift from supply-side disturbances to a fundamentally strong operation, with market performance resonating with stocks and merchants. Regarding futures prices, market volatility has declined since March, and short-term prices may continue to fluctuate with a slight upward bias. (Everbright Futures)