LFP boom drives lithium carbonate market Into new equilibrium

Since mid-October, the rapid drawdown of lithium carbonate warehouse receipts has made the ongoing destocking visibly apparent. With market expectations for future demand intensifying considerably, lithium carbonate prices staged a relentless rally. However, prices have recently plummeted as rumors swirled about the accelerated restart of the previously idled Mine. Concerns over potential supply expansions overwhelmingly dominated market sentiment, triggering stronger price volatility. Nevertheless, the prices quickly rebounded and re-claimed the previous losses since the production resumption was yet to be confirmed and the demand has been persistently strong.

 

Mysteel's survey showed that after rising 6.9% month-on-month (MoM) in October, China's lithium carbonate production is expected to create another all-time high of around 93,100 tonnes in November, with the additional production coming primarily from new lithium brine projects as well as mild ramp-up of spodumene production lines.

 

Though the lithium carbonate market is currently facing uncertainty due to safety-targeting rectification policies for mines in Jiangxi, the November is likely to remain high supported by downstream demand.

 

Chilean customs data showed that in October 2025, Chile's total lithium carbonate exports reached 24,768 tonnes, up 5.60% MoM and 23.30% year-on-year (YoY). Among them, exports to China stood at 16,210 tonnes, surging 46.0% MoM but down 4.5% YoY. In the same month, Chile's lithium sulfate exports to China totaled 1,708 tonnes, plunging 79.6% MoM and 64.2% YoY.

 

The significant month-on-month increase in Chile's lithium carbonate shipments in October indicates that China's lithium carbonate imports are likely to remain high in November, which is expected to slightly slow the month-on-month destocking pace of lithium carbonate. However, the simultaneous sharp decline in lithium sulfate shipments will also impact some domestic tolling.

 

On the demand end, China's lithium iron phosphate (LFP) cathode production is projected to hit 405,600 tonnes in November, rising 2.5% from 395,700 tonnes in October, with most cathode plants operating at full capacity.

 

Taken together, an inventory drawdown of 13,494 tonnes is projected for November. Driven by strong demand from the energy storage sector, LFP cathode plants' production scheduling has consistently exceeded expectations and is expected to surpass 400,000 tonnes for the first time. Though lithium carbonate production has been creating new monthly record highs, its growth rate still lags behind that of demand, maintaining a supply gap of above 10,000 tonnes.

 

As for lithium carbonate warehouse receipts, data from Guangzhou Futures Exchange indicated that the warehouse receipts have been hovering around 27,000 tonnes following consecutive drawdowns by mid-October. This directly reflects robust downstream demand. Currently, the spot-futures spread has remained stable and has not weakened despite sharp price fluctuations. With downstream demand still strong, further declines in warehouse receipts are anticipated.

 

On the spot market, the marketable lithium carbonate inventory across 42 sampled entities reached 34,100 tonnes, an increase of 2,889 tonnes from the previous week. As lithium prices rose, the marketable inventory rebounded noticeably, with some traders restocking moderately. Lithium refineries, on the other hand, have recently prioritized fulfilling long-term agreements, with fewer goods available for the spot market except for a few large-sized refineries.

 

The traders' inventory saw a slight increase, as top-tier traders conducted substantial sales at month-end but received long-term contract shipments at the beginning of the month. Small and medium-sized traders restocked cautiously amid price gains but maintained low inventory levels due to divergent views on future basis trends.

 

While lithium prices were volatile recently, spot trading activity recently picked up, with heavy volume observed as prices fell from Yuan 82,000/tonne to Yuan 77,000/tonne. However, as prices rebounded, trading activity slightly weakened again.

 

Looking ahead, the supply-demand balance is expected to remain in a destocking phase until year-end. Strong downstream procurement will continue to support lithium carbonate prices, but with marketable lithium carbonate showing no palpable destocking, the spot-futures spread is unlikely to strengthen significantly in the near term.

 

From a medium-term perspective, if the idled mines resume the production, the balance sheet could shift to a tight balance. This would alleviate spot market tightness, and price trends will increasingly depend on the demand-end performance in the first quarter of next year.