Lithium Carbonate Futures Experience a Rapid Roller Coaster Ride, Market Enters a Futures-Spot Realignment Phase

Since November, the spot and futures prices of lithium carbonate have strengthened in tandem, demonstrating a robust upward trend. During last week, the price of the main lithium carbonate futures contract breached the Yuan 100,000/tonne mark, hitting a new high since June 2024, which drew widespread market attention. Subsequently, regulatory intervention cooled the market, and on the 21st, the main lithium carbonate contract hit the daily downside limit, causing a sharp reversal in the market. This intense price volatility was not driven by a single factor but resulted from a combination of multiple pressures across policy, sentiment, industry, and macroeconomic dimensions.

Since November, the spot and futures prices of lithium carbonate have strengthened in tandem, demonstrating a robust upward trend. During last week, the price of the main lithium carbonate futures contract breached the Yuan 100,000/tonne mark, hitting a new high since June 2024, which drew widespread market attention. Subsequently, regulatory intervention cooled the market, and on the 21st, the main lithium carbonate contract hit the daily downside limit, causing a sharp reversal in the market. This intense price volatility was not driven by a single factor but resulted from a combination of multiple pressures across policy, sentiment, industry, and macroeconomic dimensions.

 

On the supply side, although domestic lithium carbonate production has continued to grow, it has still not fully met demand. In October 2025, China's lithium carbonate production reached 89,300 tonnes, up 6.9% MoM. While production schedules for November may further rose to 93,100 tonnes, a month-on-month rise of 4.3%. Meanwhile, operating rates remained high in major production regions such as Jiangxi, Sichuan, and Qinghai, with new salt lake capacity gradually coming online, and the recycling sector also remained stable, supported by the price recovery. Regarding imports, Chile's lithium carbonate exports to China reached 16,200 tonnes in October, a significant month-on-month increase of 46%, and imports are expected to remain high in November.

 

 

On the demand side, performance has been even stronger. In October, lithium iron phosphate (LFP) production reached 395,700 tonnes, up 11.21% MoM, supported by continued strength in the energy storage market and growth in the power battery sector, driven by increased commercial vehicle production and sales and higher battery cell capacity. LFP production in November is expected to exceed 400,000 tonnes for the first time, further boosting lithium carbonate demand.

 

 

 

 

Some market players believed that downstream consumption remained robust, with demand growth consistently exceeding 30%. As one of them predicted, lithium carbonate prices may break through the range of Yuan 150,000-200,000/t next year. Additionally, uncertainties persist on the supply side, such as the accelerated resumption of production at the C Mine and unclear safety rectification policies for Jiangxi mines. These factors could alter the supply-demand balance, leading to divergent market expectations regarding future supply and demand.

 

In the short term, lithium carbonate prices breaking through the Yuan 100,000/t mark have significantly stimulated supply elasticity. Jiangxi lepidolite projects, previously suspended due to high costs, have now regained profitability, strengthening expectations for their restart. Meanwhile, downstream acceptance of high prices has reached a bottleneck. Battery material producers were exercising extreme caution in spot procurement, and industry concerns about first-quarter demand next year continued to intensify. While lithium carbonate prices remain strongly supported by fundamentals, limited downstream acceptance of high prices and unenthusiastic spot purchasing are constraining further upside potential. In the medium term, attention should focus on whether EV demand will experience seasonal weakness in the first quarter of next year and the pace of new capacity deployment.

 

During this rally, futures price movements have significantly diverged from spot fundamentals, displaying sentiment-driven characteristics. The sustained rise in lithium carbonate prices has placed noticeable pressure on mid- and downstream users. Cathode active material plants faced rising costs, battery manufacturers saw profit margins squeezed, and some small and medium-sized players were reducing procurement willingness. Concurrently, lithium salt producers were inclined to increase long-term agreement ratios, while traders maintained low inventory levels due to divergent views on basis trends. Tighter circulating resources in the market were further exacerbating price volatility.

 

To curb excessive speculation, the Guangzhou Futures Exchange issued a notice on November 20, significantly raising transaction fees for near-month lithium carbonate futures contracts and implementing strict daily position limits effective November 24. This move directly increased short-term trading costs and precisely tempered the market's speculative sentiment. Following the policy announcement, speculative fervor noticeably cooled, with lithium carbonate futures prices experiencing a sharp correction-the main contract fell over 8% in a single trading day.

 

This significant decline clearly demonstrates that any price rally detached from actual demand is unsustainable. Looking ahead, both regulatory pressure and shifting fundamental expectations have collectively driven a reversal in market sentiment. In the short term, trading is likely to enter a phase of high volatility and correction as the market reassesses the supply-demand balance. Going forward, the lithium carbonate market will continue to be in a tug-of-war. In the near term, barring any fundamental shift in the supply-demand structure, lithium carbonate prices may continue to fluctuate around Yuan 90,000/t, with volatility likely remaining elevated.