CITIC Securities: Lithium Prices Under Pressure from Loose Supply Expectations, Anticipating Rebound

CITIC Securities (中信建投) reports that lithium prices are experiencing a significant decline, primarily due to expectations of easing supply constraints. This loosening is projected to materialize in July with the resumption of lithium mining in Jiangxi and the arrival of lithium concentrate from Zimbabwe. However, the actual supply of concentrate is expected to remain tight, as some lithium salt producers have reduced output due to raw material shortages and maintenance. Production from pyroxene and mica sources has also decreased, with overall weekly output showing a downward trend. Despite these supply pressures, inventory levels continue to decline, and some spot sellers are holding back supply to support prices. On the demand side, there are no significant concerns. The initial consumption phase anticipates new production capacity coming online in the second half of the year, which will boost downstream restocking efforts and contribute to marginal demand growth. At the terminal demand level, the phasing out of new energy vehicle subsidies by 2027 is expected to drive a surge in vehicle production within the current year, raising expectations for increased output in the latter half of the year. Commercial vehicle growth is optimistic, with a 36% year-on-year increase in the first half of the year. From January to May, 1.833 million pure electric vehicles were exported, a 114.4% increase year-on-year. Looking at the third quarter, production is forecast to grow month-on-month in both July and August, suggesting that the typically slower season may not be as subdued, with potential for a strong peak season ahead.