CITIC Securities: Loose Supply Expectations Suppress Lithium Prices, Anticipating a Rebound

CITIC Securities Research reports that lithium prices have significantly declined over the past week, primarily due to expectations of increased supply. This easing is anticipated to materialize in July with the resumption of production at Jiangxi lithium mines and the arrival of lithium concentrate from Zimbabwe. However, the current reality remains one of tight concentrate supply, leading some lithium salt producers to reduce output because of raw material scarcity and maintenance shutdowns. Production from pyroxene and mica sources has also decreased, contributing to a week-on-week decline in overall output. Despite these pressures, inventory levels continue to fall, and some spot sellers are holding back supply to support prices. On the demand side, there are no significant concerns. The initial consumption phase is expected to see new production capacity coming online and ramping up in the second half of the year, boosting downstream restocking efforts and driving marginal demand growth. At the terminal demand level, the tapering of new energy vehicle subsidies in 2027 is expected to solidify year-end purchasing rushes, increasing production schedules for the latter half of the year. Commercial vehicle growth is also optimistic, with a 36% year-on-year increase in the first half of the year. From January to May, pure electric vehicle exports reached 1.833 million units, a 114.4% increase year-on-year. Looking at the third quarter, production schedules for both July and August are projected to grow month-on-month, suggesting that the typically slower season may not be weak, and a strong peak season is anticipated.