Chang'an Futures Zhang Chen: Lithium Carbonate Supply Still Subject to Disruptions, Demand Resilience Emerges

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I. Market Trends Review

On February 25, Zimbabwe’s Ministry of Mining announced an immediate suspension of all ore and lithium concentrate exports, pushing up lithium carbonate prices. However, in March, market activity mainly centered around the global energy supply stability shocks caused by the US-Iran conflict, leading to active trading in the energy chemical sector. Concerns over Middle Eastern energy storage project progress accelerated short-term capital withdrawal from the new energy sector. Lithium carbonate futures showed a clear volatile downward trend, closing at 172,020 yuan/ton on March 2, then sharply falling to 150,860 yuan/ton on March 3, a 12.3% daily drop. Afterwards, prices gradually entered a consolidation range, closing at 152,080 yuan/ton on March 13, with intense bullish and bearish battles. Spot prices followed a similar trend: after Zimbabwe’s embargo on February 25, battery-grade lithium carbonate prices peaked at 172,500 yuan/ton over three trading days, then gradually declined. In March, the price center remained around 155,000 yuan/ton. Downstream material manufacturers maintained rigid demand procurement; some large factories actively replenished inventories. Market activity gradually increased, showing demand resilience.

II. Supply Side: Domestic and International Disruptions Persist, Supply Expectations Tighten

On the supply side, domestic and overseas markets show divergence, with overall supply growth below market expectations. Domestically, focus is on the resumption progress of lithium mica mines in Jiangxi. Currently, Jiangxi’s lithium mica mine resumption is still underway. CATL’s Jiangxi Jianxiawo lithium mine has completed mineral change and new mining license procedures, but progress is slow due to environmental assessments, safety evaluations, and explosive permits, making full resumption unlikely in the first half of the year. Some small lithium mica mines have gradually resumed production, but capacity release remains limited. Overall, in February, domestic lithium carbonate production was 83,100 tons, down 14,800 tons from January, mainly due to reduced output during the Spring Festival. By March, domestic lithium salt plants had mostly resumed production, with weekly output rising from 21,800 tons in late February to 23,400 tons. Lithium spodumene production increased by 1,050 tons to 14,534 tons, and salt lake lithium increased by 205 tons to 3,495 tons. It is expected that total domestic lithium salt production in March will reach 100,000 tons, but delayed mica mine resumption still constrains supply growth.

Overseas, the core disruption comes from Zimbabwe. On February 25, 2026, Zimbabwe’s Ministry of Mining announced a suspension of all ore and lithium concentrate exports to strengthen mining regulation and promote local downstream capacity building. Only companies with valid mining licenses and approved processing plants can export; agents and third-party traders are prohibited. The government plans to ban concentrate exports by 2027, significantly ahead of schedule. Zimbabwe’s lithium resources are about 3.4 million metric tons, ranking fifth globally. In 2025, production was approximately 28,000 metric tons, about 8% of global output. China’s total lithium concentrate imports in 2025 were about 6.2093 million tons, with Zimbabwe accounting for 1.1913 million tons (19.19%). The impact on China’s monthly lithium carbonate output is estimated at about 14,000 tons LCE. This export ban has disrupted sales schedules for many mining companies worldwide. Based on an average shipping time of two months, China’s imports are expected to be significantly affected after May. While some lithium mines expected exports to resume in about a month, the actual timeline depends on approval processes. Short-term supply shortages are unlikely to ease. Outside Zimbabwe, other overseas regions maintain stable production: Chile and Argentina’s salt lakes continue normal output, Australian lithium concentrate supply remains stable, and Chile’s February lithium salt exports to China surged, partially offsetting African supply risks. However, rising resource nationalism globally adds long-term supply uncertainty.

III. Demand Side: Strong Energy Storage Demand, Power Market Recovery Pending

On the demand side, the dual-driven pattern of downstream power batteries and energy storage batteries is clear, with strong support. In February, domestic production of lithium iron phosphate (LFP) batteries was 348,200 tons, down 12.2% month-on-month due to the Spring Festival and some companies’ line maintenance. In March, the industry gradually returned to normal, with most companies operating at full capacity. Some projects in Sichuan and Hubei increased shipments. During the week of March 12, weekly LFP production exceeded 100,000 tons. As temperatures warm and demand recovers, LFP production is expected to continue rising, possibly reaching new highs in March.

Regarding terminal demand, according to CABIA (China Automotive Power Battery Industry Innovation Alliance), in February, China’s total power and energy storage battery output was 141.6 GWh, down 15.7% MoM but up 41.3% YoY. January-February cumulative output was 309.7 GWh, up 48.8% YoY. Sales in February totaled 113.2 GWh, down 23.9% MoM but up 25.7% YoY; cumulative sales for January-February reached 262.0 GWh, up 53.8% YoY. Power batteries accounted for 177.2 GWh (67.6%), up 36.5% YoY; energy storage batteries totaled 84.8 GWh (32.4%), up 108.9% YoY.

In vehicle installation data, February domestic power battery installations were 26.3 GWh, down 37.4% MoM and 24.6% YoY. January-February total installations were 68.3 GWh, down 7.2% YoY. Among these, ternary batteries accounted for 15.1 GWh (22.1%), with a slight increase of 0.6%; LFP batteries totaled 53.3 GWh (77.9%), down 9.2%. February’s auto production and sales data showed significant declines due to seasonal factors, tax policy adjustments, and consumer hesitation. However, recent weekly data from some automakers show improvement, with the average energy per vehicle significantly increasing, partially offsetting sales fluctuations. According to CABIA, in February, the average energy per new energy vehicle was 75.9 kWh, up 27.5% MoM and 52.6% YoY. For pure electric passenger cars and plug-in hybrid electric vehicles, the averages were 68.6 kWh and 39.0 kWh, respectively, with MoM increases of 8.0% and 12.8%, and YoY increases of 28.5% and 57.6%. January-February, the average energy per vehicle was 64.9 kWh, up 32.3% YoY.

Energy storage demand continues to surge, becoming the core driver of lithium demand growth. Globally, nearly 100% of energy storage batteries are compatible with LFP. New scenarios such as AI data centers, grid reform, and power marketization are continuously boosting demand. Coupled with overseas energy pressures caused by the US-Iran conflict, European household storage demand is rising, further amplifying storage sector growth. Export tax rebate policy adjustments have also driven a “rush for exports,” with some companies accelerating production to fulfill overseas orders. Downstream material manufacturers maintain rigid procurement; some large firms actively replenish inventories, showing demand resilience.

IV. Inventory: Total Inventory Drops to Low Levels, Structural Shift Occurs

On the inventory front, low inventory across the industry chain remains a key factor supporting lithium carbonate prices, with a continued trend of destocking. As of the week of March 13, 2026, domestic lithium carbonate social inventory had fallen to 98,900 tons, down 1,134 tons from late February. Inventory turnover days decreased to 27.8 days, below the industry safety line of 40 days. Upstream smelters’ inventory dropped by 2,090 tons to 16,300 tons, reaching the lowest in nearly three years, mainly due to active shipments and limited supply growth. Midstream traders are eager to receive goods post-holiday, but overall inventory has declined due to tight spot supply, mainly on a need-based rotation. Downstream cell and material manufacturers’ inventories increased by 5,626 tons to 45,600 tons, indicating inventory transfer from upstream and midstream to downstream terminals, with downstream replenishing on dips.

V. Summary: Supply Still Disrupted, Demand Resilience Evident

Currently, the fundamentals of lithium carbonate show a pattern of “limited supply growth, steady demand recovery, and low inventory levels,” with multiple factors supporting prices. On the supply side, domestic Jiangxi mica mine resumption is delayed; Zimbabwe’s export suspension causes short-term supply tightness, with recovery timelines uncertain. On the demand side, LFP operation rates and output are steadily rising, power battery stocking demand is increasing, and energy storage demand continues to explode, driven by dual forces. Inventory across the industry chain remains at historic lows, with ongoing replenishment needs providing price support. Cost factors, including rising global processing and raw material costs, further support prices. Overall, lithium carbonate fundamentals remain strong, with short-term supply tightness and demand recovery dominating market trends. For reference only.

Chang’an Futures: Zhang Chen

March 16, 2026