[SMM Analysis] In H1, the overflow of global utility-scale energy storage long-term contracts intertwined with the growing pains of production line upgrades. This not only completely shattered the cyclical pattern of "retreat after rapid rise" in the energy storage market, but also directly triggered a structural shortage and a strong price recovery for 314Ah battery cells. Furthermore, driven by the looming cancellation of tax rebates at year-end, an even more intense wave of "export rush" is gaining momentum, potentially pushing the full-year battle between volume and price to its peak.

From a supply-demand balance perspective, China's lithium carbonate market exhibited a tight balance in H1 2026, with sellers and buyers continuously seeking new equilibrium points amid bargaining.

In the second half of last year, ahead of the halving of the NEV purchase tax rebate, ternary cathode orders climbed steadily, hitting record highs month after month. At that time, the market generally expected ternary demand growth for 2026 to be within 10%. But the actual results for the first half of this year came in much stronger. According to SMM, domestic ternary cathode production reached 493,000 metric tons in H1 2026, up 40% YoY, while global ternary cathode output reached 611,500 metric tons, up 24% . Meanwhile, CAAM data shows that NEV sales in China (including exports) reached 7.445 million units in H1 2026, up only 7% YoY, with domestic sales actually contracting by 13%. Given such modest growth in vehicle sales, where did the strong performance of ternary cathode come from? The answer lies in two key factors: a rising share of premium vehicle models and a rapid increase in battery capacity per vehicle . The halving of the purchase tax rebate has had a greater impact on low-priced vehicles. For A00-class models priced under RMB 50,000, the exemption was a major selling point—now, buyers face an additional tax payment of several thousand yuan, significantly eroding their cost advantage. In contrast, for mid-to-high-end models priced between RMB 200,000 and 300,000, the RMB 15,000 rebate cap still covers most of the tax, so the actual cost increase perceived by consumers is limited . At the same time, trade-in subsidy rules shifted from a fixed-amount structure to a tiered system based on the new vehicle price—higher-priced purchases yield subsidies closer to the cap, effectively steering consumer demand toward the premium segment . As a result, the share of B-segment, C-segment, and SUVs in China's NEV passenger car mix rose from 68.3% in 2025 to 73.6% in H1 2026—and these are precisely the models that predominantly use ternary battery cells. The rising share of premium models also directly lifted average battery capacity per vehicle . In May, the average battery capacity of BEV passenger cars reached 62 kWh, up 11% year-on-year, while PHEV passenger cars reached 37 kWh, up 37%. While automakers have been proactively increasing battery sizes to meet market demand, the more significant driver has been the compositional shift toward premium vehicles. This explains the apparent paradox: vehicle sales growth has been moderate, yet cathode material demand has surged—the key lies in the increase in battery capacity per unit . Overseas markets also contributed to the growth. European NEV sales rose approximately 30% year-on-year in the first half of the year, supported by local subsidy policies, high oil prices that favor NEVs, and the aggressive expansion of Chinese brands. Given that ternary batteries still account for more than 60% of Europe's NEV passenger car market , leading battery manufacturers serving the European market—such as CATL, EVE, AESC, and LGES—have maintained high procurement volumes of ternary cathode materials from China this year. Another notable feature of this year's production schedule has been its atypical seasonal pattern, largely influenced by raw material price volatility and policy shifts. On the raw material front, pricing between domestic ternary battery manufacturers and cathode producers is generally settled using a M-1 month metal price mechanism. This gives battery makers a strong incentive to build inventories ahead of anticipated price increases . For instance, in January, the SMM average monthly price of lithium hydroxide (coarse grains) surged to RMB 147,100 per ton, but the settlement price referenced the December price of RMB 88,800 per ton. This translated into a cost saving of more than RMB 26,000 per ton of cathode material, which is why production remained robust even during a traditionally slow month. A similar pattern played out in May, when the monthly average lithium hydroxide price rose by about RMB 20,000 per ton from the previous month, prompting another wave of restocking and driving cathode orders beyond expectations. On the policy side, the most significant impact came from the removal of the VAT rebate on ternary cathode exports, which pulled a large volume of export orders forward into Q1, breaking the typical seasonal slowdown. Domestic production in Q1 reached 236,000 metric tons, up 47% YoY. Notably, after the rebate was officially withdrawn, overseas orders did not drop sharply—Q2 still posted 34% YoY growth. This resilience can be attributed to two factors: first, overseas battery makers remain heavily reliant on Chinese cathode suppliers , who offer clear advantages in product quality, stable mass-production capabilities, and cost, making it difficult to switch suppliers in the short term. Second, overseas end-market demand remains solid , with popular models in Europe (Volkswagen ID series, BMW Neue Klasse, Renault, Hyundai IONIQ series, Tesla, etc.) and key models in Japan and Korea (Toyota, Hyundai, Kia, Tesla, etc.) continuing to rely on ternary chemistries. With order books full and procurement needs urgent, customers have little room to qualify new suppliers, which has only reinforced existing partnerships. Looking ahead to the second half of the year, the upcoming removal of the VAT rebate on lithium battery exports next year is expected to bring some orders forward into 2026. However, the market has already priced this in, and battery manufacturers have ample time to plan their inventory strategies, so a concentrated surge similar to the one seen ahead of the ternary rebate cancellation is unlikely. The purchase tax rebate will remain at the halved level next year and will not be fully phased out until the year after, so there is no additional pull-forward effect for Q4 2026. With orders already exceeding expectations in the first half and battery makers continuing to build inventories, the traditional "Golden September-Silver October" peak may be less pronounced this year. Still, seasonal patterns persist, and the market's inherent restocking momentum remains, so Q4 still warrants attention. SMM currently forecasts: 1.02 million metric tons of domestic ternary cathode production for 2026, up 24% year-on-year; 240,000 metric tons overseas, down 2%; and a global total of 1.26 million metric tons, up 18% .

This week (July 4–10, 2026), the secondary aluminum market outside China remained in the doldrums, with the price centers of aluminum scrap and ADC12 declining further. As the impact of supply disruptions in the Middle East gradually faded, market trading logic returned to supply-demand fundamentals, while downstream procurement demand remained sluggish, pushing aluminum scrap and secondary aluminum alloy prices outside China under pressure. The overall trading atmosphere was relatively sluggish.

[SMM Analysis: H1 2026 PV Wafer Market Analysis and Outlook—Trade Barriers, Technology Iteration, and Capacity Rationalization]

[SMM Analysis: “Tight Resource Balance” Meets “Computing Power Revaluation”—2026 H1 Tin Price Deep Review and H2 Outlook] In 2026 H1, tin prices exhibited a wide-ranging tug-of-war pattern of “reaching record highs—pulling back to consolidate—rallying again—consolidating at highs.” The most-traded LME tin contract surged from about $42,000/mt at the beginning of the year to a record high of $59,000/mt, pulled back to $40,500 in March, rallied again to around $58,000 from April to May, and fell below $50,000 at end-June; the most-traded SHFE tin contract surged from 330,000 yuan/mt at the beginning of the year to a record high of 470,000 yuan/mt, dipped to 322,600 yuan/mt in March, touched 451,000 yuan/mt again in early June, and pulled back below 400,000 yuan/mt at month-end.