On July 2 (local time), the US Defense Logistics Agency (DLA) issued a solicitation for a five-year fixed-price contract to procure battery-grade lithium carbonate for the US National Defense Stockpile . According to the solicitation, the contract covers up to 35,641,599 lbs (approximately 16,167 metric tons) of battery-grade lithium carbonate, with a maximum contract value of US$300 million . Bids will be accepted until July 17 , and the contract will be awarded to the technically acceptable offer with the lowest evaluated price. The minimum guaranteed order value is US$1 million . The procurement schedule indicates that approximately 8.06 million lbs (around 3,657 tonnes) will be purchased during the first contract year, gradually declining to approximately 6.26 million lbs (around 2,839 tonnes) in the fifth year. The product must be powdered battery-grade lithium carbonate with a minimum purity of 99.5% , delivered to DLA warehouses located in New York, Nevada, Indiana, or Ohio . The procurement forms part of the US National Defense Stockpile program , aiming to strengthen strategic reserves of critical minerals and enhance supply chain resilience for national defense and critical industries. The five-year contract also underscores the US government's continued efforts to reinforce the security of its critical mineral supply chain. SMM will continue to monitor the tender process and subsequent contract awards. SMM Analysis Key Takeaway: This is more of a strategic policy signal than a demand shock for the lithium market. Rather than representing a sudden increase in commercial lithium demand, the tender demonstrates that the United States is moving from policy planning to the actual implementation of its critical mineral stockpiling strategy. The DLA Strategic Materials office is responsible for managing the US National Defense Stockpile, which serves national security purposes rather than commercial inventory management. Earlier this year, in March, the DLA had already issued a Request for Information (RFI) regarding the potential procurement of approximately 550 tonnes of lithium carbonate , indicating that lithium stockpiling has become part of a broader expansion of the US critical mineral reserve system rather than an isolated initiative. Limited Impact on Global Supply-Demand Fundamentals The announced procurement totals approximately 16,200 tonnes over five years, averaging roughly 3,200 tonnes per year (LCE) . Compared with global lithium consumption, this volume remains relatively small and is significantly outweighed by fluctuations in EV and energy storage demand. Consequently, the procurement is unlikely to materially alter the global supply-demand balance or fundamentally change lithium market dynamics in the near term. Instead, it should be viewed as a long-term strategic procurement program , with limited direct impact on spot market fundamentals. Procurement Strategy Prioritizes Supply Security Based on the announced ceiling value of US$300 million , the implied maximum procurement price is approximately US$18,600 per tonne , or roughly RMB 134,000 per tonne . While this figure does not represent the actual transaction price, it suggests that the US government places greater emphasis on security of supply, supplier qualification, and long-term delivery reliability , rather than simply sourcing at the lowest spot price available in Asia. Should the final contract prices exceed prevailing Asian market prices, the procurement could effectively create a policy premium for qualified suppliers. Supply Chain Implications Although the required product specification—battery-grade lithium carbonate with a purity of at least 99.5% —is relatively standard, participation requires suppliers to satisfy government procurement requirements, demonstrate reliable delivery capability, and comply with US procurement regulations. As a result, the tender is expected to favor North American producers , as well as qualified suppliers from Australia, South America, and other "friend-shoring" jurisdictions , rather than traditional spot-market traders. Market Implications SMM believes the impact can be assessed across three dimensions. 1. Limited Near-Term Price Impact The procurement schedule translates into roughly 200–300 tonnes per month , which is insignificant relative to China's monthly lithium salt production, cathode manufacturing, and downstream battery demand. Therefore, the procurement alone is unlikely to change the short-term direction of lithium carbonate prices. 2. Positive Sentiment Effect At current low lithium price levels, government stockpiling reinforces the narrative that lithium is evolving from a purely commercial commodity into a strategic resource . Although the direct demand impact is modest, the announcement could provide short-term support to market sentiment, particularly when oversupply expectations have already been largely priced in. 3. Long-Term Strategic Repricing If the United States continues supporting domestic and allied lithium supply through the DLA, the Defense Production Act, critical mineral incentives, government loans, and long-term procurement contracts, a parallel strategic procurement market may gradually emerge. Such demand may remain relatively small in volume but could command stronger pricing and place greater emphasis on supply security, ESG compliance, traceability, and geopolitical alignment. SMM View The significance of this announcement lies more in its policy implications than its immediate demand impact . In the short term, the procurement is unlikely to materially affect lithium carbonate supply-demand fundamentals or spot prices. However, over the longer term, the inclusion of lithium within the US national defense stockpile further highlights its strategic importance and may provide stronger policy support for North American and allied lithium projects. Lesley Yang New Energy Analyst Shanghai Metals Market (SMM)

SMM July 3 News: In the metals market: As of the midday close, most domestic base metals rose. SHFE copper gained 0.76%, SHFE aluminum rose 1.45%. SHFE lead advanced 0.47%. SHFE zinc edged down 0.02%. SHFE tin climbed 0.66%. SHFE nickel increased 0.59%. Additionally, the most-traded cast aluminum futures rose 1.42%, while the most-traded alumina fell 1.62%. The most-traded lithium carbonate futures rose 1.87%. The most-traded silicon metal futures gained 0.18%. The most-traded polysilicon futures edged up. Ferrous metals mostly fell. Iron ore declined 1.41%. HRC, rebar, and stainless steel all fell within 0.4%. In the coking coal and coke markets, the most-traded coking coal contract rose 1.58%, and the most-traded coke contract rose 1.89%. In overseas base metals, as of 11:46, LME metals rose across the board. LME copper gained 0.96%, LME aluminum rose 1.04%, LME lead advanced 0.8%. LME zinc increased 0.81%, LME tin climbed 2.05. LME nickel rose 1.1%. In precious metals, as of 11:46, COMEX gold rose 1.64%, and COMEX silver gained 2.76%. In domestic precious metals, SHFE gold advanced 2.67%, and the most-traded SHFE silver futures contract surged 4.05%. Strategists at OCBC Bank Group Research said in a report that gold's medium-term role as a target for asset diversification remains valid, but its price may be dragged down by a more challenging macroeconomic environment. OCBC analysts said demand for gold may be supported by the official sector, with central banks indicating they intend to increase gold reserves in the next 12 months. However, they added that investors have already priced in expectations for US Fed interest rate hikes, and the short-term macro pressure from rising real yields and a stronger US dollar is unlikely to be fully offset. OCBC expects gold prices to reach $4,360 per ounce by the end of 2026 and $4,680 per ounce by the end of Q2 2027. (Jinshi Data APP) Furthermore, as of the midday close, the most-traded platinum futures rose 3.81%, and the most-traded palladium futures gained 4.1%. As of the midday close, the most-traded European container shipping route futures contract rose 3.31% to 2,653 points. As of 11:46 on July 3, midday quotes for some futures: Spot and fundamentals Copper: Today, spot #1 copper cathode in Guangdong against the front-month contract: high-quality copper quoted at 60 yuan/mt, up 10 yuan/mt from the previous trading day; standard-quality copper quoted at 20 yuan/mt, up 20 yuan/mt from the previous trading day; SX-EW copper quoted at a discount of 50 yuan/mt, up 10 yuan/mt from the previous trading day. The average price of #1 copper cathode in Guangdong was 102,965 yuan/mt, up 625 yuan/mt from the previous trading day, while the average price of SX-EW copper was 102,875 yuan/mt, up 620 yuan/mt from the previous trading day. In the spot market, Guangdong inventories have pulled back for two consecutive days… Macro Front On the domestic front: [This year's 200 billion yuan "program of large-scale equipment upgrades and consumer goods trade-ins" funding for equipment renewal has been fully allocated] The National Development and Reform Commission (NDRC) has noted that this year's 200 billion yuan ultra-long-term special sovereign bond funding to support the "program of large-scale equipment upgrades and consumer goods trade-ins" for equipment renewal has been fully allocated. (CCTV News) [PBOC's open market operations resulted in a net drain of 168.5 billion yuan on the day, and a net drain of 1,587 billion yuan for the week] The PBOC conducted 63 billion yuan of 7-day reverse repo operations today. With 231.5 billion yuan of 7-day reverse repos maturing today, this resulted in a net drain of 168.5 billion yuan for the day. For the week, the PBOC conducted 678.5 billion yuan of 7-day reverse repos and 900 billion yuan of overnight reverse repos. With 2,265.5 billion yuan of 7-day reverse repos and 900 billion yuan of overnight reverse repos maturing this week, this resulted in an aggregate net drain of 1,587 billion yuan for the week. (Jin10 Data APP) On the US dollar front: As of 11:46, the US dollar index fell 0.07% to 100.81. On Friday, the US dollar was on track for its biggest weekly loss in nearly three months, after a weaker-than-expected June payrolls report delayed market expectations for US Fed rate hikes and offered some respite to the ailing yen. A sharp slowdown in US employment growth in June prompted traders to scale back their expectations of near-term rate hikes by the US Fed, with the market now pricing in a 52% chance of a hike at the September meeting, down from 64% the previous trading day. US Treasury yields also pulled back from earlier highs, with the two-year yield snapping a three-day winning streak. OCBC currency strategist Sim Moh Siong said, "At the margin, the data is a bit dovish and helps ease concerns about an overheating labor market and the need for more aggressive policy tightening." However, he added that so long as expectations of Fed tightening remain in place, the overall outlook for the US dollar remains constructive, especially against low-yielding currencies. (Jin10 Data APP) According to CME "FedWatch": The probability of the US Fed keeping rates unchanged at the July meeting is 82.4%, and the probability of a cumulative 25-basis-point rate hike is 17.6%. For the September meeting, the probability of rates remaining unchanged is 46.8%, while the probability of a cumulative 25-basis-point rate hike is 45.6% and the probability of a cumulative 50-basis-point rate hike is 7.6%. Jin10 Data APP) CICC research report pointed out that the US added 57,000 nonfarm payrolls in June, below market expectations, indicating a cooling of the acceleration in job growth. After downward revisions to previous months, the average job gains over the past three months still reached 111,000, showing that the labour market is still expanding. Meanwhile, the unemployment rate fell to 4.2%, and the labour force participation rate continued to pull back, reflecting steady labour demand coexisting with a contraction in labour supply, with overall unemployment pressure relatively small. CICC believes that this data gives the US Fed time to wait and watch, thus maintaining the judgement that there will be neither an interest rate increase nor a cut for the rest of the year. In the medium term, the improvement in US employment this year is more attributable to the economic cycle recovery driven by AI investment, rather than short-term factors such as the World Cup. This means that if total economic demand continues to expand boosted by AI, the possibility of the US Fed resuming interest rate hikes next year cannot be ruled out. Huatai Securities research report stated that the US nonfarm payrolls in June missed expectations, mainly due to a sharp pullback in leisure and hospitality and local government employment, which had been boosted earlier by the early Memorial Day and the World Cup. By sector, both services and government saw a marked slowdown in new nonfarm jobs, while the goods sector saw a small rebound. The June nonfarm report eased market concerns about overheating risks in the US labour market. Leading indicators suggest that employment levels will be around the equilibrium level of 0‒50,000 in the coming months, maintaining the view that the US Fed will keep interest rates unchanged in H2 and may need to raise rates next year. Data: Today, France's May industrial production m/m, France's June final services PMI, Germany's June final services PMI, Eurozone June final services PMI, UK June final services PMI, and other data will be released. In addition, China's refined oil products will open a new pricing window. European Central Bank President Lagarde will attend an economic forum, and Bank of England Governor Bailey will deliver a speech on fiscal and monetary policy coordination. Notably, on July 3, the US – NYSE will be closed for one day due to the US Independence Day holiday. The US – CME, due to the US Independence Day, will have trading in its precious metals, energy, foreign exchange, US Treasury, and equity index futures contracts close early at 01:00 Beijing time on July 4. July 3 (Friday) coincides with the US Independence Day holiday, and financial market trading hours will be adjusted accordingly. The holiday schedules for overseas exchanges are as follows: (all times are Beijing time) Crude oil: As of 11:46, both benchmarks rose, with WTI up 0.52% and Brent up 0.64%. Saudi Arabia’s crude exports have surged to near pre-war levels since it resumed loading and unloading tankers in the Persian Gulf, providing further evidence that oil supplies from regional producers are recovering following the US-Iran interim peace agreement. In the six days through Wednesday, the world’s largest oil exporter shipped a daily average of 6.3 million barrels of crude, according to tanker-tracking data compiled by Bloomberg. That pace is roughly in line with the average for 2025 and nearly 90% of February’s level, when the kingdom and its Gulf neighbors ramped up supply before the Iran war broke out. (Jin10 Data APP) Citigroup said the US-Iran memorandum of understanding is expected to remain in force in the coming months and eventually be converted into a formal agreement. The incentives for de-escalating the conflict outweigh the costs of returning to confrontation. The bank reiterated its recommendation to sell into any summer rally and forecast that Brent crude will fall to $60-65 a barrel by year-end. Additionally, "gasoline prices have been a bit sticky on the way down," US Treasury Secretary Bessent said in a CBS News interview. "We’re trying to put a little pressure on the gasoline retailers. We are telling them we’re watching closely," Bessent said, "We’ve gotten positive responses from some of the big-box retailers on doing something for the consumer." Bessent hopes the average gasoline price will fall to $3 a gallon by Labor Day and said he expects oil and energy prices to continue to pull back. (From Wall Street News APP) Separately, trading in Intercontinental Exchange (ICE) Brent crude futures contracts will close early at 01:30 Beijing time on July 4 in observance of US Independence Day. Spot Market Overview: ► ► ► ► ► ► ► ► ► ► ►

SMM Cobalt Morning Meeting Minutes: This week, the cobalt industry chain overall stopped falling and stabilized. Spot refined cobalt prices rebounded slightly, boosted by policy news from the DRC, and market sentiment recovered somewhat, but actual transactions were still dominated by rigid demand stockpiling. Cobalt intermediate product prices remained stable, with miners’ quotations firm but limited acceptance from downstream smelters, resulting in a significant bid-ask spread. Market transactions for cobalt sulphate, cobalt chloride, and Co3O4 remained sluggish, with strong downstream wait-and-see sentiment and restocking demand not yet significantly released. Cobalt powder prices continued to decline, as off-season pressure on cemented carbide persisted. Ternary cathode precursor prices weakened, while ternary cathode materials rebounded slightly but with limited transactions. LCO demand remained relatively weak.

[SMM Cobalt Lithium Morning Meeting Minutes: This week, overall sentiment in the industry chain recovered, as a rebound in upstream raw material prices drove some material prices higher. Lithium carbonate, LFP, and separator segments performed strongly. Downstream production schedules stayed high, with demand from energy storage, commercial vehicles, and power batteries still providing support. However, acceptance of high prices was limited, and actual transactions were mostly based on essential needs. Cobalt salts, nickel salts, and ternary cathode precursors remained in the doldrums, with a strong wait-and-see sentiment prevailing in the market. Overall, short-term prices may continue to drift higher, but attention still needs to be paid to raw material arrivals, the sustainability of restocking, and the realization of end-use demand going forward.]

The overall market remained sluggish this week. Although the July consumption peak season has arrived and battery cell production schedules saw WoW growth, high inventories in the cathode and upstream sectors absorbed the incremental demand, preventing it from transmitting upstream along the industry chain. Hence, shipment pressure on cobalt salt plants and cathode material plants remained unabated. From the market sentiment perspective, the influence of supply-side disruptions has weakened noticeably. Mid-week, the DRC announced the cancellation of unused Q2 quotas, which triggered only brief fluctuations that morning before quickly subsiding, indicating that market focus has shifted from the policy front to the pace of own demand and inventory digestion. While the quota cancellation brought some changes to H2 fundamentals, it merely shifted the supply-demand pattern from very loose to relatively loose and did not fundamentally reverse market fundamentals. On the price front, the trends for cobalt chloride, Co3O4, and LCO were largely consistent, all in a consolidation phase. For cobalt chloride, smelter quotations began to stabilize, with some firms raising slightly to test the market. However, under inventory pressure and the “rush to buy amid continuous price rise and hold back amid price downturn” sentiment, downstream procurement remained cautious, actual transactions were limited, and downside room in the short term was small, keeping prices largely stable. Co3O4 moved sideways following cobalt salt; after the interim reporting window, previous selling pressure was largely released, and quotations tended to stabilize, but downstream cathode plants continued to push for lower prices, and transactions remained scarce. For LCO, in addition to being dragged down by weak upstream Co3O4 prices, lithium carbonate prices recently rose significantly, but downstream enterprises’ inventories buffered the impact of raw material fluctuations on quotations, leaving overall prices relatively stable. Overall, the core issue facing the industry chain currently is that previously accumulated inventories have not yet been fully digested. Even though end-user battery cell demand has improved marginally, it will still take time for this to transmit upstream. In the short term, price rebound will be under considerable pressure, fundamentally because market inventories are excessively high, severely suppressing procurement demand for upstream products.

[SMM Analysis] Energy storage battery cell prices remained stable this week due to tight short-term supply-demand conditions and transmission lags. In H2, with the concentrated rollout of new capacity and the combined effect of the year-end export rush, the market is expected to break out of the stable period and enter a new round of resonance, with both volume and prices rising.

Raw material side, lithium carbonate prices rose somewhat this week, while nickel sulphate and cobalt sulphate prices fell steadily.

This week, China's second-life application market operated smoothly overall, with prices across all categories remaining flat. Market transactions were dominated by just-in-time procurement, and the supply-demand pattern did not show significant fluctuations. Raw material trends diverged: lithium carbonate stopped falling and rebounded this week, while nickel sulphate and cobalt sulphate continued their weak, sluggish decline. However, second-life battery cell prices did not undergo noticeable adjustments accordingly. Currently, second-life product prices are already at a relatively low level, with limited downside room; meanwhile, the demand side also lacks significant incremental support and upward momentum. In the short term, with neither rise nor fall easy, prices naturally remained stable. On the supply side, quotations for new battery cells were generally stable, providing a clear price anchor for second-life A- and B-grade battery cells, and their quotations remained steady throughout. Dismantled battery cells, supported by rigid dismantling costs, saw prices stabilize in tandem, with no clear upward or downward momentum for the time being.

This week, spot lithium carbonate prices bottomed out and consolidated higher. The futures market was strong, with the most-traded 2609 contract rebounding sharply from 145,300-154,700 yuan/mt at the start of the week to 162,200-167,800 yuan/mt. The mid-week high touched 167,800 yuan/mt, and the weekly gain was about 8.4%. Market sentiment diverged significantly between upstream and downstream players. Upstream lithium chemical plants continued to hold prices firm and hold back from selling, with low willingness to sell below 170,000 yuan/mt. Some enterprises, supported by costs, maintained the intention to keep prices high. Downstream material plants had largely completed their month-end stockpiling for the next month. As prices consolidated higher, purchases were mainly need-based, restocking was cautious, and acceptance of high-priced cargoes remained low. Overall, market inquiries and actual transactions were relatively stable and quiet, with the spot-futures price spread strengthening slightly. Supply-side output fell sharply, strengthening expectations of supply contraction. Lithium carbonate production fell sharply this week, mainly because the circulation of spodumene and lepidolite raw materials in the market was relatively tight, while some lithium chemical plants had maintenance plans, leading to a sharp drop in spodumene-based output. Salt lake-based and recycling-based output maintained steady gains. Multiple bullish factors on the supply side converged to drive the price rebound. First, raw material supply tightened, with spot circulation of spodumene concentrates tightening, coupled with maintenance plans at some lithium chemical plants, strengthening expectations of near-term supply contraction. Second, signs of a phased decline in imports emerged: Chile’s lithium carbonate exports to China fell 40.8% MoM in May, and domestic import arrivals are expected to decline subsequently. On the demand side, downstream production schedules in July showed significant growth and remained high. The domestic lithium carbonate supply-demand balance is expected to show a large destocking pattern in July. Looking ahead, near-term lithium carbonate prices may hold up well and consolidate, but upside room should be viewed with caution. Near-term lithium prices are expected to consolidate in the 160,000-170,000 yuan/mt range. It is recommended to focus on the progress of mine license renewal in Jiangxi, the pace of port arrivals of lithium ore from Zimbabwe, changes in downstream acceptance of high prices, and the extent of warrant retreat from high levels.

[SMM Lithium Battery Electrolyte Market Weekly Review: Electrolyte prices remained stable this week (2026.6.29-7.2)] From June 29 to July 2, 2026, electrolyte prices remained stable. The future market price trend of electrolyte will still need to be continuously tracked for raw material price fluctuations and their transmission.