According to combined data from the General Administration of Customs and SMM, China's total imports of lithium raw materials (spodumene + lithium sulfate) approached 80,000 tonnes in lithium carbonate equivalent (LCE) in June 2026, remaining at elevated levels and providing a solid feedstock base for the continued rise in domestic lithium salt production. Spodumene: Import Volumes Continue to Climb, Australian Year‑End Shipment Surge Contributes Significantly In June, China's spodumene imports reached 768,000 physical tonnes, up 13% month‑on‑month and 33% year‑on‑year, equivalent to approximately 72,000 tonnes LCE. The import scale has maintained a high growth trajectory for several consecutive months, reflecting robust end‑user demand from domestic lithium salt producers for upstream ore feed. A clear divergence in supply sources emerged: Australia remained the dominant supplier, with the year‑end fiscal push by mines fully materialising in June. Arrivals exceeded 370,000 tonnes, up 12% month‑on‑month, broadly in line with market expectations for quarter‑end shipment concentration. As the anchor of China's spodumene supply, Australia's stable shipments set the tone for the month's total imports. Mali saw arrivals rise significantly month‑on‑month to 60,000 tonnes, providing a phased incremental supply for related smelters' production needs. South Africa and Nigeria both maintained steady performance, with arrivals from each exceeding 110,000 tonnes. Notably, the share of high‑grade concentrate in Nigerian ore continued to rise, exceeding 65%, extending the trend of grade structure optimisation. Zimbabwe, affected by earlier export restrictions and cross‑border transport inefficiencies, saw arrivals fall back to 42,000 tonnes in June, a month‑on‑month decline, indicating persistent short‑term supply volatility. In terms of grade composition, SMM data show that the share of lithium concentrate in total arrivals fell to 72% month‑on‑month. The main drag came from Brazil – its 65,000 tonnes of arrivals were mostly previously booked lithium raw ore fines, the concentration of which pulled down the overall concentrate ratio. Lithium Sulfate: Imports Accelerate Month‑on‑Month, Zimbabwe Makes Its First Supply Breakthrough In addition to spodumene, lithium sulfate imports also deserve attention. In June, China's lithium sulfate imports reached 13,500 tonnes, up 12% month‑on‑month, equivalent to over 7,700 tonnes LCE. By source, Chile continued to dominate the supply landscape with 13,400 tonnes. Meanwhile, imports from Zimbabwe quietly exceeded the 100‑tonne level for the first time – although still small in absolute terms, this marks the country's first bulk shipment of lithium sulfate to China, heralding the potential for future normalised supply from Zimbabwe. Overall Assessment: June Feedstock Support Solid, but Tightening Spot Availability in July Raises Concerns In aggregate, combined spodumene and lithium sulfate imports in June reached nearly 80,000 tonnes LCE. Together with domestic lithium concentrate production of over 30,000 tonnes, total domestic lithium raw material supply exceeded 110,000 tonnes LCE for the month, providing ample and relatively stable feedstock support for the high operating rates of lithium salt production in June. However, beneath the seemingly upbeat headline figures, a key variable warrants attention: the majority of June's arriving cargoes had been pre‑locked via contracts weeks or even months in advance, leaving only a small share available for free‑trading spot circulation. The persistence of this pre‑locked structure implies that spot market availability of lithium ore will remain tight in July. If downstream rigid‑demand procurement paces hold steady, the tightening of available spot supply will constrain lithium salt producers' flexibility in raw material sourcing to some extent, thereby limiting the further upside room for lithium carbonate output in July – a transmission effect that has already been reflected in recent SMM weekly lithium carbonate production data. Source: General Administration of Customs of China, SMM

This week, ternary cathode material prices continued their downward trend. On the raw material front, nickel sulfate and cobalt sulfate edged lower amid subdued trading activity, while manganese sulfate prices rose slightly. Lithium carbonate and lithium hydroxide saw notable declines recently, influenced by capital market volatility. In terms of transaction sentiment, some manufacturers restocked at lower price levels last week when lithium salt prices fell sharply, leading to relatively active trading. However, entering this week, raw material prices continued to decline with no clear signs of stabilization. With sufficient inventories on hand, downstream battery cell manufacturers generally turned cautious and slowed their procurement pace, resulting in subdued transaction sentiment this week. On the payable front, influenced by the continued decline in absolute nickel sulfate prices, some ternary cathode manufacturers saw upward adjustments in nickel sulfate payables during settlements. Payables for other metals remained relatively stable. On the demand side, EV market demand remained at high levels recently, with orders being executed as normal, while consumer market demand continued to stay subdued.

Yongxing Materials expects its net profit for the first half of 2026 to increase 137%-187% YoY to 9.5-11.5 billion yuan. The company attributed the growth to strong demand from the EV and energy storage sectors, higher lithium salt prices, and stable production and sales of its lithium carbonate products.

Price Trends In the first half of 2026, domestic lithium hydroxide prices followed a trajectory of "surge – high-level volatility – softening decline," with the price center first rising and then falling amid the interplay of multiple factors. January: Prices surged sharply. Concentrated maintenance shutdowns at major lithium salt producers tightened spot supply. Combined with persistently rising costs of lithium carbonate and lithium ore, lithium salt producers held firm on pricing, pushing the monthly average price up by 65% month-on-month. Although ternary material manufacturers maintained just-in-time procurement and remained cautious on spot orders, and some import flows returned due to domestic-international price spreads, the phase of supply shortages and cost support still drove prices to a high level. February: Prices fluctuated at high levels with thinning trading. Macro sentiment drove overall lithium prices downward, but producers' firm pricing stance persisted. Downstream ternary manufacturers, having ample inventories and some entering maintenance, saw eased raw material shortages, with procurement mostly based on monthly average prices. During the Chinese New Year holiday, transportation of lithium hydroxide, classified as hazardous chemicals, stalled, leading to a seasonal quiet period; post-holiday restocking demand was tepid, limiting upside momentum, and prices oscillated widely throughout the month. March: Gains narrowed notably. Cell manufacturers' offtake fell short of expectations, and new orders for ternary materials were limited. Additionally, increased customer-supplied materials in mid-month sharply reduced spot demand, leading to subdued trading and an upward price channel that stalled. The monthly average price rose only 3.4% month-on-month. April: First down then up. In the first half, limited new ternary orders and scarce spot demand put mild pressure on prices; in the second half, pre-holiday stocking and new orders drove increased inquiries from ternary producers, while sharp rises in lithium carbonate and ore prices pulled lithium hydroxide higher. The monthly average price rose 2.73% month-on-month. May: Rose then fell. In the first half, positive demand expectations and supply-side disruptions lifted lithium carbonate and ore prices, pulling lithium hydroxide higher in tandem; in the second half, sentiment turned weaker, with more trades settled via negotiation between traders and material mills. As ternary demand trends became clearer, upstream producers softened their price support, prompting a modest pullback. The monthly average price reached RMB 174,000/ton, up 13.6% month-on-month. June: Prices fell notably, with range-bound volatility intensifying. Frequent supply disruptions on the lithium resource side amplified market volatility significantly, prompting holders to adopt a cautious stance and quote prices in line with market conditions. Upstream producers adjusted prices flexibly, while traders maintained a high discount (over RMB 15,000/ton against the lithium carbonate futures main contract). On the demand side, total ternary material demand remained weak month-on-month, but within the RMB 135,000–145,000/ton range, downstream buyers showed strong willingness to stockpile on dips, providing some bottom support and exacerbating range-bound fluctuations. The monthly average price fell 11.52% month-on-month. Looking at the price trends, the correlation between lithium hydroxide prices and lithium carbonate futures prices has strengthened over the past six months. This is partly because upstream producers use a "lithium carbonate price × discount factor" formula as a floor price in their pricing. On the other hand, traders capitalize on the price spreads between domestic and overseas lithium hydroxide and between hydroxide and carbonate, by importing lithium hydroxide and pricing their sales with reference to lithium carbonate futures, further reinforcing this price linkage. Production In the first half of 2026, domestic total lithium hydroxide output reached 172,000 tons, up 21% year-on-year, driven by relatively robust downstream demand, with notable incremental growth. By output structure, the refining segment contributed the most, accounting for about 88%. Within this, the gradual ramp-up of new production lines at leading companies added some volume, while other enterprises maintained steady output backed by downstream orders, resulting in an 18% year-on-year increase for the overall refining segment. For the causticization segment, most active producers sustained stable operations, and the industry CR5 reached 72% in the first half, indicating a persistently high market concentration. From the capacity utilization perspective, although some capacity has been switched to lithium carbonate production, the operating rate for the lithium hydroxide industry has consistently lingered below 50% over the past six months, reflecting an ongoing overcapacity trend. Costs and margins: For the refining segment, lithium ore feedstock remained relatively tight in the first half of 2026, with ore prices staying elevated and closely correlated with lithium carbonate prices, providing strong cost support for lithium hydroxide. As a result, non‑integrated producers faced notable pressure on the sales side, and their product discount prices did not decline further, which in turn provided marginal support for profit margins at current price levels. For the causticization segment, the supply of salt‑lake‑based lithium salts has increased over the past six months, making causticization feedstock relatively ample. The linkage between actual procurement costs and industrial‑grade carbonate quotes has weakened, which has alleviated cost pressures for enterprises that purchase lithium carbonate externally, leading to actual profitability in the causticization segment being better than theoretical estimates. Import and Export The import‑export landscape has seen a notable reversal. On the export front, since the second half of 2025, some overseas ternary material producers have shifted to entrusting domestic tolling processors, resulting in products that would have been exported being delivered domestically instead, effectively suppressing export volumes. At the same time, overseas demand for ternary materials has remained persistently weak, reducing foreign buyers' appetite for Chinese lithium hydroxide. This, combined with the gradual ramp‑up of overseas local production lines, has collectively kept export volumes at low levels over the past six months. On the import side, weak overseas demand, high accumulated inventories, and arbitrage opportunities have driven import volumes to remain relatively elevated, further reinforcing the net import trend. Supply‑Demand Balance and Inventory The surge in import data made most months in the first half of the year oversupplied. However, from the perspective of directly usable lithium hydroxide products, the market as a whole remained in a relatively tight balance, providing effective support for upstream price control. As for inventory, current lithium hydroxide stock levels have improved significantly compared with the same period last year. This is mainly attributable to two factors: first, part of the inventory has been absorbed into the market by being converted into lithium carbonate; second, active producers have flexibly adjusted their output pace, keeping current inventory days at around one month. Future Outlook Looking ahead, although the LFP route continues to squeeze the ternary route, ternary materials currently have no rival in the high‑nickel segment. In addition, the cost advantages of 6‑series materials offer more possibilities for the ternary route. Based on end‑user production schedules, ternary power demand in the second half of 2026 is expected to maintain a sound performance, growing by approximately 36% compared with the first half. This will drive a roughly 7% sequential increase in ternary material output in the second half. As ternary materials continue to move toward higher nickel content, this brings an incremental demand trend for lithium hydroxide. Meanwhile, considering that most lithium hydroxide production lines have flexible switching or carbonation purification capabilities, lithium hydroxide output is projected to grow by about 6% sequentially. Coupled with a modest recovery in overseas ternary demand, the supply‑demand balance for lithium hydroxide is expected to remain tight through 2026–2027. In terms of price, under a market structure with highly concentrated supply, lithium hydroxide prices are primarily determined by the supply‑demand dynamics of its own industrial chain and closely track lithium ore and lithium salt price trends. Prices are currently oscillating in a range above RMB 150,000/ton. Futures Developments As for lithium hydroxide futures, there has been a flurry of related developments in the second quarter. The Guangzhou Futures Exchange (GFEX) and the Lithium Branch of the China Nonferrous Metals Industry Association have both explicitly stated that they will continue to strengthen cooperation and jointly advance the listing of lithium hydroxide and other lithium‑chain futures products. The征求意见稿 of Guangzhou's "15th Five‑Year Plan" for finance also clearly supports GFEX in listing new‑energy futures such as lithium hydroxide. On the industrial side, companies have moved swiftly to follow up. In June, Yahua Group, Shengxin Lithium Energy, and Tianqi Lithium all announced their intention to apply to GFEX for designated delivery factory warehouse status for lithium hydroxide. In addition, Milkyway's shareholders' meeting approved a proposal for its subsidiary to apply to become a designated delivery warehouse for battery‑grade lithium hydroxide at GFEX. According to media reports, lithium salt producers (Ganfeng Lithium, Tianqi Lithium, Yahua Group, etc.) have already positioned themselves in the factory‑warehouse system. However, due to the high‑risk storage requirements of lithium hydroxide—such as strong corrosiveness, exothermic reaction with water, and the need for inert gas protection—no logistics‑focused player had previously entered this category. On the market front, some traders have already made early arrangements in anticipation of futures listing, and the number of merchants participating in lithium hydroxide import trade has noticeably increased. In summary, preparations for the listing of lithium hydroxide futures are progressing in an orderly manner, with positive official signals and accelerating industrial infrastructure development.

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.

On the evening of July 6, Yahua Group released its performance forecast for the first half of 2026, expecting a net profit of 1.1 billion yuan to 1.3 billion yuan, representing a year-on-year increase of 710.17% to 857.48%. Yahua Group stated that in the first half of this year, lithium salt market prices continued to rise, and both sales volume and average selling prices of its lithium salt products increased, significantly boosting its main business revenue. At the same time, the company continuously deepens its full-chain production and operation management, strengthens the balance among mining, production, and sales, optimizes production efficiency, and strictly controls production costs, leading to an improvement in profitability.

Core View The main theme of lithium ore prices in H1 2026 was a sharp rally followed by a correction, rather than a one-way upward shift in the price center. The SMM spodumene concentrate index price (SC6, CIF China) started the year at around USD 2,000/t in January, briefly fell to USD 1,875/t in early February, then followed lithium carbonate prices higher and reached the year-to-date high of USD 2,780–2,840/t in mid-May, before retreating to the USD 2,385–2,480/t range in June. This trajectory almost fully mirrored lithium carbonate prices. Lithium carbonate spot prices started the year at around RMB 130,000/t, rose above RMB 200,000/t in May, and then pulled back to RMB 160,000–180,000/t in June. Lithium ore did not experience an independent rally throughout the period. It was pulled upward by lithium carbonate pricing via the futures market and then corrected as lithium carbonate prices peaked. Therefore, the starting point for understanding lithium ore prices in H1 is not resource-side supply and demand, but lithium carbonate pricing and market sentiment. One common misinterpretation needs to be corrected first: the strength in lithium ore prices in H1 was not the result of “tight effective supply pushing the price center higher.” The real drivers were the resonance of front-loaded demand, supply disruption expectations, and futures-driven sentiment. Front-loaded demand was triggered by export tax rebate adjustments; supply disruption expectations came from the repeated delays in Jianxiawo’s restart and Zimbabwe’s lithium concentrate export ban. When warehouse receipts accumulated and macro headwinds were released in May, and when Jianxiawo’s restart expectation materialized in June, prices corrected accordingly. After that, prices rebounded again as demand expectations improved. 1. Lithium Ore Followed Lithium Carbonate, While Spodumene-Based Conversion Margins Stayed Negative Throughout H1 The clearest evidence of the lithium ore pricing mechanism in H1 was not how much ore prices rose, but the fact that spot conversion margins for producing lithium carbonate from externally procured spodumene concentrate were negative for most of the period. The ore-salt margin inversion was structural and persistent in H1, rather than a short-lived squeeze on processing margins. The cause of this inversion directly points to the reversal of the pricing mechanism. Ore prices are no longer determined by a cost-plus model from the upstream side, which then determines lithium salt prices. Instead, lithium carbonate has become the pricing anchor, and ore prices are reverse-priced through the futures market. In early January, when lithium carbonate prices rallied on front-loaded demand and sentiment, ore prices were pushed higher at the same time. However, downstream lithium salt demand could not fully absorb the higher cost, and processing margins were squeezed into negative territory. In April, under the reality of ore-salt inversion and limited hedging opportunities, lithium salt producers relying on externally procured ore saw their ability to accept high-priced ore weaken significantly. For overseas miners, this means their realized selling prices are increasingly anchored by the profitability of China’s refining sector. This is not a narrative assumption, but a mechanism that can be verified month by month through spot margin data. The financialization of pricing was also visible in market transactions. When prices fell at the end of May, lithium salt producers became more active in pricing ore purchases. In June, the basis for new cargoes strengthened. Pricing based on futures quotation plus premium or discount has become the mainstream transaction model. Lithium salt producers tend to use pricing windows during price corrections to lock in ore supply. Whoever holds the pricing right controls the settlement timing, and in H1’s highly volatile two-way lithium carbonate market, this directly led to margin differentiation among different lithium salt producers. 2. The Three Drivers of the Rally and the Triggers of the Correction Front-loaded demand — export tax rebate adjustment. In January 2026, the Ministry of Finance and the State Taxation Administration clarified that the VAT export rebate rate for lithium battery products would be reduced from 9% to 6% from April 1, and fully removed from January 1, 2027. This policy directly stimulated downstream players to concentrate export shipments and inventory preparation before April, significantly front-loading demand into H1, especially supporting demand for energy storage and ternary-related materials. This was the most important demand-side catalyst in H1 and the one most easily overlooked by the “weak recovery” narrative. Supply disruption expectations — Jianxiawo and Zimbabwe. After Jianxiawo’s mining permit expired and production was halted in August 2025, its restart timeline was repeatedly pushed back in H1, continuously providing room for both bullish and bearish speculation in the market. Now that Jianxiawo’s restart has been confirmed, the largest bearish factor has been priced in, and the market’s focus has shifted back to whether demand can outperform expectations. In Zimbabwe, the lithium concentrate export ban at the beginning of the year disrupted shipment expectations. Positive progress was reported in late March, and by mid-May, Chinese-funded mining companies in Zimbabwe had completed export procedures and restarted shipments, easing the previous short-term tightness in African cargo arrivals. SMM expects the first batch of cargoes to arrive in China in mid-to-late July. Correction triggers — warehouse receipts, macro factors, and the materialization of restart expectations. After lithium carbonate prices rose above RMB 200,000/t in May, exchange warehouse receipts continued to accumulate and hit new highs, while concerns over off-balance-sheet inventory increased. Together with macro pressure from expectations of further Fed rate hikes, prices peaked and corrected in late May. On June 17, the approval of Jianxiawo’s land use application materialized, and clearer restart expectations further weighed on both ore and salt prices. By late June, according to SMM monthly production schedules, July demand showed resilience despite the seasonal lull, with both power and energy storage cell production schedules increasing month on month. Monthly lithium carbonate consumption remained at a high level, which restored some market confidence and pushed lithium prices higher again. 3. Supply-Side Reality: Imports Weakened Month on Month, but Cumulative Imports Still Increased; Australia Remained Dominant From January to May, spodumene imports showed a combination of weaker month-on-month momentum and continued year-on-year cumulative growth. On a monthly basis, imports reached 758,000 physical tonnes in April, down 9.5% month on month, and 680,800 tonnes in May, down 10.2% month on month. However, total spodumene imports in January–May reached around 3.66 million tonnes, up approximately 25% year on year. By origin, Australia remained the dominant source. China imported around 1.585 million tonnes from Australia in January–May, although May imports from Australia were around 330,000 tonnes, down approximately 15.2% year on year. The share of African supply continued to rise. On the shipment side, lithium concentrate shipments from Port Hedland to China showed clear quarter-end volume acceleration, with March shipments reaching around 122,000 tonnes, up 64.3% month on month. The marginal changes in overseas mines were concentrated in restarts and offtake agreements. Core Lithium restarted its Finniss project on May 20 and plans to ship the first batch of concentrate in Q4. Mineral Resources also restarted Bald Hill, with first spodumene output expected in July. These restart volumes are limited and will not change the short-term supply structure, but they reinforce the expectation of new supply materializing in H2 2026 and H1 2027. On the domestic side, SMM’s domestic sample mines produced 160,690 tonnes LCE in January–June. The restart of Jiangxi lepidolite mines was constrained by permitting procedures, environmental protection, profitability, and other factors, and did not fully ramp up in H1. 4. Migration of Long-Term Pricing Mechanisms: Floor Price Plus Pricing Optionality Has Become the Norm The long-term spodumene offtake agreements signed intensively in H1 provide direct contractual evidence of the financialization of ore pricing. In February, Pilbara Minerals signed a two-year offtake agreement with Tianhua New Energy, setting a floor price of USD 1,000/t, with no price ceiling, together with a USD 100 million interest-free prepayment. In the same period, Pilbara also signed a long-term agreement with Canmax. Yahua Group signed an offtake agreement with Brazil’s MGLIT, also with a minimum price of USD 1,000/t on a 6% basis. Liontown and Tianhua agreed on supply for 2027–2028, priced against a spodumene index. The common feature is a structure of USD 1,000/t floor price plus index or pricing optionality, with downside protection but no upside cap. The pricing benchmark is migrating from fixed website-based long-term pricing toward index-based and futures-linked pricing. This confirms that ore pricing is shifting from traditional long-term contracts to a more financialized structure of “floor price + pricing optionality + premium/discount.” This provides a contractual basis for assessing pricing transmission lags and distortions, and is also a key point for overseas investors to understand how China’s pricing system is penetrating upstream resources. 5. H2 Outlook H1 2026 provides a very clear methodological lesson for H2: lithium ore prices will not move independently from lithium carbonate. The core pricing variables for ore are not the nominal size of global lithium resources, but the dynamic matching among lithium carbonate futures, spot conversion margins for lithium salt producers using externally procured ore, domestic mine restart progress, African cargo arrival schedules, lithium salt producers’ feedstock inventories, and downstream material production schedules. In H1, lithium salt conversion margins remained negative for an extended period, yet ore prices did not fall quickly. Instead, they rose together with lithium carbonate prices under the influence of downstream restocking and supply disruption expectations. This shows that the H1 rally was not an independent strengthening of upstream fundamentals, but a synchronized industry-chain movement driven by front-loaded demand, delayed supply realization, and amplified futures sentiment. For H2 lithium ore analysis, the first step is to distinguish between “no shortage in total resources” and “short-term tightness in effective ore supply.” From a global resource perspective, Australia, Africa, Brazil, South American brines, and Chinese domestic mines all have incremental supply expectations, so there is no absolute shortage of resources. However, from the perspective of Chinese lithium salt production, what truly affects lithium carbonate supply is ore that can be purchased in time, arrive steadily, meet grade requirements, have controllable impurities, and match existing processing lines. If ore is locked in long-term contracts, still in transit, concentrated in trader inventories, or if high prices reduce lithium salt producers’ willingness to purchase, its contribution to short-term lithium salt supply will be weakened. Therefore, H2 analysis should not simply focus on mine output. It should track port inventories, traders’ saleable inventories, in-plant inventories at lithium salt producers using externally procured ore, vessel schedules, and long-term contract lock-up structures. On the domestic supply side, Jianxiawo is the core variable driving H2 market expectations, but its impact should not be simplified as “restart equals immediate supply.” After the mine was suspended, the market treated it as the key anchor for marginal domestic lepidolite supply. The real question in H2 is not the single event of whether it restarts, but whether the restarted volume becomes freely tradable ore. If the output is mainly consumed within CATL’s integrated system, the impact on the spot ore market and externally procured ore salt producers will be limited. Only if the output enters the spot market will it directly pressure ore prices and conversion margins. At the same time, the suspension and restart timeline of other Jiangxi lepidolite mines also needs to be incorporated into the framework. Previous public reports indicated that some mines in Yichun may first exhaust their annual mining quota during the license renewal process and then enter a production halt for license renewal. If these mines continue to be affected by permitting, environmental protection, safety, or profitability factors in H2, the supply elasticity of domestic lepidolite will be weaker than nominal capacity suggests. Conversely, if Jianxiawo and other Yichun mines move forward with restarts or license renewals in Q3–Q4, the marginal contribution of domestic ore to lithium carbonate supply will increase significantly and put pressure on high ore prices. In other words, domestic ore supply in H2 should not be treated as a single variable. It is jointly determined by Jianxiawo, other Yichun mines, and the operating rates of Jiangxi lepidolite-based lithium salt producers. For overseas ore, African supply remains one of the largest sources of H2 supply elasticity. In H1, the disruptions in Africa were more about policy, shipment, and arrival timing rather than the disappearance of resources. If shipments from Zimbabwe and other regions recover and previously delayed cargoes arrive in China in a concentrated manner, feedstock availability for lithium salt producers will improve and the bargaining power of ore sellers will weaken. However, if policy disruption, logistics cycles, grade volatility, or financing pressure cause arrivals to remain inconsistent, lithium salt producers using externally procured ore may still be unable to raise operating rates quickly even if margin repair expectations improve. Australian supply is relatively stable, but a large portion is locked under long-term contracts, limiting its marginal adjustment impact on the spot market. Brazilian and other emerging resources are more important for medium- and long-term expectations, while their short-term impact on Chinese lithium salt production depends on arrival timing and quality stability. Demand is the key factor determining downside support for ore prices. In H2, power batteries and energy storage will enter the traditional peak season, and the expansion and ramp-up of cell and material producers will continue to lift lithium salt consumption. In particular, lithium iron phosphate output, supported by energy storage and commercial vehicle demand, is expected to remain high and provide sustained demand for lithium carbonate. Although ternary materials are growing more slowly than LFP, they may still see periodic restocking driven by certain overseas and high-end power battery demand. If material producers’ expansion is realized smoothly, lithium salt producers will need to maintain high operating rates to meet long-term contract deliveries and spot orders, which will in turn support rigid ore procurement demand. Conversely, if terminal orders fail to absorb the expansion of materials, material producers may enter a destocking cycle, and lithium salt producers’ ore procurement will quickly weaken, causing ore prices to come under pressure earlier. Therefore, H2 lithium ore prices can be divided into four scenarios. Base case: margins gradually rebalance, and ore prices fluctuate at high levels before edging lower. Jianxiawo’s restart expectation materializes, but actual mining and beneficiation ramp-up is gradual. African cargo arrivals recover but do not form a concentrated shock. Power battery and energy storage production schedules remain high, while material producers’ expansion is gradually realized. In this scenario, lithium carbonate prices remain volatile at high levels, the margin inversion of externally procured ore salt producers slowly improves, and lithium ore prices follow lithium carbonate lower but do not collapse. The profits that were excessively concentrated in upstream resources and futures expectations in H1 begin to gradually flow back toward midstream refining. Correction scenario: supply materializes in a concentrated manner, and profits quickly flow back to midstream refining. If Jianxiawo ramps up faster than expected and part of its output enters the spot market; if other Yichun mines progress faster than expected in license renewals; if African ore arrives in China in a concentrated way; and if lithium carbonate warehouse receipts and futures market pressure intensify, ore prices will face stronger downside pressure. The transmission chain would be: lithium carbonate futures turn bearish → lithium salt producers become more cautious in procurement → rigid demand for externally procured ore slows → traders release saleable inventories → ore prices correct quickly. In this scenario, profits do not disappear; they shift quickly from upstream resources back to midstream refining, and overseas miners’ realized prices also come under pressure. The key is not the nominal restart volume of Jianxiawo, but whether the restarted ore is internally consumed or enters the spot market, and whether downstream material inventories can absorb the additional lithium salt supply. Support scenario: effective ore supply remains tight, and profits stay upstream. If Jianxiawo’s actual output is later than market expectations, if license renewals or environmental factors continue to suppress the supply elasticity of other Yichun mines, if African arrivals remain inconsistent, and if peak-season energy storage and power battery production schedules continue to exceed expectations, lithium salt producers using externally procured ore will still face the situation of “orders and capacity available, but feedstock either expensive or unstable.” In this case, negative conversion margins will force some marginal lithium salt producers to reduce operating rates. The contraction of effective lithium carbonate supply will support lithium salt prices; and once salt prices stabilize, ore prices will also gain support. The persistent margin inversion in H1 has already shown that losses are not simply bearish. They act as an automatic stabilizer for the industry chain: they force some marginal refining capacity to shut down, reduce lithium salt supply, and thereby support prices in reverse. Upside scenario: effective ore shortage transmits into lithium salt supply contraction, driving ore prices higher again. If H2 sees the combination of stronger-than-expected demand, weaker-than-expected domestic ore realization, and inconsistent overseas arrivals, lithium ore prices could still rise further. Specifically, if energy storage demand remains highly robust and power batteries enter the traditional peak season with further upward revisions to cell and material production schedules, especially as new LFP capacity continues to ramp up, monthly lithium carbonate consumption will continue to rise. At the same time, if Jianxiawo’s restart is slower than expected, or if output after the restart is mainly consumed within the integrated system with limited spot supply, and if other Jiangxi lepidolite mines are temporarily halted due to license renewal, environmental protection, safety, or profitability factors, domestic ore supply elasticity will fall short of nominal expectations. If African ore arrivals are also inconsistent due to shipment schedules, policy disruptions, grade volatility, or financing issues, lithium salt producers using externally procured ore will face difficulties replenishing feedstock. Under this scenario, ore is no longer merely a variable reverse-priced by lithium carbonate. It begins to constrain lithium salt supply in reverse. The transmission chain would be: downstream material and cell production schedules are revised upward → lithium carbonate spot destocking accelerates → lithium salt producers increase operating rates to fulfill orders → demand for processable ore rises → domestic ore and overseas arrivals fail to ramp up simultaneously → feedstock inventories at externally procured ore salt producers decline → some marginal producers cut output because they cannot secure suitable ore or because margins remain deeply negative → effective lithium carbonate supply contracts → lithium carbonate spot and futures prices strengthen again → lithium ore prices follow lithium carbonate upward. In this case, ore price increases are not driven by independent upstream strength. They are re-priced upward by lithium carbonate after insufficient effective ore supply starts to restrict lithium salt output. In this upside scenario, spot conversion margins for externally procured ore may remain negative or even widen further. On the surface, negative margins should pressure ore prices. But under the combination of strong demand, strong lithium salt prices, and tight ore supply, negative margins can instead become a price-supporting mechanism. On one hand, they force some high-cost externally procured ore producers to suspend operations, reducing lithium carbonate supply. On the other hand, producers with long-term delivery obligations, customer orders, or futures hedging needs still have to keep buying ore, further consuming saleable ore supply. The end result is that industry-chain profits remain concentrated upstream, lithium salt producers’ margin recovery is delayed, and the ore price center may move further upward. Overall, the core issue for the H2 lithium ore market is not whether there is too much or too little ore, but whether ore can be converted into lithium carbonate supply in time. The correct analytical framework should cover six variables: the strength of power battery and energy storage production schedules, inventory cycles at material and cell producers, lithium carbonate spot and futures pricing, the depth of margin inversion for lithium salt producers using externally procured ore, the actual restart and distribution path of Jianxiawo and other Yichun mines, and changes in African arrivals and traders’ saleable inventories. Lithium ore is not the starting point of the industry-chain cycle. It is the result of reverse pricing by lithium carbonate supply-demand fundamentals, refining margins, and the futures market. Only when ore starts to restrict lithium salt producers’ operating rates, or when new ore supply begins to materially increase lithium carbonate supply, will lithium ore shift from a price-following variable to a supply-demand-leading variable. SMM New Energy Analyst: Lesley Yang yangle@smm.cn +61 0451581533

Yahua Group expects net profit attributable to shareholders for the first half of 2026 to reach RMB 1.1-1.3 billion, up 710.17%-857.48% year-on-year. The company said stronger lithium salt prices and higher sales volumes significantly boosted revenue during the period. Improved production efficiency, optimized mine-to-market operations, and tighter cost control also contributed to higher profitability.

Nearly one year after China reopened qualified black mass imports, the market has evolved differently from initial expectations. While stronger linkages have emerged between China's domestic and overseas markets, water-soluble fluorine remains a key constraint on direct imports. Meanwhile, overseas intermediate processing has gained attention as an alternative supply chain model, reflecting the industry's growing focus on cross-border resource integration and supply chain optimization.

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)