SMM reported on July 3: LME copper prices moved sideways this week. On Monday, LME copper opened at $13,317/mt before fluctuating around the $13,100-$13,500/mt range. Affected by the limited price fluctuations, the conversion rates of ex-China copper scrap transactions remained largely unchanged overall. Mainstream quotations for bare bright copper ex-China held around 98.5%-99%, while No.1 copper semis quotations were mostly concentrated in the 97%-98% range, and No.2 copper semis quotations varied from 95% to 98.5% depending on material quality and gold/silver content. From the supply-demand fundamentals, the copper scrap market continued to show weak supply and demand. Supply side, the outflow of secondary copper declined further, with most enterprises reporting a marked tightening of available material in the market. In terms of recent trade volume changes, market trading activity also pulled back significantly over the past month. Demand side, in addition to the seasonal off-season drag, some enterprises held a bearish view on the copper price outlook, expecting the US dollar to strengthen further, and maintained a cautious procurement pace, mostly preferring to wait for a pullback in copper prices before restocking. As a result, overall purchasing sentiment remained weak this week, and the trading atmosphere stayed sluggish. Looking ahead to next week, if Middle East tensions ease further and market concerns about US Fed rate hikes cool down, copper prices could see a phased rebound. In that scenario, the price rise is expected to boost some suppliers' willingness to sell. However, given that overall ex-China copper scrap supply is still tight, the related conversion rates are expected to stay high, and even if copper prices rise, the rates are unlikely to pull back significantly.

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.

Refined Cobalt: This week, refined cobalt spot prices stopped falling and rebounded. Supply side, EXW prices from mainstream smelters fell first then rose during the week, currently stable at 385,000 yuan/mt. After the market stabilized, traders resumed offering, with the spot-futures price spread running at parity to a premium of 10,000 yuan/mt. Demand side, buoyed by news from the DRC, downstream end-user inquiry interest modestly picked up. Transactions during the week slightly improved WoW, but most were advance stockpiling for rigid demand, and a substantive recovery in end-user demand has yet to materialize. In the short term, insufficient downstream demand support, coupled with high industry inventory, suggests futures prices will likely consolidate mainly. The refined cobalt price recovery still requires the rise of upstream categories such as cobalt intermediate products and cobalt sulphate to drive it. Cobalt Intermediate Products: This week, the cobalt intermediate products market was sluggish, with futures prices remaining generally stable. Mid-week, the DRC government announced the withdrawal of miners' unexported quotas for H1 2026, greatly boosting long-term bullish sentiment. Supported by this, offers from mainstream miners held firm at $25.5/lb, while some traders with small lots kept their lowest shipment prices at around $24/lb. Currently, cobalt salt market valuations are running at low levels. Back-calculating from cobalt salt spot prices, the acceptable raw material purchase price for downstream smelters is only around $23/lb, resulting in a significant price gap between buyers and sellers and a stalemate in actual transactions. In the short term, weak demand support from the downstream smelting sector means intermediate product prices are likely to continue moving sideways. A subsequent market breakout and strengthening will depend on cobalt salt valuation recovery driving procurement demand. Cobalt Sulphate: This week, the cobalt sulphate market remained sluggish, with prices stopping falling and stabilizing. Supply side, offers from primary smelters were firm overall, with mainstream companies holding their minimum intended shipment price at 85,000 yuan/mt. Buoyed by DRC policy news in mid-week, market pessimism was repaired, and some recycling smelters and traders reduced their willingness to cut prices and sell off cargo. Low-priced cargo offers were raised from 80,000-81,000 yuan/mt last week to 82,000-83,000 yuan/mt. Demand side, no significant recovery has been seen. Downstream enterprises generally adopted a produce-based-on-sales model, and product settlement mostly uses a monthly average price mechanism. To avoid the risk of point-in-time purchase-sales price spreads, most enterprises maintained a wait-and-see sentiment in early July, with substantial restocking activities likely postponed to mid-to-late July. In the short term, cobalt sulphate prices will mainly consolidate, and a sustained market recovery still requires downstream concentrated restocking demand to materialize. SMM New Energy Research Team Wang Cong 021-51666838 Ma Rui 021-51595780 Feng Disheng 021-51666714 Lyu Yanlin 021-20707875 Xiao Wenhao 021-51666872 Zhang Haohan 021-51666752 Wang Zihan 021-51666914 Wang Jie 021-51595902 Xu Yang 021-51666760 Yang Lianting 021-51595835 Wang Zhaoyu 021-51666827

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

Refined cobalt: This week, spot prices for refined cobalt remained in the doldrums, with futures prices continuously putting pressure on the spot market. Supply side, mainstream smelters lowered their ex-factory quotations to 385,000 yuan/mt. After the deep price decline, most traders suspended external quotations, and wait-and-see sentiment dominated the market. Demand side, the rush-to-buy-amid-continuous-price-rise-and-hold-back-amid-price-downturn mentality continued to restrain downstream procurement pace. Alloy enterprises maintained a wait-and-see stance and postponed restocking, while some magnetic material enterprises released procurement demand in small quantities near 380,000 yuan/mt to restock opportunistically. In the short term, futures will remain volatile and under pressure. Two conditions are needed for refined cobalt prices to stabilize: first, market funding pressure eases and low-price selling declines; second, prices of cobalt salt and related products stop falling and stabilize, providing market confidence support. Cobalt intermediate products: This week, the cobalt intermediate product market continued to fluctuate, with little change in the price center. Supply side, mainstream miners and traders kept their offers steady at around $25.5/lb, but downstream smelters remained conservative in purchasing, with intended purchase prices generally below $25/lb. Some smelters even planned to sell their intermediate products at $24.8-24.9/lb and switch to purchasing low-priced recycled black mass to control production costs. Logistics side, since May, some Chinese miners have gradually increased chartered shipments, and some leading miners have gradually resumed shipments since June. Port arrivals of intermediate products are expected to trend slowly upward in the coming months and are likely to see concentrated arrivals in batches after August. In the short term, with insufficient end-use demand support, prices will likely continue to move sideways. If the market is to strengthen later, a resonance between downstream operating rate recovery and cobalt salt price repair is still needed. Cobalt sulphate: This week, trading atmosphere in the cobalt sulphate market remained sluggish, with the spot price center slowly edging lower. Supply side, performance continued to diverge: primary smelters' quotations remained relatively firm, with mainstream producers still holding their minimum intended selling price above 85,000 yuan/mt; some recycling smelters and traders, under cash flow pressure, continued to lower offers to 80,000-81,000 yuan/mt. Demand side, the continuous decline in prices has dampened downstream stockpiling confidence, and enterprises' psychological price levels mostly concentrate at 79,000-80,000 yuan/mt. Although some downstream intended purchase prices have now converged with the lowest sellers' offers in the market, because the low-priced cargoes have not yet fully matched downstream requirements in terms of commercial terms and product quality, bulk transactions remain limited. In the short term, the soft pattern of cobalt sulphate prices is unlikely to be fundamentally reversed. Market stabilization and recovery still await substantial realization of downstream concentrated restocking demand. SMM New Energy Research Team Wang Cong 021-51666838 Ma Rui 021-51595780 Feng Disheng 021-51666714 Lyu Yanlin 021-20707875 Xiao Wenhao 021-51666872 Zhang Haohan 021-51666752 Wang Zihan 021-51666914 Wang Jie 021-51595902 Xu Yang 021-51666760 Yang Lianting 021-51595835 Wang Zhaoyu 021-51666827

This week, China's second-life application market operated steadily overall, but prices of some categories edged down slightly, with limited overall fluctuation. Market transactions were dominated by just-in-time procurement. The cost side exerted consistent downward pressure: this week, prices of nickel, cobalt, and lithium chemicals all pulled back, with lithium carbonate showing the most pronounced downward movement. Although there was a time lag in the transmission of raw material costs to the second-life battery cell segment, the simultaneous weakening of all raw material categories still directly pressured market price expectations. The divergence in category trends became more pronounced: ternary second-life battery cells, originally dragged down by persistently mediocre end-use demand in the downstream EV sector, had long faced expectations of price declines in the market. Coupled with the loosening of price support due to the cost-side decline, these dual factors jointly drove a slight pullback in ternary second-life battery cell prices this week. In contrast, LFP second-life battery cells found strong support from stable and improving demand in the ESS sector. Even though raw material costs pulled back simultaneously, prices remained stable and did not follow the downward trend.

Spot lithium carbonate prices extended their downward trajectory this week, with the price center shifting further lower. The futures market saw intensifying volatility, with the most-traded LC2609 contract fluctuating downward from 150,900-161,800 yuan/mt early in the week to 150,300-163,900 yuan/mt, hitting a mid-week high of 163,900 yuan/mt before pulling back sharply and dipping to a low of 150,300 yuan/mt, testing the 150,000 yuan/mt psychological level. Open interest increased overall amid a fierce tug-of-war between longs and shorts. Market transactions showed active dip-buying on the downstream side while upstream players held firm on prices and held back from selling. On the upstream lithium chemical plant side, spot order quotes remained high as they maintained a stance of holding prices firm and holding back from selling, with some enterprises showing limited willingness to sell below 170,000 yuan/mt. On the downstream material plant side sentiment around buying and stockpiling near the 150,000 yuan/mt level was active, continuing a dip-buying strategy, with some closing out their post-settlement price positions around 150,000 yuan/mt. Overall, market inquiries and actual transactions were relatively active, with downstream purchase willingness notably strengthening as prices fell. Supply-side production edged up, while industry chain inventory diverged significantly. Lithium carbonate production edged up this week, mainly driven by incremental release from new capacity ramp-up on the spodumene side, while production from other raw material sources remained relatively stable overall. Looking at inventory changes: upstream lithium chemical plants, against the backdrop of a downward shift in the price center, continued to hold firm on spot order quotes and hold back from selling, leaving inventory basically stable; downstream material plants maintained a dip-buying strategy, with enthusiasm for buying and stockpiling notably increasing this week, leading to some inventory accumulation; traders synchronized destocking in line with the downstream buying pace. Overall, inventory adjustments diverged across segments, and market trading sentiment warmed somewhat. Import and export data showed continued ample supply from outside China. According to customs data, China imported 37,555 mt of lithium carbonate in May, up 15% MoM and up 78% YoY. Cumulative imports for January-May reached 153,000 mt, up 53% YoY. Of this, 24,522 mt came from Chile (65%) and 11,422 mt from Argentina (30%). Lithium sulfate imports in May totaled 12,107 mt, down 33% MoM but up 53% YoY, with cumulative imports for January-May reaching 71,000 mt, up 105% YoY. Import data stayed high, supplementing domestic supply. Looking ahead, on the supply side, the arrival pace of ore from Zimbabwe and the progress of Jiangxi mining license renewals remain key variables; on the demand side, active downstream buying and stockpiling sentiment near the 150,000 yuan/mt level provides some price support. In the short term, lithium carbonate prices are expected to remain in the doldrums, but whether the support near 150,000 yuan/mt holds requires monitoring.

This week, second-life battery market prices remained flat. Cost side, lithium carbonate prices saw a notable decline, cobalt sulphate extended its weakness with persistent declines, and nickel sulphate prices were basically flat. Meanwhile, new battery cell prices were generally stable; ternary new battery cell prices remained stable, while LFP energy storage new battery cell prices edged up. Correspondingly, downgraded A- and B-grade battery cells, anchored by new cell prices, also stabilized. Dismantled battery cells, supported by previous high procurement costs and rigid dismantling costs, had entered a phase of stability; coupled with limited circulation of qualified low-priced supply, prices had little upside and downside room.