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Report Industry Investment Rating No relevant content provided. Core Views of the Report - Cost side: During the reporting period, the price of spodumene continued to weaken, with Australian miners showing a strong willingness to sell at reduced prices while African mines tried to hold prices. The price of lepidolite also weakened, and the cost - support logic was difficult to materialize [3]. - Supply side: Affected by the continuous decline in lithium prices, there were frequent rumors of lithium salt plant overhauls in May, and high - frequency production declined. Low - cost salt lakes were gradually resuming production but could not fill the supply contraction gap [3]. - Consumption side: The production schedules of ternary and lithium - iron cathodes were relatively stable overall, but the spot inventory continued to accumulate, and downstream demand was weak. In May, the sales growth rate of new energy vehicles was more stable than in April, maintaining between 31% - 32%. Energy storage orders improved, and export demand increased due to the easing of trade relations [3]. - Later views: The high - frequency production of lithium salt has rebounded, indicating the resilience of upstream supply at current prices. With the continuous increase in salt lake production, there are no expected disturbances on the supply side. Lithium ore prices follow the decline of lithium carbonate prices, and short - term cost narratives are difficult to materialize. The demand is expected to be stable. Although the sales of new energy vehicles may enter a slow - growth season, the recovery of energy storage export orders after the easing of Sino - US trade relations may fill the demand gap to some extent. Overall, supply is resilient, price increases will quickly drive upstream production, lithium ore resources are abundant, there are no upstream disturbance risks, and demand is expected to be relatively stable, with the fundamentals remaining flat [3]. Summary by Directory I. Market Review - Market review: In May, the price of lithium carbonate hit a new low. Before mid - May, it was in a downward trend due to weak fundamentals. After May 20th, the National Development and Reform Commission issued a document to rectify vicious competition, and there were rumors of overhauls in Jiangxi lithium salt plants and potential environmental risks, leading to short - covering by bears and a price rebound. However, with the release of high - frequency data showing a slight increase in supply, the market's cautious sentiment eased, and the price weakened again [8]. - Spread review: In May, the electric - industrial spread of lithium carbonate weakened significantly, dropping from - 0.09 million yuan/ton at the beginning of the month to - 0.15 million yuan/ton. The spot price continued to decline, and the futures price was lower than the industrial - grade spot price, closing the arbitrage window. The lithium carbonate - lithium hydroxide spread was near par, with no arbitrage opportunities during the reporting period [10]. II. Fundamental Analysis - Resource end: In May, the price of imported spodumene concentrate further declined, with the price of imported ore (5.5% - 6%) dropping from 722 US dollars/ton at the beginning of the month to 661 US dollars/ton at the end of the month, a monthly decline of about 8.45%. The price of technical - grade lepidolite (2.5%) also slightly decreased. Although lithium ore prices continued to weaken, global lithium ore mining continued. Many lithium ore projects were accelerating in May. For example, the Jijiaoshan lithium mine of Dazhong Mining had completed the excavation tunnel, and the lithium ore resources in Quebec, Canada, increased significantly. Meanwhile, Rio Tinto Group reached development agreements for lithium salt lake projects with Chile [12]. - Imported ore lithium extraction capacity: In May, the production capacity of lithium carbonate was 214,860 tons, an increase of about 20,000 tons compared to April. The total lithium salt production in May was about 73,020 tons, an increase of 1,368 tons from April. However, there were rumors of production cuts in some lithium salt plants. The production in Sichuan, which mainly uses imported spodumene, decreased significantly from 12,400 tons in April to 9,900 tons in May, while the production of self - owned mica and Qinghai salt lakes showed strong resilience, with slight increases to 11,500 tons and 29,550 tons respectively [14]. - Lithium salt import: In April, the import volume of lithium carbonate was about 28,000 tons, a month - on - month increase of 56.3% and a year - on - year increase of 33.6%. The increase was mainly due to the concentrated arrival of some imported resources, which may not be sustainable in the context of weak demand. The export volume of lithium carbonate from Chile to China decreased in April, which may lead to a contraction in domestic lithium carbonate imports in May. The scale of lithium salt imports from Argentina increased significantly, but the actual production projects in Argentina are limited, and the shipping scale to China fluctuates greatly [16]. - Cathode materials: In May, the production of lithium - iron phosphate was about 269,400 tons, a month - on - month decrease of 2.67%. The weekly average operating rate in May was about 58.19%, a decrease of 1.56 percentage points from April. The production of ternary materials was about 63,100 tons, a month - on - month increase of 0.39%. The weekly average operating rate of ternary materials in May was about 45.78%, an increase of about 0.6 percentage points from March. The production of ternary materials shifted towards the 6 - series. The inventory of lithium - iron phosphate decreased by 2,295 tons, and the inventory of ternary materials decreased by about 75 tons by the end of May [19][20]. - Battery production: In April, the total production of power and other batteries was about 118.1 GWh, a year - on - year increase of 51.22% and a month - on - month increase of 0%. The production of ternary power batteries decreased by 0.3 GWh, and the production of lithium - iron phosphate power batteries increased by 0.3 GWh. The sales of power batteries decreased slightly. The price of square lithium - iron phosphate cells was stable at 0.34 yuan/Wh, and the price of square ternary cells was stable at 0.44 yuan/Wh. The battery factory had a cross - period production adjustment due to the Spring Festival, with significant inventory reduction in March and a slight increase in April. The inventory of vehicle manufacturers increased slightly in April, indicating limited terminal consumption growth [22]. - Power terminal: From January to April, the cumulative sales of new energy vehicles were about 4.3 million, a year - on - year increase of 46.26%. In May, the sales of new energy vehicles were relatively stable, with a single - week growth rate between 31% - 32%, lower than the nearly 40% growth rate at the beginning of the year. In the third quarter, the sales growth of new energy vehicles is usually weak, and the terminal demand is difficult to be significantly boosted. The new - replacement policy has a weakening effect on new energy passenger cars, and the policy focus is gradually shifting to new energy heavy trucks, ships and other transportation fields [25]. - Inventory: As of May 30, the total lithium carbonate inventory decreased by 1,185 tons. The market inventory decreased significantly due to weak downstream procurement, while the salt factory inventory increased. The change in exchange warehouse receipts was not obvious. In the future, supply growth may be limited, and inventory trends will depend on downstream procurement plans. If the exchange warehouse receipts are excluded, the market inventory is not high, and downstream active inventory reduction may drive the reduction of factory inventory, while the total inventory level may remain stable [28]. III. Market Outlook - Cost and supply: Lithium ore prices follow the decline of lithium prices, and resource inventory is abundant. Supply is resilient, and there are no upstream disturbance risks (neutral) [29]. - Consumption side: New energy consumption enters the off - season, but the easing of trade relations boosts the increase in energy storage orders, and the demand is expected to be stable overall (neutral) [29]. - Overall view: The high - frequency production of lithium salt has rebounded, indicating the resilience of upstream supply. The supply side has no expected disturbances, and short - term cost support is difficult to materialize. The demand is expected to be stable. Although new energy vehicle sales may enter a slow - growth season, the recovery of energy storage export orders may fill the demand gap to some extent. Overall, supply is resilient, lithium ore resources are abundant, and the fundamentals are flat [29].