1. Report Industry Investment Rating - The rating for lithium carbonate is "Oscillating" [4] 2. Core Viewpoints of the Report - The actual fundamentals of lithium carbonate are positive, but the futures market is significantly affected by macro - sentiment and capital flows. After the Spring Festival, the fundamentals are expected to show a simultaneous increase in supply and demand. From March to Q2, lithium carbonate is still expected to experience inventory reduction. After the supply increases in Q3, there may be inventory accumulation, but considering the demand growth, the inventory days are expected to decrease to less than one month. The price center of lithium carbonate may still be significantly higher than before. A bullish strategy is recommended, and investors should look for opportunities to go long at low prices after the trading volume and volatility stabilize [2][16] 3. Summary by Relevant Catalogs 3.1 1 Month Chilean Shipment Exceeded Expectations, and the Futures Market Declined Significantly - **Price Changes**: This week (2/2 - 2/6), lithium salt prices dropped significantly. The closing price of LC2605 decreased by 10.3% week - on - week to 132,900 yuan/ton. The average spot prices of SMM battery - grade and industrial - grade lithium carbonate decreased by 16.2% and 16.6% week - on - week to 134,500 and 131,000 yuan/ton respectively. The price of lithium hydroxide fluctuated accordingly [11] - **Chilean Exports**: In January 2026, Chile exported a total of 25,400 tons of lithium carbonate and lithium hydroxide, a 26% increase month - on - month and an 8% decrease year - on - year. Exports to China were 17,000 tons, a 44.8% increase month - on - month and an 11% decrease year - on - year. In January 2026, Chile shipped 27,800 tons (13,900 tons LCE) of lithium sulfate to China, a 475% increase month - on - month and a 1222% increase year - on - year. This large shipment may be due to pulse shipments considering the Spring Festival [1][12] - **Supply and Demand and Inventory**: According to SMM forecasts, the lithium carbonate production in February is 81,930 tons, a 16% decrease month - on - month. In the demand side, the production schedules of cathodes and cells also decreased in February, but the decline was lower than that of lithium salts. It is expected that lithium carbonate will continue to reduce inventory in February. This week, the total inventory of the SMM lithium carbonate sample decreased by 2019 tons week - on - week [13] - **Terminal Market**: In the power battery sector, in January 2026, the estimated wholesale volume of new energy passenger vehicles by national manufacturers was 900,000 units, a 1% year - on - year increase. Considering the Spring Festival effect in the same period last year, this data is not optimistic. In the energy storage sector, in January 2026, there were 152 energy storage bidding and winning projects. On January 30, the National Development and Reform Commission and the National Energy Administration issued a notice to improve the capacity price mechanism on the power generation side, which is beneficial to the energy storage yield [2][15] 3.2 Weekly Industry News Review - Sigma Lithium resumed the mining operation of the Grota do Cirilo lithium mine on February 3, 2026. This mine is Sigma's only operating asset and the largest lithium mine in Brazil, with an annual production capacity of 270,000 tons of lithium concentrate [17] - Tianqi Lithium plans to dispose of no more than 3,565,970 Class A shares of SQM, accounting for no more than 1.25% of SQM's total shares [17] 3.3 Key High - Frequency Data Monitoring of the Industry Chain 3.3.1 Resource End: The Price Trends of Ore and Salt are Consistent - The report presents data on the average spot price of lithium concentrate and the monthly inventory of lithium ore samples [19][21] 3.3.2 Lithium Salts: The Futures Market Fell from High Levels, and the Basis Fluctuated Significantly - The report shows data on the closing price of the GFEX lithium carbonate main contract, the term structure of GFEX lithium carbonate, domestic weekly lithium carbonate production, SMM weekly lithium carbonate inventory, domestic average spot price of lithium carbonate and the electric - industrial price difference, lithium carbonate basis, domestic average spot price of lithium hydroxide, the price difference between domestic and overseas lithium hydroxide, the price difference between domestic battery - grade lithium hydroxide and lithium carbonate, and the theoretical production profit of lithium salt plants [24][31][34] 3.3.3 Downstream Intermediates: The Production Schedules in February are Good - The report includes data on the monthly production of SMM ternary materials, SMM lithium iron phosphate, the price trend of lithium iron phosphate, the average price of lithium iron phosphate cells (power type), the price trend of ternary materials, the average price of 523 square ternary cells (power type), the price trend of lithium cobalt oxide, and the average price of lithium cobalt oxide cells (consumer type) [48][53][57] 3.3.4 Terminal: Pay Attention to the Negative Feedback in the Industry Chain - The report provides data on China's power battery installation volume and year - on - year growth rate, the monthly installation proportion of China's power batteries, China's new energy vehicle production and sales year - on - year growth rate, and China's new energy vehicle penetration rate [62][66][68]

Summary of Key Points from Conference Call Industry Overview - The conference call primarily discusses the energy storage industry in the Northwest region of China, focusing on the impact of policy changes and material prices on project timelines and profitability [1][3][4]. Core Insights and Arguments - **Impact of Material Prices**: The rise in prices of lithium carbonate and copper has significantly affected project timelines, leading to delays rather than cancellations. Most projects are still expected to proceed due to prior investments [1][4][8]. - **Profitability Standards**: State-owned enterprises (SOEs) require an internal rate of return (IRR) of 6.3% to 6.7% to participate in energy storage projects. Regions with favorable policies, such as Gansu, Inner Mongolia, and Ningxia, are seeing faster development due to meeting these profitability standards [5][12]. - **Gansu's Market Dynamics**: Gansu is highlighted as the only province in the Northwest with a functioning spot market for energy storage. The revenue from energy storage is approximately 0.26 CNY per kWh, which is insufficient for profitability without additional compensation policies [6][10]. - **Future Growth Projections**: It is anticipated that by 2026, the national energy storage capacity will increase by 200-300 GW, with significant growth expected in the Northwest region. The demand for energy storage will primarily be met by lithium iron phosphate batteries [3][18][24]. Additional Important Content - **Policy Variability**: The capacity pricing policy for energy storage varies by province, with nine provinces having implemented local compensation policies to address reduced rental income [3][17]. - **Construction Challenges**: Winter construction poses challenges in regions like Inner Mongolia and Xinjiang, where traditional methods may be hindered. Innovations such as prefabrication are being adopted to mitigate these issues [2]. - **Investment Environment**: The financing environment for energy storage projects is improving, with increased investment from SOEs and listed companies, indicating a positive outlook for the sector [19]. - **Electricity Pricing Adjustments**: The increase in coal-fired capacity pricing has enhanced the competitiveness of coal power, indirectly benefiting independent energy storage by creating more profitable conditions [20]. - **Regional Resource Availability**: Gansu has abundant solar resources for future development, while wind resources are limited, presenting challenges for wind energy expansion [13]. Conclusion The conference call provides a comprehensive overview of the current state and future outlook of the energy storage industry in Northwest China, emphasizing the importance of policy support, material costs, and regional resource availability in shaping project viability and profitability.