Core Viewpoint - The recent sharp decline in lithium carbonate futures is driven by a combination of regulatory policies, macroeconomic sentiment, and seasonal trading behaviors, rather than a fundamental shift in the market [4][5]. Market Analysis - The primary driver of the recent downturn is regulatory intervention aimed at cooling speculative trading, including increased fees and margin requirements, which has led to a rapid exit of speculative funds [4]. - Macroeconomic sentiment has also played a role, with declines in prices of major assets like precious metals and crude oil contributing to a general decrease in market risk appetite, further pressuring lithium carbonate prices [4]. - Seasonal factors are evident as investors tend to reduce positions and secure funds ahead of the Chinese New Year, amplifying selling pressure in the market [4]. - Recent data from Chile indicating a significant increase in lithium salt exports has raised concerns about short-term supply pressures, although this is viewed as a temporary spike rather than a long-term trend [4]. Supply and Demand Overview - Current supply dynamics show a slight contraction due to maintenance and seasonal factors, while demand remains resilient supported by battery exports and energy storage needs [5]. - As of January 2026, lithium carbonate production was reported at 97,900 tons, with battery-grade accounting for 71,440 tons, reflecting a minor month-on-month decline [8]. - The inventory of lithium carbonate has continued to decrease, with total inventory at 107,482 tons as of January 29, 2026, indicating ongoing demand despite price fluctuations [10]. Price Trends - On February 5, 2026, lithium carbonate futures closed at 132,780 yuan/ton, marking a 10.68% drop, with spot prices for high-quality lithium carbonate ranging from 146,200 to 149,500 yuan/ton [2][7]. - The market is currently experiencing a technical adjustment influenced by regulatory measures and seasonal trading patterns, with key support levels needing to be monitored for future price stability [5][13]. Market Sentiment - Analysts suggest that the recent price corrections are more reflective of market sentiment and seasonal factors rather than a fundamental weakening of supply-demand dynamics [13]. - The expectation of supply tightening due to maintenance and seasonal shutdowns, alongside resilient demand from the battery sector, suggests that the underlying market fundamentals remain intact [13][15].

Group 1: Report Industry Investment Rating - No relevant content provided Group 2: Core View of the Report - The report believes that lithium carbonate will operate strongly at a high level, and attention should be focused on cost and marginal changes in supply and demand [2][4] Group 3: Summary According to Related Catalogs Lithium Carbonate Futures and Spot Market - Last week, the main contract of lithium carbonate futures closed at 181,520 yuan/ton. The net short position of the main funds continued, the long - short ratio decreased month - on - month, and the warehouse receipts decreased slightly by 730 tons to 28,156 tons. The average price of SMM electric carbon was 171,000 yuan/ton. The trading market was active last week. In the spot market, upstream producers were more willing to sell, with some still holding back supply. Downstream buyers had a mix of inventory building and waiting, and scattered purchases slowed down after the price increase. Overall, transactions were mainly based on demand [2] Supply and Demand Fundamentals - **Supply side**: Last week, the raw material market showed a differentiated trend. Overseas lithium spodumene remained stable with a slight increase, while domestic spot lithium ore prices generally declined. The total weekly operating rate of SMM lithium carbonate was 50.99% (- 1.7%), and the operating rate of each process route decreased month - on - month due to maintenance plans. The total output was 22,217 tons (- 388 tons), with a slight decrease in supply [3] - **Demand side**: There was a significant structural differentiation. Last week, the output of SMM lithium iron phosphate and ternary materials decreased slightly month - on - month, and inventories were reduced. The output of SMM power cells decreased slightly. As of January 18, the penetration rate of new energy vehicle sales increased to 55.6%, and the production schedule of energy - storage cells increased slightly to support demand [3] - **Inventory**: Last week, the social inventory of the four - place sample of SMM increased by 2% (+ 860 tons) month - on - month, the sample weekly inventory decreased slightly by 0.7% (- 783 tons) month - on - month, and the total inventory days were 27.8 days. The inventory days of the upstream and downstream increased to 5.1 days and 9.6 days respectively, and the inventory days of other links decreased to 13.1 days, showing a significant differentiation in the inventory structure [3] Macro - policy Level - **Demand side**: Multiple incentives such as subsidies for car trade - ins and battery export tax rebates stimulate terminal consumption and improve macro - liquidity - **Supply side**: On January 15, the National Development and Reform Commission proposed to introduce management measures for the comprehensive utilization of new energy vehicle power batteries, which will improve the recycling threshold and eliminate backward production capacity, optimize the domestic supply structure in the long term, and raise the cost support center - **Industrial planning**: The industrial plan for Qinghai Salt Lake, the key points of the "15th Five - Year Plan" for energy storage, and a series of deployments at the Central Economic Work Conference have formed synergistic benefits to support long - term supply - demand balance. The central bank's structural interest rate cut indirectly strengthens the long - term macro - positive atmosphere [4]

Report Industry Investment Rating - Not provided Core View of the Report - The lithium carbonate market is expected to operate in a volatile and upward - trending manner, with a focus on cost and marginal changes in supply and demand [3] Summary by Relevant Catalogs Market Performance - The main contract of lithium carbonate futures fluctuated within a range and closed at 168,780 yuan/ton. The net short position of the main funds continued, the long - short ratio decreased month - on - month, and the warehouse receipts increased slightly by 230 tons to 28,886 tons. The average price of SMM electric carbon was 164,500 yuan/ton [1] Supply - side Situation - Last week, raw material prices increased by over 17% month - on - month, strengthening cost support. This week, the total weekly operating rate of SMM lithium carbonate was 50.99% (-1.7%), and the operating rates of various process routes decreased month - on - month due to maintenance plans. The total production of SMM was 22,217 tons (-388 tons), with a slight decrease in supply [2] Demand - side Situation - There was a significant structural differentiation on the demand side. Last week, the production of SMM iron - lithium and ternary materials decreased slightly month - on - month, and inventory was destocked. The production of SMM power cells decreased slightly. As of January 18, the penetration rate of SMM new - energy vehicle sales rose to 55.6%, and the production schedule of energy - storage cells increased slightly to support demand [2] Inventory Situation - The sample social inventory in four regions of SMM increased by 3.1% (+1,290 tons) month - on - month, the sample weekly inventory was destocked again, decreasing slightly by 0.7% (-783 tons) month - on - month. The total inventory days were 27.8 days, with the upstream and downstream inventory days increasing to 5.1 days and 9.6 days respectively, and the inventory days in other links decreasing to 13.1 days. The inventory structure showed significant differentiation [2] Macro - policy Situation - On the demand side, multiple incentives such as subsidies for car trade - ins and battery export tax rebates stimulate terminal consumption and improve macro - liquidity. On the supply side, on January 15, the National Development and Reform Commission proposed to introduce management measures for the comprehensive utilization of new - energy vehicle power batteries, which will optimize the domestic supply structure and raise the cost support center in the long term. Industrial plans such as the Qinghai Salt Lake Industry Plan, the key points of the "15th Five - Year" plan for energy storage, and a series of deployments in the Central Economic Work Conference form synergistic benefits to support long - term supply - demand balance. The central bank's structural interest rate cuts indirectly strengthen the long - term macro - positive atmosphere [3]

Market Overview - The Hong Kong stock market showed a narrowing upward trend, with the Hang Seng Index and the Hang Seng China Enterprises Index closing at 26,848 points and 9,285 points, up 0.9% and 0.7% respectively, indicating sustained investor confidence as the total turnover reached HKD 315.2 billion, slightly higher than the previous day's HKD 306.2 billion [1] - In sector performance, materials, energy, and healthcare indices rose by 1.9%, 1.6%, and 1.6% respectively, while consumer staples, telecommunications, and information technology sectors saw declines of 0.4%, 0.3%, and 0.1% [1] Real Estate Sector - The Hong Kong real estate sector continued its upward trend, with major companies such as Henderson Land (12 HK), Sun Hung Kai Properties (16 HK), and New World Development (17 HK) rising by 3.0%, 1.2%, and 7.2% respectively [2] - Recent adjustments in housing price forecasts by financial institutions support the view of an improving real estate market, driven by declining interest rates and a projected decrease in new housing supply [2] - The anticipated government announcement at the end of January regarding new housing supply statistics for 2025 is expected to further confirm this trend, with a projected 61.9% year-on-year decrease in private residential construction units for the first three quarters of 2025 [2] Macro Dynamics - The U.S. Consumer Price Index (CPI) for December showed a year-on-year growth of 2.7%, consistent with November's figure and market expectations [3] Automotive Sector - The automotive sector is experiencing changes due to a government announcement that will reduce battery export tax rebates from 9% to 6% starting in April, with a complete elimination by 2027, prompting downstream battery manufacturers to accelerate production and order placements [4] - This policy is expected to lead to a short-term surge in demand for lithium resources, with companies like CATL (3750 HK), Tianqi Lithium (9696 HK), Ganfeng Lithium (1772 HK), and BYD (1211 HK) showing stock price increases of 0.9%, 0.8%, 3.9%, and 1.6% respectively [4] Healthcare Sector - The Hang Seng Healthcare Index rose by 1.7%, with WuXi AppTec (2359 HK) announcing a positive earnings forecast, projecting a 15.8% year-on-year revenue increase to RMB 45.46 billion and a 102.7% increase in net profit to RMB 19.15 billion for 2025 [5] - WuXi AppTec's core business profitability, as measured by Non-IFRS adjusted net profit, is expected to rise by 41.3% to RMB 14.96 billion, exceeding Bloomberg's forecasts, which contributed to an 8.3% increase in its stock price [5] - WuXi Biologics (2269 HK) is also expected to report strong 2025 results, while Rongchang Biologics (9995 HK) signed an exclusive licensing agreement with AbbVie (ABBV US) for its new PD-1/VEGF dual-specific antibody drug, RC148, which includes an upfront payment of USD 650 million and potential milestone payments of up to USD 4.95 billion [5] Energy Sector - The new energy and utilities sectors displayed mixed performance, lacking significant new developments, while the thermal power sector generally rose, benefiting from stable coal prices despite colder weather in some regions [6] - Companies such as Huaneng International (902 HK), Datang International (991 HK), and Huadian International (1071 HK) saw stock price increases ranging from 1.4% to 2.2% [6]