[Weekly Report] Non-Ferrous Metals | Lithium Carbonate: Bright Storage Demand Outlook & Partial Supply Disruptions, Lithium Carbonate Fluctuates at High Levels

（Source: Haitong Securities Futures Research Institute）

Supply side: In the long and medium term, overall production capacity ramp-ups from previously started projects, restart/re-expansion of idled capacity, and the commissioning of new capacity mean that supply overall will still show a steady net increase; however, in the short term, supply disruptions are increasing. First, Zimbabwe’s ban on mining has not yet been lifted. Considering transport lead times, this portion of spodumene/lithium ore supply decline will be reflected in April to June. As global order is being reshaped, resource protectionism is on the rise, and control over resources will become a key point in major-country games. Second, geopolitical conflict in the Middle East has led to less oil supply and higher prices, which in turn has also caused downstream products such as diesel to show both lower volumes and higher prices. The market worries this could disrupt the normal operations of some mines in certain regions (such as Australia), leading to reduced extraction volumes and slower transportation.

Demand side: In terms of power batteries, at the beginning of this year, vehicle sales declined by a larger margin while the amount of electricity stored per vehicle increased. Therefore, based on vehicle sales, the loading volume shows a year-on-year increase and a month-on-month decrease. Throughout the year, the “trade-in for replacement” policy continues to play a role, though growth rates are expected to slow somewhat. In terms of energy storage, both domestic and overseas energy storage orders remain robust. Unstable conditions in the Middle East may lead to a pattern where energy storage activity slows first and then accelerates. In particular, projects in the Middle East are expected to be deferred. In regions with higher energy import dependency, represented by Europe, new energy demand may be increased for energy security considerations. On timing, the demand side will maintain a high level of optimism in the long and medium term. The second quarter will enter a peak season. Lithium battery production schedules will continue to increase sequentially, but later on, it will be important to monitor whether cost pass-through to downstream buyers is smooth.

Overall, it is already widely agreed that in 2026, both supply and demand of battery-grade lithium carbonate will increase and move toward a tight but balanced state. Market funds recognize the contribution of energy storage to growth in lithium carbonate demand. Together with localized supply-side disruptions and the long-term narrative of major-country resource games, lithium carbonate has logical support for sustained upward moves over the long run. In terms of timing, the approach will be mainly to buy on dips. But in the short term, complicated and changing supply-side information, as well as the repeated flare-ups of geopolitical conflicts, will lead to a relatively large intraday trading range. Therefore, on the trading side, attention must be paid to both direction and timing.

Strategy: One-way: In the long and medium term, hold the mindset of buying on dips, but strictly manage position sizing/risk.

Options: Hold a moderate amount of deep out-of-the-money put options—either you earn the option premium as profit upon expiration, or after assignment you hold long positions.

Hedging: Sell hedges in a medium proportion upstream (participate in delivery), and buy hedges in a medium proportion downstream.

Basis: Stay on the sidelines.

Calendar spread: Keep a light position in the sell 07–buy 09 calendar spread combination, and do a good job with risk/at-profit management.

Fan Bingting (Trading Advisory Account No.: Z0019571): Researcher at Haitong Securities Futures Research Institute in nonferrous metals and new energy metals; holds a Master’s degree in Statistics. Mainly responsible for research on battery-grade lithium carbonate, industrial silicon and new energy-related products, as well as nonferrous metals such as copper and aluminum. Skilled in using a commodity research framework combined with qualitative analysis based on fundamentals and quantitative data analysis to assess market direction. Has extensive experience in providing industrial price risk management services, and delivers customized hedging solutions to multiple nonferrous metals companies.

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