JP Morgan has released a report indicating lithium futures fell 4% to CNY 167,000 per tonne on June 3rd, with Chinese lithium stocks declining between 0% and 2%. Market sentiment weakened due to record-high warehouse receipts for lithium carbonate on the Guangzhou Futures Exchange.

The report notes that while downstream demand remains solid, it has raised its profit forecasts for Tianqi Lithium Corporation (ASX: 09696) and Ganfeng Lithium Group Co.,Ltd. (ASX: 01772) for the 2026 to 2028 period. This revision is based on higher long-term lithium price assumptions and expectations of improved margins for lithium compounds and battery businesses. However, the bank anticipates that sentiment in the commodity and equity markets will be difficult to reverse in the near term.

Market consensus on the lithium supply-demand balance remains elusive, with prices primarily driven by news flow. The report also points out that recent positive catalysts, such as production halts at Jiangxi lepidolite mines and Zimbabwe's export controls, have largely been priced in. Consequently, risks are seen as skewed towards negative news, such as the restart of overseas mines, unexpected resumption of production at Shixiawo, or hidden lithium inventories being higher than anticipated.

JP Morgan maintains its "Neutral" rating on both Ganfeng Lithium Group Co.,Ltd. (ASX: 01772) and Tianqi Lithium Corporation (ASX: 09696), with target prices of HKD 70 and HKD 52, respectively.