On September 11, the main lithium carbonate futures contract experienced a sharp intraday drop, sliding as much as 10% to hit a low of 128,080 yuan per tonne. This marked the first time since February that prices fell below the 130,000 yuan psychological level, and the lowest point since February 6. Although short-covering in the final trading period trimmed the decline, the contract still closed nearly 5% lower on the session.

The spot market mirrored the futures rout. Data from Shanghai Steel Union showed the average spot price for battery-grade lithium carbonate stood at 139,400 yuan per tonne that day, down 3,500 yuan from the previous session, extending a run of consecutive losses.

This marks the second significant collapse for lithium carbonate within a single week. On September 4, the main contract suffered a daily drop of over 7%, briefly breaking below the 140,000 yuan mark. Prices then hovered around that level for a short period before succumbing to another downside breakout today. Measured from the late-August high above 160,000 yuan per tonne, the futures price has now retreated more than 20% in just half a month.

Market participants widely attribute the most direct catalyst for this decline to an adjustment in the statistical methodology used by an industry body for lithium carbonate inventories. On September 3, Shanghai Metals Market (SMM) announced it would introduce a new weekly inventory reporting framework effective September 4. The updated methodology expands the sample base beyond upstream smelters and cathode material producers to also include traders, cell manufacturers, and other downstream segments, while adding new production sources such as lithium extraction from red mud, tungsten ore by-products, and aluminum electrolysis waste residue.

Following this adjustment, SMM's weekly lithium carbonate inventory figure was revised upward in one go to 169,300 tonnes, an increase of roughly 90,000 to 100,000 tonnes compared to the previous methodology. In effect, previously uncounted "hidden inventories" nearly doubled the reported stockpile overnight.

It must be noted that this upward revision primarily stems from the expansion of statistical coverage, not from a sudden surge in physical inventories over a short period. Nevertheless, the "low inventory" narrative that the market had repeatedly traded on has been significantly weakened, delivering a heavy blow to bullish positioning. The long-held belief in "continuous destocking and tight spot supply" was instantly rewritten by that single announcement into a scenario of "hidden inventories far exceeding expectations."

Meanwhile, the demand side has also sent out discouraging signals. Recent market chatter suggested that Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ/03750.HK) had lowered its September production plans for lithium batteries, which was interpreted as a sign of weakening new energy demand. On September 9, in response to investor questions about the production cut on its investor interaction platform, CATL did not directly confirm the reports but stated that its capacity utilization is currently basically at saturation levels and referred investors to its periodic reports for production details.

Commenting on the sharp drop in lithium carbonate futures on September 11, Everbright Futures also noted that the market was hit by a confluence of bearish macroeconomic forces. The European Central Bank's hawkish rate hike, rising oil prices driven by Middle East tensions, worse-than-expected US PPI data, a breakout move higher in long-end US Treasury yields, and weakening yen hedge support all combined to dampen sentiment across non-ferrous metals, accelerating lithium carbonate's short-term slide.

The violent price swings in lithium carbonate have quickly transmitted to the equity market. On September 11, the A-share lithium mining sector slumped collectively in morning trading, with the sector index at one point falling more than 6%. By the close, Sinomine Resource Group Co Ltd (002738.SZ) was down over 7%, Tibet Mining Industry Co Ltd (000762.SZ) fell more than 5%, while Rongjie Co Ltd (002192.SZ) and Shengxin Lithium Energy Co Ltd (002240.SZ) both dropped over 4%.

The "lithium mining twin giants" Tianqi Lithium Corp (002466.SZ) and Ganfeng Lithium Group Co Ltd (002460.SZ) each declined more than 3%. However, the pain for lithium mining stocks extends far beyond this single trading day. Tianqi Lithium is down more than 22% year-to-date, having nearly halved from its May peak, while Ganfeng Lithium has fallen over 25% this year, also close to being cut in half from its May high. The market capitalizations of both lithium giants have shrunk substantially from their peak valuations.