A change in the methodology used by SMM Information & Technology Co. for reporting lithium stockpiles led to a sudden and significant increase in reported inventory data last week. The new figures showed stockpiles jumping to 175,000 tons, up from a previous 78,800 tons. This unexpected surge, attributed to a larger sample size, confounded traders and caused the price of the most active lithium carbonate contracts in China to fall by more than 14% over three days. The revised method now includes sampling from more manufacturers, and SMM stated that it may have underestimated the impact of this shift, initiating internal compliance checks.
The upheaval has led to concerns about the reliability of market data and the transparency of the still-developing lithium market. Industry officials, traders, and analysts expressed bafflement, with some circulating a petition demanding an investigation by relevant agencies. Ganfeng Lithium, a major producer, stated that if third-party pricing platforms fail to objectively reflect market levels, it will adopt more market-oriented pricing methods to ensure fairness.
While the market had anticipated a sustained destocking trend, the revised data suggests a significant slowdown in inventory reduction. This, coupled with actual end-market consumption falling short of expectations and production cuts by leading battery manufacturers, has fueled concerns about demand sustainability, even during the traditional peak season. JPMorgan Chase noted that the 94,000-ton increase in reported inventory was more of an "accounting impact" due to reclassification and expanded sampling rather than a sudden emergence of hidden stock, and that the inventory direction was still destocking, albeit at a slower pace.
