Prismo Metals Inc. (CSE:PRIZ)
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Recently, unexpected surge in lithium carbonate inventory data caused by an adjustment in statistical methodology has left traders deeply confused and exerted pressure on prices, with some market participants calling on relevant regulatory authorities to intervene and investigate. Last week, data released by SMM Information & Technology Co. showed that after adopting a new statistical method based on a larger sample size, lithium carbonate inventory jumped to 175,000 tons, compared with the previous figure of 78,800 tons. Affected by this, the price of the most actively traded lithium carbonate futures contract in the Chinese market fell more than 14% over three trading days.
The lithium market has itself been prone to frequent fluctuations in recent years, but this sudden jump in inventory data has reignited market concerns about the true state of demand and highlighted the difficulty of predicting the next move in an opaque market that is still in a stage of development. More than a dozen company executives, traders and analysts said the industry is confused by the sudden change in the inventory data and uneasy about the reliability of the figures. These people all requested anonymity because of the sensitivity of the matter, but they mentioned that an online petition is calling on relevant institutions to launch an investigation into the issue.
SMM said last Friday that its new statistical method showed that downstream cathode material plants had built up inventory, while upstream smelters and battery plants had drawn down inventory. SMM said the revised method includes a larger sample of manufacturers and will also lead to changes in some previously published data. The company added that the relevant estimates are based on public information, market communication and its internal data models. An SMM official said the company may have underestimated the impact of the change in inventory data, but has launched an internal compliance review to examine the relevant issues.
This unexpected jump in lithium carbonate inventory data stemmed from an adjustment in statistical methodology, yet it triggered sharp price volatility and widespread market confusion in a short period of time. The incident not only exposed the market’s heavy reliance on reliable data, but also reflected the profound impact of data changes on trading sentiment and the pricing system in a lithium market characterized by opaque information and still-maturing mechanisms. Faced with doubts, relevant institutions have launched an internal review, while downstream companies are calling for the establishment of a fairer and more diversified pricing mechanism to safeguard market stability and confidence.
