This is only my view. Maybe someone can explain better. There is...

This is only my view. Maybe someone can explain better.
There is no oversupply of product,PERIOD.
The banks have embarrassed themselves with their analysis.
To understand we need to break the pricing down.
OZ hard rock producers are all spodumene miners. They are lithium mineral producers. DSO (direct shipping ore) means exactly that, dig up send off. Currently DSO are not and cannot be processed. Some MDs would like you to believe otherwise. DSO from OZ are sitting in china unprocessed.
The spodumene contract price has been increasing for the last 3years. You all know pls, ajm and taw have taken 1.5-2 years to build a working mine. The demand for battery use is growing 3 times faster than the mines can be built, assuming the funding is there. To produce more batteries, more spodumene need to be mined. With supply slow the price has to rise. Within the spodumene ore there are many impurities that need to be removed. Ever tried separating 6 red smarties from a packet of 100 in the dark?. There is a premium to be paid, when more than one buyer is after red only. The contract price can only go up.
Carbonate/ hydroxide is spodumene thats been processed and reduced. Lets stay with carbonate. Since last year till now, the price has been rising from $8/kg to $14/kg ($8000-14000/t). This is reported in ORE ($14000). The price the miners get are all contract prices. Prices are determined by the clauses in the contract.
The spot price in china is unrelated.
For comparison, the ticket price to a ball game is fixed (the contract). The spot price in china is scalping ticket price. Companies without supply buy spot. The spot price was trading over $20k/t. The miners in china have released poor quality to the market hoping for quick profit. The buyers are simply saying, we don't want sh!tty seat at front row prices. Buyers will need to process more to get up to battery quality. Cheap and nasty carbonates are being sold on spot. Hence the price reflecting the quality. The volume is very small.
We go from lithium minerals to lithium chemicals. Chinese lithium chemical producers need other supply from overseas. Chinese buying overseas mines as you all know. There is obviously a short supply, so prices has to go up. The spot price we all keep hearing is coming down to the contract price. The real price and quality to match.
Other countries have woken up to lithium demand and buying before it all goes the china.

The banks have jumped on the chinese spot price, creating the illusion there is an oversupply. What they are really saying is the scalping price has fallen. They use this to short stocks.
The shorting of GXY has been explained. There is simply not enough shares on market to cover the current opened positions. Short sellers can only go down to dislodge scared retailers who don't understand.