Inventory will remain as little as they possibly can until a deficit hits. When prices are going down of course they destock, because they can buy it for lower in a few weeks time. And when prices start to go up they restock and buy as much as they physically can, accelerating the wave.
Pretty sure the max amount of lithium they usually hold at the best of times is 55 days worth.
Let's say they want to reduce that to 10 days so they buy 90% as much lithium as they normally do until it reaches that 10-day mark.
Suddenly that's manipulation! Truth is when the prices are going down due to oversupply (which is called out by nearly every analyst) of course they're going to buy less lithium than they usually do and exacerbate the problem so they can get it cheaper. It's not a new principle and it's not something explicitly done in China. Any smart business owner would do that.
If you had 60 days worth of wool. And it cost e.g. $200 per unit. But next week it'll be $180. Would you hold off on restocking and draw down your supplies so you could restock at a lower price? Of course you would.
Just like shorters this principle promotes volatility, and just like how it causes the bad times it's the same principle that boosts the good times.
(Sorry if this sounds argumentative dragon, I am trying to say I agree with you and explaining how it still fits my narrative).
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