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In the first quarter of 2026, the global lithium market continued the recovery trend from the second half of 2025, with lithium carbonate prices rebounding from a previous low of over 50,000 yuan per ton to a range of 150,000 to 180,000 yuan, as the industry supply-demand pattern gradually shifted from surplus to shortage.
<img src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OXorfVxxQIjMc0pDs5Rg1M7WBflmbF1Jpry2mW24wDetEAA/641?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://inews.gtimg.com/om_bt/OXorfVxxQIjMc0pDs5Rg1M7WBflmbF1Jpry2mW24wDetEAA/641"/> Wu Xiaoming's presentation PPT
Recently, Fastmarkets research analyst Li Zihao and CFA battery materials researcher Wu Xiaoming presented a common viewpoint at the Fastmarkets Shanghai Battery Materials Conference: this round of price fluctuations is not a simple reflection of short-term market sentiment, but rather a substantial change in the underlying logic of the global lithium industry.
&#34;Due to financial recession based on the industrial cycle, restructuring of global trade patterns, and the addition of geopolitical premiums in pricing logic, the lithium market will face a substantial shortage in 2026, with an expected shortfall of 15,800 tons of lithium carbonate equivalent, making a secondary price increase inevitable,&#34; said Wu Xiaoming.
Rigid Supply Contraction and Changes in Global Trade Flows
The driving force behind the current rise in lithium prices primarily comes from the loss of elasticity on the supply side, which is determined by both short-term sudden events and long-term financial recession. From the perspective of short-term supply disruptions, the shutdown of large domestic mines has directly reduced supply. Li Zihao believes that China, as the world's largest producer and consumer of lithium salts, will directly drive significant fluctuations in lithium salt and lithium ore prices across Asia due to changes in domestic supply.
In the second half of 2025, the Jiangxia Mine of CATL was shut down due to the expiration of its mining license, with an annual production capacity of up to 65,000 tons of lithium carbonate equivalent, and there is currently no clear timeline for resumption. Meanwhile, the policy risks in overseas resource countries have sharply increased, with Zimbabwe suddenly announcing a suspension of all lithium ore exports in February of this year.
According to statistics from Fastmarkets research department, Zimbabwe's lithium production capacity is expected to reach 124,000 tons of lithium carbonate equivalent in 2026, accounting for 7% of global supply and 16% of China's total imports. The introduction of this ban has sent a signal to the market about the rising policy risks in resource countries, directly exacerbating supply fluctuations at the raw material end.
Compared to the aforementioned short-term sudden events, the long-term financial recession has slowed down the deployment of new production capacity. Wu Xiaoming pointed out from a micro-financial perspective that lithium resource companies in Brazil, the Americas, and Australia have entered a recession phase in their balance sheets since 2023. During the commodity price decline cycle, companies first lose cash flow, then profits are affected, ultimately transmitting to the balance sheet. By 2024, capital expenditures for these companies have already declined, and by 2025, this has evolved into a comprehensive decline in earnings before interest and taxes and cash flow
Against the backdrop of supply-side contraction, Li Zihao believes that geopolitical factors have exacerbated the divergence in supply and demand in China and regions outside of China, rewriting the global lithium trade pattern. Affected by tariff uncertainties, cost-cutting by automakers, and a slowdown in overseas consumption of new energy vehicles, the demand for lithium salts in regions outside of China, such as Japan and South Korea, has significantly weakened.
In addition, U.S. policies have accelerated the decoupling of supply chains from China in Japan and South Korea, leading to a substantial decrease in the proportion of Chinese lithium hydroxide in the import structure of these countries. By 2025, Japan's imports from China are expected to drop from 86% in 2024 to 50%, while South Korea's will fall from 83% to 61%. This will result in a significant decline of 41% in the total import volume of lithium oxide and lithium hydroxide in Japan and South Korea compared to last year, with China's exports of lithium hydroxide decreasing by 15% year-on-year.
However, the reduction in overseas demand has been completely offset by the increase in domestic demand in China. By 2025, the total production of power and energy storage batteries in China is expected to reach 1,700.5 GWh, a year-on-year increase of 64%, with new energy storage installations reaching 144.7 GW, a staggering increase of 80% year-on-year.
China's strong demand resilience not only supports its own market but also absorbs excess capacity from overseas. The divergence in domestic and foreign demand, combined with the continuous growth of overseas lithium salt supply, has led to a one-way flow of excess lithium hydroxide to China, with imports of lithium hydroxide in China expected to surge by 126% compared to 2024. Wu Xiaoming views this ongoing destocking behavior across the entire industry chain as the most compelling micro-evidence of the apparent shortage of lithium resources.
A shortage of 15,800 tons of lithium carbonate equivalent is expected in 2026
The traditional supply and demand framework is no longer sufficient to explain the current price trends; instead, there is a repricing of long-term resource scarcity and geopolitical risks. Wu Xiaoming points out that geopolitical risks are deepening the extent of lithium carbonate shortages from two aspects.
On one hand, the stability of the global lithium resource supply chain has been disrupted, and lithium resources can no longer be effectively allocated through low costs as in the past. For example, the U.S. requires that subsidies cannot be provided without production, and resource countries require that exports cannot occur without production capacity. On the other hand, lithium mining faces higher environmental costs; even if prices rise, policies will impose restrictions. Li Zihao's analysis of Zimbabwe's ban indicates that the intensification of policy disturbances in resource countries forces the market to pay an additional premium for uncertainties in raw material supply.
Under this new pricing logic, the market has expressed concerns about the transmission of costs to downstream. In response, Wu Xiaoming disassembled the battery cost model based on February of this year, stating that lithium remains one of the largest raw material costs, accounting for 21% to 24% of material costs and 13% to 18% of total costs. Assuming that other materials such as anodes and separators remain unchanged, if the price of lithium carbonate rises from 60,000 yuan to 180,000 yuan, the internal rate of return for energy storage will drop from 12% to 9%.
However, Wu Xiaoming also noted that although the rate of return is being squeezed, there is still a certain profit margin, and in the context of a commodity boom cycle characterized by U.S. dollar depreciation, a reshaping of the credit distribution system, and the rise of resource protectionism, the transmission of costs in energy storage batteries is still relatively smooth until the end of 2025. Whether negative feedback will occur in the future depends on the industry's ability to absorb rising costs and the level of support from national policies, but under the hard constraints of supply shortages, the resistance to price transmission will gradually be digested
Wu Xiaoming believes that due to the financial contraction on the supply side, the unexpected demand from China's energy storage, and the normalization of geopolitical premiums, lithium prices will re-enter an upward investment cycle in the coming years. Although the rapid rise in raw material prices may cause fluctuations in the downstream transmission of the industrial chain and the resumption of mining, it will not be as smooth as the period from 2019 to 2020, but the upward trend has already been established.
&#34;Based on the contraction of lithium mines on the supply side and the continued unexpected performance of the energy storage market, the market will enter a shortage phase in 2026. It is estimated that there will be a shortage of 15,800 tons of lithium carbonate equivalent in 2026. With this support, the price of lithium carbonate in China, Japan, and South Korea is expected to reach 19.95 yuan/kg,&#34; said Wu Xiaoming

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The global lithium market is expected to face a shortage of 15,800 tons of lithium carbonate equivalent by 2026, with lithium prices rebounding from 50,000 yuan to a range of 150,000 to 180,000 yuan. Analysts point out that the supply-demand pattern has shifted from surplus to shortage, mainly due to the loss of elasticity on the supply side and changes in global trade flows. The suspension of operations at large domestic mines and increasing overseas policy risks have led to fluctuations in the supply of raw materials in the market. The long cycle of financial recession has also slowed down the deployment of new production capacity, making a secondary rise in lithium prices an inevitable trend

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Global X Lithium & Battery Tech

Sprott Lithium Miners ETF

Amplify Lithium & Battery Tech ETF

Industry researchers predict a shortage of 15,800 tons of lithium carbonate equivalent in 2026, and a second rise in lithium prices has become an inevitable trend