Profits increased 20-fold, yet stock prices plunged 40%—why did lithium-mining stocks suddenly collapse?

Of course, from the perspective of market sentiment, the sharp decline in lithium-mining stock prices was also driven by factors such as concentrated profit-taking on hyped themes, mid-term portfolio rebalancing by investment institutions, panic selling triggered by weakening sector momentum, and company-specific 'red-flag' issues. 03 Supply surges while demand weakens Why did lithium carbonate prices suddenly reverse course and plummet? In fact, the downward trend in lithium carbonate prices did not begin just recently—it started with a peak-and-reversal pattern following the mid-May rally. As a commodity, lithium carbonate prices are fundamentally driven by supply and demand dynamics. This round of price weakness stems primarily from a string of negative supply-side developments: On July 4, Chile’s two lithium giants—Sociedad Química y Minera de Chile (SQM) and Codelco—announced major expansion plans for their brine-based lithium projects, jointly investing $3 billion to upgrade and expand existing facilities. The current capacity of this joint venture stands at 270,000 tonnes per year; the targeted future capacity is 470,000 tonnes annually—a more than 70% increase. On July 7, West Africa’s largest lithium processing plant officially commenced operations in Nasarawa State, Nigeria, with a daily lithium ore processing capacity of 6,000 tonnes—equivalent to approximately 30,000 tonnes per year of lithium carbonate equivalent. News about the resumption of operations at CATL’s Jianxiawo lithium mine began circulating on June 29 and has since been confirmed; its annual lithium carbonate production capacity is around 100,000 tonnes. Recently, after Australian lithium majors Mineral Resources (MinRes) and Core Lithium jointly announced the restart of suspended projects in May 2026, PLS’s Ngungaju processing plant also resumed spodumene concentrate production. Earlier, on May 13, Shanghai Metals Market (SMM) significantly refined its lithium carbonate inventory reporting methodology, raising sample coverage from 50%–60% to 70%–80%, causing reported social inventories to jump abruptly by roughly 36,000 tonnes. It was precisely from this date that lithium carbonate prices entered a sustained downtrend. On June 22, according to The Information, Thacker Pass—the largest known lithium deposit in the U.S.—is expected to launch Phase I production by the end of next year, delivering an annual output ten times the country’s current lithium production. In short, since May this year, a steady stream of supply-increase announcements from the lithium mining sector has emerged—becoming the key factor suppressing lithium carbonate price gains. Goldman Sachs’ latest research report forecasts global lithium market oversupply of 20%–22% in the second half of 2026, with lithium carbonate prices potentially falling to RMB 65,000 per tonne by year-end. Concurrently, it downgraded leading firms including Ganfeng Lithium and Tianqi Lithium to “Sell.” Meanwhile, demand remains equally bleak. This year, domestic new-energy vehicle (NEV) sales have faced severe pressure due to the transition of purchase-tax policies and the phase-out of subsidies under the “trade-in” program. Entering July, NEV production and sales entered their seasonal low, resulting in insufficient downstream demand. Accelerated industrialization of sodium-ion batteries is also exerting downward pressure on lithium prices. Historically, sodium-ion batteries were developed as a short-term alternative to lithium-ion batteries—motivated by lithium’s high cost and the heavy reliance of lithium batteries on critical minerals like nickel, cobalt, and lithium. But today, sodium-ion batteries have carved out an independent growth trajectory, challenging lithium batteries in both power and energy storage applications. Although they cannot displace lithium batteries in the near term, they are indeed siphoning off part of the incremental demand potential.

The lithium sector collapsed! Goldman Sachs: expects lithium overcapacity in 2026 and downgrades Ganfeng Lithium to 'Sell'!

On November 24, Goldman Sachs’ latest research report downgraded Ganfeng Lithium’s H-share rating from ‘Neutral’ to ‘Sell,’ and lowered its forecast for China’s benchmark spot lithium carbonate price in the second half of 2026 by 14% to USD 9,500 per tonne. Following this announcement, A-share lithium stocks plunged over 6%: Rongjie Shares and Shengxin Lithium hit the daily trading limit-down, while Tianqi Lithium, Ganfeng Lithium, and Tibet Mining fell sharply—by up to over 8%. Goldman Sachs analysts led by Trina Chen noted that although lithium market fundamentals have improved markedly—with global lithium capacity projected to fall 12% short of demand in the second half of 2025—the supply-demand balance will reverse in the second half of 2026, with an estimated 10% oversupply. This reversal will exert substantial downward pressure on lithium prices—forming the core rationale behind the downgrade. The report also highlighted extended inventory cycles in energy storage systems as a key offsetting factor: previously, the energy storage market served as a primary pillar of lithium demand, but current incremental demand growth is slowing, and rising inventory cycles may now suppress prices instead.

Albemarle Corporation Downgraded to Strong Sell Amid Lithium Price Crash

Oct 13, 2026

Albemarle Corporation, the world's largest lithium producer, was downgraded to Strong Sell by Zacks as lithium prices dropped 80% since 2022 amid slowing EV demand and oversupply. The price decline significantly impacts the company's earnings and stock performance.

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