The 200,000-yuan lithium price assumption has returned: Energy storage is pushing 2026 supply-demand into a deficit

【Answer 1】 A dual squeeze—surging demand from energy storage and tightening supply constraints—is driving lithium price forecasts back to their peak levels of two years ago. According to Zhui Feng Trading Desk, UBS Global Commodities Team, in its latest report released on May 7, raised its forecast for China’s average spot lithium carbonate price in 2026 by 18% to RMB 200,000 per ton (including VAT), and expects spot prices to potentially reach RMB 250,000 per ton between May and June. On the demand side, UBS forecasts global lithium demand in 2026 will rise 16% year-on-year to 1.97 million tons of lithium carbonate equivalent (LCE), with energy storage system (ESS) battery demand surging by as much as 60%—the core driver behind this upward revision. On the supply side, UBS’s risk-weighted supply forecast projects only a ~13% increase to 1.91 million tons LCE (including recycled material), resulting in a supply-demand gap of approximately 65,000 tons LCE. The emergence of this supply-demand gap has directly triggered substantial revisions to individual companies’ earnings forecasts. UBS raised its 2026 earnings forecasts for its covered Chinese lithium companies by 10%–40%, placing them 56%–211% above market consensus. It also raised target prices for Ganfeng Lithium (A/H shares), Tianqi Lithium, and Qinghai Salt Lake Industry, maintaining ‘Buy’ ratings on all covered stocks.

The lithium industry’s restructuring: Comprehensive operational capability is now under rigorous test

【Answer 2】 September is traditionally the peak season for inventory buildup across the new-energy industrial chain. Yet on September 28, according to data from Fubao Information, lithium carbonate futures plunged to the RMB 120,000-per-ton threshold—hitting a new annual low. Measured from the cyclical bottom, the lithium industry has evolved far beyond the earlier stage where valuation was determined solely by proven reserves and planned capacity. After rebounding from its lows, lithium prices have ridden a rollercoaster. Meanwhile, both energy storage and power batteries continue expanding; new projects in Africa and South America are accelerating into the industry’s field of vision; resource-rich countries are imposing increasingly specific requirements regarding local processing, equity arrangements, and project approvals; and capital markets no longer value enterprises merely on projected future capacity. Everything has changed—and everything continues to change. Today, merely owning resources is insufficient to shift market expectations; delivering on commitments has become the decisive factor. Thus, while lithium price fluctuations remain important, they no longer fully capture a company’s long-term value. Resource endowment, process technology, project execution capability, financing arrangements, and localized operations have collectively begun determining whether an enterprise can navigate through the cycle. I. Demand continues expanding; industry value is shifting from resource ownership to effective supply To grasp the positive dynamics within the lithium industry, one must look beyond price rebounds—and certainly not equate such rebounds with sustained sectoral prosperity. According to industry-wide statistics, lithium carbonate prices fell below RMB 60,000 per ton in 2025, recovered to around RMB 150,000 per ton by August 2026, but then retreated again to lower levels. As of now, battery-grade lithium carbonate prices remain over 60% higher than last year’s trough—so the price recovery has indeed improved corporate earnings and reopened investment windows for new projects. Yet prices peaked at RMB 200,000 in May before falling noticeably, indicating that market assessments of supply-demand shifts, inventory levels, and newly commissioned capacity remain highly responsive and subject to rapid revision. Lithium prices are merely one condition enabling renewed investment—but real investment decisions cannot be made so simplistically. On the demand side, industry data shows demand remains robust this year. For instance, China Securities Co., Ltd. previously forecast ESS demand growth of 54%–72% in 2026 and 29%–32% in 2027—making it one of the primary sources of incremental lithium demand today. The significance of energy storage extends beyond adding another category of battery demand: it broadens lithium’s application scenarios. The power system’s growing need for grid flexibility is developing in parallel with battery demand driven by new-energy vehicles. With more diversified demand sources, the industry becomes less reliant on any single end-market—and enterprises capable of stable, reliable supply gain access to a broader customer base. However, rising demand does not automatically guarantee absorption of new supply. A neutral estimate suggests global lithium carbonate supply will reach ~2.73 million tons in 2027 versus ~2.70 million tons of demand—indicating near balance, or possibly a deficit of just several ten-thousand tons. The key differentiator lies in the actual ramp-up timelines, permitting progress, and policy developments in resource-rich countries—including potential impacts on product export and downstream processing. Given the abundance of such dynamic variables, supply-demand structures cannot be extrapolated statically. Another critical factor is the gap between planned capacity and actual output. Industry data shows domestic lithium carbonate production in the first half of this year totaled ~622,000 tons—a ~46% year-on-year increase. Meanwhile, although numerous overseas new projects exist, moving from agreement signing to financing, permitting, construction, and ramp-up still involves multiple sequential stages.

Albemarle Jumps as Mizuho Sees Battery Storage Demand Tightening Lithium Market

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Albemarle shares rose after Mizuho upgraded the stock to Outperform, citing tightening lithium demand from battery storage systems. Mizuho raised price forecasts and highlighted supply constraints benefiting Albemarle's low-cost position.

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