Lithium is the most distinctive category within non-ferrous metals—fundamentally, it is a metal tightly coupled with new energy. The lithium rally originated around 2017, during the Tesla era, and peaked in 2022. Why has lithium underperformed in this bull market? The core reason is that the battery industry is currently in a transitional phase—neither fully mature nor yet revitalized. In reality, lithium stocks have merely rebounded; on a quarterly chart, they remain in a correction phase. When will lithium truly shine again? The answer is after 2029—the next cycle. By then, solid-state batteries will arrive, and lithium will naturally become the strongest performer among non-ferrous metals. A classic example is Ganfeng Lithium: if its quarterly chart forms a massive 'W' bottom, the prospect would be truly beautiful—hundreds of yuan per share could well be within reach.

Goldman Sachs remains bearish—how should we view the lithium-ion battery supply chain?

The lithium-ion battery sector has recently pulled back, and related rumors are circulating widely. Interestingly, what’s rising is lithium prices—and what’s sparking heated debate is also lithium prices. Recently, Goldman Sachs turned bearish on the lithium-ion battery sector, assigning a 'Sell' rating to nearly all lithium-related stocks covered in its research. Of course, this isn’t Goldman Sachs’ first time turning bearish on lithium-ion batteries: it began issuing bearish calls as early as last year, when lithium carbonate prices were still hovering near their bottom of RMB 70,000 per ton. Meanwhile, several other global investment banks hold opposing views. For instance, UBS, Citigroup, and Morgan Stanley express notably more optimism regarding both lithium prices and the broader lithium-ion battery supply chain. So today, let’s examine: What exactly is the core point of contention driving current market debates over lithium-ion batteries? And, drawing on the Q1 earnings performance across the lithium-ion battery supply chain, can we gain a clearer, more grounded perspective? I. The divergence on lithium prices is fundamentally a divergence on supply-demand dynamics. Goldman Sachs’ latest report presents a straightforward view: following increased supply in the second half of this year, the global lithium market may shift from tight balance to oversupply; lithium carbonate prices are expected to peak in the first half of 2024, with a target price of RMB 164,000 per ton. This logic rests squarely on supply-side assumptions. Goldman Sachs estimates that the industry will add approximately 1 million tonnes of LCE (lithium carbonate equivalent—a standardized metric used to compare lithium content across different lithium resources) in new supply between 2026 and 2027. If these capacities come online smoothly, lithium prices will struggle to sustain strength. In contrast, bullish institutions offer entirely different assessments. For example, UBS estimates that risk-weighted new supply additions between 2026 and 2027 will total only about 413,000 tonnes of LCE—far below Goldman Sachs’ projection. In other words, the biggest disagreement between these two institutions lies in how much new supply will actually materialize—and how quickly. More specifically, Goldman Sachs forecasts that over 60% of new supply will come online in the second half of 2026, with the majority originating from Chinese enterprises’ overseas projects. UBS, however, places greater emphasis on the uncertainties surrounding this wave of supply expansion, thus lowering its supply expectations. A key reason for this adjustment is that IGO, the Australian lithium mining giant, recently revised downward its spodumene production guidance for Greenbushes—the world’s largest hard-rock lithium mine—for FY2026. The reasons cited include declining ore grade, lower-than-expected mining volumes, and mounting maintenance burdens. Therefore, when observing lithium prices going forward, we must look beyond announced capacity plans—and instead focus on whether those capacities can be delivered on time and at full scale. Moreover, UBS holds a strongly positive outlook on demand, especially for energy storage systems (ESS). It forecasts global lithium demand will rise from 1.702 million tonnes LCE in 2025 to 2.324 million tonnes LCE in 2027. Geopolitical shocks, rising oil and gas prices, surging electricity demand driven by AI-powered data centers, and an anticipated 30% decline in BESS (battery energy storage system) costs collectively contribute to a substantial upward revision in global energy storage demand forecasts. Under this scenario, UBS expects spodumene concentrate prices to rise by 23% and battery-grade lithium carbonate prices to rise by 47% by 2027. Ultimately, the divergence over lithium prices boils down to one question: Can demand growth driven by energy storage and electric vehicles absorb the new supply expected to come online over the next two years? Given the current wide divergence in market views, it may indicate that available information remains insufficient to validate either side’s thesis.

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