CITIC Securities: The positive supply and demand fundamentals are expected to resonate and drive lithium prices up to 250k yuan/ton within the next 2-3 months.

CITIC Securities Research Report states that recent disruptions in African lithium resource supply have not been resolved, and domestic spodumene supply may face new variables. Greenbushes lithium mine lowered its full-year production guidance, South American lithium salt exports showed marginal decline, and overall supply is expected to contract over the next 2-3 months. The demand for power and energy storage batteries in 2026 is exceeding expectations, with lithium battery production in May increasing month-on-month. We expect that the positive supply and demand fundamentals could drive lithium prices up to 250k yuan/ton within the next 2-3 months.

The following are their latest views:

Positive supply and demand fundamentals, opening upward space for lithium prices

Recent disruptions in African lithium resource supply remain unresolved, domestic spodumene supply may face new variables, Greenbushes lithium mine lowered its full-year output guidance, South American lithium salt exports showed marginal decline, and overall supply is expected to contract over the next 2-3 months. In 2026, demand for power and energy storage batteries exceeds expectations, with lithium battery production in May increasing month-on-month. We expect that the resonance of positive supply and demand fundamentals could push lithium prices up to 250k yuan/ton within the next 2-3 months.

▍Disruptions in African lithium resource supply remain unresolved, domestic spodumene supply may face new variables.

According to SMM and Mysteel, on February 25, Zimbabwe’s Ministry of Mines announced an immediate suspension of all ore and lithium concentrate exports (including in-transit goods). On April 13, several companies obtained lithium mining export permits. However, so far, no Zimbabwean lithium mining company has officially announced export of lithium concentrates. The transportation period for Zimbabwean lithium to China is approximately three months, meaning no Zimbabwean lithium concentrates will be shipped to China from late May to August. According to the official website of Jiangxi Provincial Department of Natural Resources, the mining rights transfer evaluation reports for four ceramic clay mines in Yichun were published on April 7. We expect this indicates these four ceramic clay mines in Yichun will also enter the process of renewing mining permits. Referencing Jiange Wowo Mine, we anticipate remaining ceramic clay mines in Yichun may also face production suspension risks. According to relevant company announcements, these four ceramic clay mines produce 75k tons of LCE annually; if suspended, this would result in a loss of 6,000 tons of LCE per month.

▍Chile lithium salt exports decline month-on-month, the world’s largest lithium mine lowers its production guidance.

According to Mysteel, in April 2026, Chile’s total lithium salt exports reached 37.6k tons of LCE, down 5.1% month-on-month. Among these, lithium carbonate exports were 29.5k tons, representing +35.6%/+3.4% year-on-year and month-on-month respectively; lithium sulfate exports were 12.1k tons, with +33.6%/-26.9% respectively. Chile’s lithium salt exports have been at a historic high for four consecutive months, but saw a slight decline in April. We expect Chile’s lithium salt inventories to continue decreasing, making it difficult for monthly exports to sustain growth. According to IGO’s announcement, the global largest lithium mine Greenbushes’ 2026 fiscal year production guidance has been lowered from 1.5-1.65 million tons to 1.375-250k tons, a median decrease of 175k tons, over 20k tons of lithium carbonate equivalent. The main reasons are various production disruptions and CGP3 capacity ramp-up below expectations. We believe that in 2026, Australian lithium resource supply growth will be below expectations, South American lithium supply will marginally decrease in the coming months, and high lithium prices will stimulate global lithium supply less than expected, maintaining a tight supply trend throughout the year.

▍Power battery installation rebounding, energy storage demand continues to exceed expectations.

According to Wind, in April 2026, China’s power and other battery production reached 183.9 GWh, up 55.6%/+3.5% month-on-month and year-on-year respectively. From January to April, total production was 671.2 GWh, a year-on-year increase of 51.0%, maintaining a high growth rate. Power battery installations in April were 62.3 GWh, up 10.3%/+15.2% month-on-month and year-on-year respectively. The growth in power battery installations is mainly due to the positive recovery in new energy vehicle sales from January to April. From January to April, domestic energy storage battery sales reached 200.4 GWh, an increase of 100.4% year-on-year. Due to increased energy costs from February to April, substitution effects have supported continued growth in domestic and international energy storage battery demand, with the market increasingly recognizing the long-term profitability of energy storage stations. According to Securities Daily, the first institutional REITs product based on energy storage stations was issued in April this year, bringing more capital into the energy storage industry, providing exit channels for energy storage companies, and stimulating demand for more energy storage projects. We remain optimistic about the long-term demand for energy storage batteries.

▍Lithium salt inventories fall to extremely low levels, we expect lithium prices to rise to 250k yuan/ton.

According to SMM, in April, domestic lithium carbonate demand was 140k tons. Last week, lithium carbonate inventories decreased by 920 tons to 103k tons, indicating only three weeks of inventory at present, with smelters holding 19k tons, at very low levels. We expect this will prompt upstream and downstream companies to be cautious in sales or to stockpile in advance. According to Dandong Times Think Tank, domestic battery production in May increased by 6% month-on-month. With demand continuing to grow and ongoing disruptions in global lithium supply, we expect lithium salt shortages to persist over the next 2-3 months, and excess industry stockpiling will further support lithium prices. Therefore, we forecast lithium prices could reach 250k yuan/ton, with peak demand in the fourth quarter potentially pushing prices even higher. We continue to recommend lithium mining stocks as investment opportunities.

▍Risk factors:

• Dissipation of global lithium resource supply disruptions;
• Unexpected increase in global lithium resource supply;
• Power battery demand underperforming;
• Energy storage battery demand being suppressed by high lithium prices.

▍Investment strategy.

Recent disruptions in African lithium resource supply remain unresolved, domestic spodumene supply may face new variables, Greenbushes lithium mine lowered its full-year production guidance, and over the next 2-3 months, domestic lithium salt production will be below expectations. South American lithium salt exports show marginal decline, and overall supply is expected to contract. In 2026, demand for power and energy storage batteries exceeds expectations, with lithium battery production in May increasing month-on-month. We expect that the resonance of positive supply and demand fundamentals could push lithium prices up to 250k yuan/ton within the next 2-3 months. Growth-oriented and cost-efficient targets are likely to benefit significantly from rising lithium prices.

(Source: Yicai)