CITIC Securities: Expecting a positive supply and demand synergy to potentially drive lithium prices up to 250k yuan/ton within the next 2-3 months

China Securities Journal Research Report points out that recent disruptions in African lithium resource supply have not been resolved, and domestic lepidolite supply may face new variables. Greenbushes lithium mine has lowered its full-year production guidance, and South American lithium salt exports are showing marginal declines. 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 full text is as follows:

Metals | Supply and demand fundamentals resonate, opening space for lithium price increases

Recent disruptions in African lithium resource supply remain unresolved, domestic lepidolite supply may face new variables, Greenbushes lithium mine has lowered its full-year output guidance, and South American lithium salt exports are showing marginal declines. Overall supply is expected to shrink 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 push lithium prices up to 250k yuan/ton within the next 2-3 months.

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

According to SMM and Mysteel, on February 25, Zimbabwe’s Ministry of Mining 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 about three months, meaning no Zimbabwean lithium concentrates will be transported to China from late May to August. According to the official website of Jiangxi Provincial Department of Natural Resources, materials such as the appraisal report for the transfer of mining rights for four ceramic clay mines in Yichun were published on April 7. We expect this indicates that these four ceramic clay mines in Yichun will also enter the process of renewing mining permits. Referencing Jianxiawo Mine, we anticipate that 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, and the world’s largest lithium mine lowers its production guidance.

According to Mysteel, in April 2026, Chile’s total lithium salt exports were 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 record 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, exceeding 20k tons of lithium carbonate equivalent. The main reasons are various production disruptions and CGP3 capacity ramp-up falling short of expectations. We believe that in 2026, Australian lithium resource supply growth will be below expectations, and South American lithium supply will marginally decrease in the coming months. The high lithium prices are less stimulating to global supply than expected, and the overall supply tightness is likely to persist throughout the year.

▍Power battery installations rebound, and 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. The market is 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 more energy storage projects. We remain optimistic about the long-term demand for energy storage batteries.

▍Lithium salt inventories fall to extremely low levels, and 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 lead upstream and downstream companies to be reluctant to sell or to stockpile in advance. According to Dandong Times Think Tank, domestic battery production in May is expected to increase by 6% month-on-month. With demand continuing to grow and ongoing disruptions in global lithium supply, we anticipate lithium salt shortages will persist over the next 2-3 months. Excess industry stockpiling will further support lithium prices, which we expect could rise to 250k yuan/ton. The peak demand season in the fourth quarter could push prices even higher, and we continue to recommend lithium mining stocks as investment opportunities.

▍Risk factors:

• Disruption in global lithium resource supply diminishes;
• Global lithium resource supply exceeds expectations;
• Power battery demand underperforms;
• Energy storage battery demand is suppressed by high lithium prices.

▍Investment strategy.

Recent disruptions in African lithium resource supply remain unresolved, domestic lepidolite supply may face new variables, Greenbushes lithium mine has 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 are showing marginal declines, and overall supply is contracting. The demand for power and energy storage batteries in 2026 exceeds expectations, with lithium battery production in May increasing month-on-month. We expect that the resonance of positive supply and demand fundamentals could drive lithium prices up to 250k yuan/ton within the next 2-3 months. Companies with strong growth potential and lower costs are likely to benefit fully from rising lithium prices.

(Source: Cailian Press)