Lithium bulls eye demand support as China heads for busy season

The global lithium market has taken a positive turn as analysts see demand from energy storage systems and electric vehicles spurring gains for the battery material.

Lithium prices had eased back from last month’s highest level since 2023, but the market has perked up again in the past week as a busier buying season in China approaches, easing concerns about inventory levels and mine restarts in Australia.

Analysts from three companies that monitor lithium — CRU Group, Benchmark Mineral Intelligence and Citigroup Inc. — say stretched supplies will propel prices beyond recent highs. And CRU sees average levels climbing nearly 50% from this quarter to next before softening again.

“Safe to say this might raise some eyebrows, but we believe the tightest point in the market is yet to come,” Martin Jackson, CRU’s head of battery materials markets said by email.

Lithium had a rough few years after a price boom in 2022 was quashed by surging supply and a more moderate pace of EV adoption. But the emergence of large-scale battery storage as a major new demand driver has helped underpin an advance of nearly 40% this year for the benchmark product, lithium carbonate.

CRU sees carbonate rising to an average of $33,900 a ton in the third quarter, up from $22,800 in the current quarter, while Benchmark Minerals reckons prices could reach $30,000 this year. Citigroup’s analysts says prices could test 250,000 yuan ($36,976), most likely in August to September. That compares with China’s latest spot price at 165,500 yuan in data published by Asian Metal Inc.

“Towards the end of the year, which is typically the strongest period for consumption, we expect prices to be particularly supported by robust demand,” said Adam Megginson, principal lithium price analyst at Benchmark, which sees a tight market this year while forecasting a surplus in 2027.

Citigroup said Chinese battery-makers could also ramp up to front-load exports ahead of the cancellation of a tax rebate in 2027.

New hope

Energy storage systems — batteries that absorb and store electricity for controlled release — are offering the world’s lithium producers a new pillar of growth. There’s been a sharp acceleration in demand from that market in 2026, major lithium producer Albemarle Corp said last month, while BloombergNEF sees storage capacity in China expanding 8% annually through 2036.

Concerns about a fresh resurgence of supply will likely simmer, and may have played a part in the pullback of prices since mid-May. Two mining projects in Australia, Finniss and Bald Hill, have recently restarted in a sign of how higher prices are spurring a nascent response. Zimbabwe’s decision to water down an earlier ban on lithium exports also weighed on the market.

But China’s pivotal Jianxiawo mine, run by battery producer Contemporary Amperex Technology Co. Ltd, remains shut since permitting issues forced it to close last year near the bottom of the market.

There were also some concerns over higher stockpiles at China’s Guangzhou Futures Exchange as some market players deliver against higher prices on the bourse versus the spot market. Inventories reached about 56,000 tons earlier this month, around the highest since trading began on the bourse.

That increase has revealed higher inventory in the supply chain than thought and could moderate price gains, analyst Su Jinyi at Chinese consultancy Fubao said. But demand remains solid and prices are acceptable for downstream buyers, she said.

(By Annie Lee)