Lithium carbonate futures near 150,000 yuan ($22,000–$23,000) a tonne have revived the market’s bullish instincts. The most active Guangzhou Futures Exchange contract recently closed at 152,500 yuan, up 11% from July lows and 29% since the start of the year.
But Fitch Solutions’ BMI is warning that the rally has moved faster than the underlying fundamentals. Its upgraded 2026 average forecast of $20,100 a tonne is below the current year-to-date Chinese spot average of $22,941. In other words, BMI’s forecast assumes a meaningful decline from present levels through the remainder of the year.
That does not make 150,000 yuan an impossible price. It does suggest that the market needs to distinguish between a short-term supply disruption and the beginning of a durable new bull cycle.
The central tension is straightforward:
- Energy-storage demand is accelerating.
- Electric-vehicle growth is cooling.
- New and restarted supply is responding to higher prices.
- Project economics are improving, encouraging additional investment.
- Technology substitution and recycling could limit longer-term demand growth.
For operators and investors, the question is not simply whether lithium can trade above 150,000 yuan. It is whether the market can remain there after supply begins responding.
What Fitch’s forecast says about the rally
BMI, a unit of Fitch Solutions, lifted its 2026 lithium carbonate forecast to $20,100 a tonne and its lithium hydroxide forecast to $19,600. The firm cited persistent supply disruptions and resilient demand, especially from energy storage.
The upgrade is constructive on the market’s near-term resilience, but it is not a conventional bull-market call. BMI said current prices are already “beyond what underlying fundamentals alone would justify” and expects quarterly averages of approximately $17,200 in the third quarter and $16,800 in the fourth quarter.
Its longer-term forecast is more cautious:
| Year | BMI lithium carbonate forecast |
|---|---|
| 2026 | $20,100/t |
| 2027 | $16,500/t |
| 2028 | $14,500/t |
| 2029 | $17,500/t |
| 2030 | $18,500/t |
BMI expects the market to remain in surplus through the end of the decade before potential deficits emerge between 2031 and 2035. That outlook reflects the lag between low prices, deferred investment and eventual supply shortages.
The implication is important: a high price today may be part of the cure for tomorrow’s shortage.
Energy storage is changing the demand equation
The strongest argument against a sharp lithium correction is the growth of battery energy storage systems.
China’s production of power and energy-storage batteries reached 191.7 gigawatt-hours in May, up 55% from a year earlier, according to the Northern Miner’s report on BMI’s outlook. BMI’s power and renewables team also expects global battery-storage capacity to rise from roughly 325 GW currently to 1,270 GW by 2035.
That growth gives lithium demand a second engine beyond passenger vehicles.
Lithium iron phosphate chemistry is particularly relevant. The International Energy Agency estimates that LFP batteries account for more than half of electric vehicles and over 90% of battery storage worldwide. In China, LFP represented a record 83% of battery installations in June.
LFP is less dependent on nickel and cobalt, but it remains heavily dependent on lithium carbonate. That means energy storage can support carbonate demand even when lithium hydroxide demand from high-nickel vehicle batteries is under pressure.
The shift also changes the market’s seasonal profile. Grid-storage procurement can be influenced by renewable deployment, data-center electricity demand, transmission bottlenecks and government capacity targets. Those drivers are not identical to consumer vehicle sales.
Still, storage demand does not eliminate the risk of surplus. It only raises the demand floor.
EV growth is slowing, not disappearing
BMI expects global lithium demand growth of 5.8% this year, down sharply from approximately 19% in 2025. Global EV sales growth is forecast at 3.9%, while China’s electric-vehicle market is entering what BMI describes as a structural deceleration.
China’s new-energy vehicles still accounted for roughly 59% of new-car sales, and monthly exports exceeded 500,000 units for the first time in June. Those figures show that EV adoption remains substantial. The issue is the rate of change.
A market that grew at 20% annually can absorb new mines quickly. A market growing at 4% to 6% requires more disciplined supply management. If producers add capacity based on the assumption that earlier growth rates will return, the result could be another period of excess inventory.
Technology adds another variable. CATL’s Naxtra sodium-ion battery, Changan’s planned sodium-powered passenger vehicle and advances in battery recycling could reduce lithium intensity in selected applications.
Sodium-ion is unlikely to displace lithium across the entire EV market in the near term. Its relevance is greatest in lower-cost vehicles and stationary storage, where energy density requirements may be less demanding. Even a partial substitution effect, however, could weaken the demand assumptions supporting a sustained price above 150,000 yuan.
Supply response is already building
The market’s supply response is one of the clearest reasons to be cautious about treating current prices as a new structural floor.
BMI expects global lithium production to grow 13% this year, led by Australia and China. Higher prices are also encouraging the restart of previously mothballed or deferred operations.
Mineral Resources is restarting Bald Hill, Core Lithium is bringing Finniss back, and the stalled Jianxiawo mine in China remains a major swing factor. A full restart of Jianxiawo could return roughly 3% of global supply, while Benchmark Mineral Intelligence has estimated that a prolonged shutdown could place around 4% of supply at risk.
The market has also had to absorb operational disruptions, including a snowstorm affecting Rio Tinto’s Fenix operation in Argentina’s Catamarca province. Such interruptions can tighten spot markets quickly, but temporary disruptions do not necessarily create a lasting deficit.
At 150,000 yuan, projects that were uneconomic during the downturn can become financeable again. Higher prices improve the economics of marginal hard-rock operations, brine expansions and new processing capacity. They also give producers the confidence to restart plants that were placed on care and maintenance.
That is the supply-response problem for the bulls: the higher lithium climbs, the more capacity becomes commercially attractive.
Lithium price forecast: base, bull and bear cases
The following framework uses the Fitch/BMI outlook, current market levels and the main supply-and-demand risks. Dollar ranges are indicative and currency movements can change the yuan equivalent.
| Scenario | Lithium carbonate range | Approximate yuan range | Main drivers |
|---|---|---|---|
| Bear | $12,000–$16,500/t | 85,000–120,000 yuan/t | Supply restarts, Chinese expansion, slower EV growth, sodium-ion substitution |
| Base | $17,000–$22,000/t | 120,000–155,000 yuan/t | Strong storage demand, slower EV growth, gradual supply additions |
| Bull | $26,000–$32,000+/t | 185,000–230,000+ yuan/t | Jianxiawo delays, mine disruptions, storage acceleration and delayed greenfield projects |
The base case places 150,000 yuan near the upper end of a sustainable trading range rather than at the start of an open-ended rally.
The bull case requires more than strong storage demand. It likely needs a combination of major mine disruptions, delayed project ramps and tighter-than-expected refining capacity.
The bear case does not require demand to collapse. It only requires supply to return faster than consumption grows.
A Cramer-style company watchlist: with the risks attached
A punchy market screen would focus less on the headline lithium price and more on cost position, balance-sheet strength and execution. The companies below are not direct investment recommendations. They are examples of the operating profiles that could matter most if volatility continues.
| Company | Why the market may focus on it | Principal risk |
|---|---|---|
| Albemarle | Large-scale production base and exposure to improving carbonate prices | Price weakness, project spending and cost pressure |
| SQM | Low-cost brine exposure and established chemical-processing capability | Chilean policy, royalties, water constraints and price sensitivity |
| Mineral Resources | Potential benefit from restarted Australian hard-rock capacity | High operating leverage and vulnerability to lower spodumene prices |
| Core Lithium | Finniss restart could add supply if market economics support it | Ramp-up execution, funding and volatile concentrate prices |
| Lithium Americas | Thacker Pass provides strategic North American supply exposure | Construction, commissioning, financing and technical execution |
| CATL | Downstream scale and strong positioning in EV and storage batteries | Sodium-ion substitution could reduce lithium intensity over time |
The strongest balance sheets may be able to use a period of elevated prices to invest in processing, automation and supply-chain integration. Higher-cost developers, by contrast, may look attractive on a spot-price model but remain exposed to delays, dilution and cost inflation.
That distinction is especially relevant for projects dependent on a sustained price above $20,000 a tonne. A feasibility study built around temporary spot strength can overstate project value if the market later returns to BMI’s 2027–2030 forecast range.
What decision-makers should monitor next
The market’s next direction will likely depend on a small number of measurable indicators:
- Jianxiawo’s restart timetable: A return of meaningful Chinese supply could quickly change the balance.
- Chinese carbonate inventories: Rising inventories would challenge the current price recovery.
- Battery-storage installation data: Storage must continue growing fast enough to offset slower vehicle demand.
- Restart economics: The speed at which Bald Hill, Finniss and other idled operations return will show how responsive supply has become.
- LFP and sodium-ion market share: Chemistry changes could alter lithium intensity even if total battery demand rises.
- Greenfield project financing: Sustained prices above $20,000 could unlock projects that remain uneconomic at BMI’s longer-term forecasts.
Our previous lithium supply-chain analysis examines how margin, refining capacity and jurisdictional security are reshaping the sector. The recent analysis of the $18,000 price floor provides additional context on project economics and emerging supply.
The bottom line
Lithium near 150,000 yuan a tonne is a meaningful recovery from the downturn, but it is not proof that the market has entered a new bull cycle.
Energy storage is providing real structural support. LFP chemistry is expanding carbonate demand, and delayed supply has tightened the market. But EV growth is slowing, producers are responding to higher prices and substitution risks are becoming more visible.
Fitch’s BMI forecast captures that balance: higher prices in the near term, followed by a projected decline as supply returns and the market moves back toward surplus.
For operators, the priority is cost control, reliable commissioning and secure offtake. For investors, the more durable signal may not be the spot price itself but which companies can remain financially resilient if lithium returns to the mid-teens.
Source: The Northern Miner analysis of Fitch/BMI’s lithium forecast.
