[SMM Flash] 2026 Lithium Price Forecasts Revised Higher; Storage Demand Supports Resilience, Supply Growth Caps Upside

Mainland Chinese lithium carbonate and lithium hydroxide monohydrate average price forecasts for 2026 have been revised up to $20,100/t and $19,600/t respectively, reflecting H1 price strength. Prices are expected to soften in H2, but robust energy storage demand should limit downside, with uncertainty over CATL's Jianxiawo mine restart also capping bearish sentiment.

Global lithium demand growth is projected to slow to 5.8% y/y in 2026 from 18.5% in 2025, tracking a deceleration in global passenger EV sales growth (BEV+PHEV) to 3.9% y/y from 22.8% in 2025. China remains the core demand driver: domestic NEV sales rose 23.6% y/y to 1.6 million units in June, with NEV penetration holding at a record 58.5% of new-vehicle sales for a third straight month as incentive withdrawal and structural pressures push the market into a more mature growth phase. Elevated fuel prices tied to the Middle East conflict are lending incremental support to electrified and hybrid powertrain demand.

On supply, global lithium output is forecast to grow 13.2% y/y in 2026, led by Australia and China, with the price recovery supporting restarts of higher-cost Australian capacity despite cost pressure from energy prices and a potential sulphur shortage. The combined share of the top three producers Australia, China, and Chile is expected to decline through 2035 as Argentina and Zimbabwe ramp up output, with Zimbabwe seen as a key driver of African lithium mine development in the coming years.

Carbonate's premium over hydroxide is expected to persist on continued LFP adoption, which now accounts for over half of global EV battery installations and more than 90% of battery energy storage capacity. Longer term, lithium-free/reduced-lithium battery chemistries and advances in battery recycling represent structural downside risks to price.

SMM View: The revision confirms H1 price resilience rather than a shift in underlying fundamentals current prices remain viewed as elevated relative to fundamentals, with H2 risk skewed to the downside. For African supply, Zimbabwe's role in the coming decade's shift away from the traditional top three producers aligns with its ongoing sulphate/hydroxide integration build-out; continued execution would further strengthen Africa's position in the global lithium supply structure.