Analysis agency BMI – a Fitch Options Firm – is revising up its common lithium value forecast for this 12 months to $17 000/t for Mainland Chinese language lithium carbonate 99.5% and $16 700/t for Mainland Chinese language lithium hydroxide monohydrate 56.5%.
This follows an earlier out-of-cycle upward revision this 12 months, as costs headed into the 12 months on a firmer footing amid tightening provide expectations, though early-year ranges appeared to maneuver past what fundamentals alone would justify, given combined short-term demand alerts.
In its newest outlook of lithium costs report, BMI explains that supply-side swings, coupled with probably stronger demand momentum from low-carbon industries amid the present vitality shock, notably by means of accelerated electrical automobile (EV) adoption, ought to assist the lithium market’s rebalancing after a chronic interval of oversupply.
That stated, BMI says swift restarts of beforehand idled higher-cost capability throughout a value restoration may immediate manufacturing to ramp up shortly, though a protracted bout of disruptions should be enough to maintain an upward value trajectory.
The year-to-date averages for lithium carbonate and lithium hydroxide for this 12 months stand at $21 892/t and $21 736/t, respectively, as of April 20, with costs rebounding strongly this 12 months as Zimbabwe’s export restrictions in late February added to restricted visibility over Chinese language undertaking restarts, reinforcing structural market tightness and bringing upside dangers into sharper focus.
The report explains that January noticed lithium carbonate break above $24 000/t and lithium hydroxide above $23 000/t, ranges not seen since 2023, supported by sturdy EV and vitality storage demand alongside the continued suspension of Up to date Amperex Expertise’s (CATL)’s Jianxiawo mine, in China.
Whereas a broader market correction all through February punctured the early-year rally, renewed provide considerations following Zimbabwe’s export curbs and post-Chinese language New Yr restocking helped pare earlier losses.
That stated, the market turned extra cautious in March as weaker EV demand alerts
in China weighed on sentiment, although remained comparatively resilient, leaving lithium costs sharply increased by the top of the primary quarter, says BMI.
Moreover, the report notes that the US-Iran battle that erupted in late February bolstered broader demand expectations for low-carbon industries, notably by
probably offering a stronger EV demand impulse given elevated vitality costs, but in addition revived a extra cautious outlook for vitality storage system (ESS) tasks within the Center East.
On the similar time, the battle is elevating considerations over squeezed margins for lithium producers amid increased vitality prices and doable sulphur shortages attributable to a tightening chokehold on shipments flowing by means of the Strait of Hormuz.
“We be aware that costs stay elevated into April 2026, hovering round year-to-date highs at $25 156/t for lithium carbonate and $24 569/t for lithium hydroxide, as of April 20.”
BMI says costs are prone to keep range-bound within the close to time period and extremely delicate to geopolitical developments within the Center East, whereas the restart of Chinese language provide amid sturdy demand expectations stays the pivotal catalyst for a value retreat, which now seems poised to materialise later than beforehand anticipated.
On the availability aspect, market focus may also be centred on regulatory developments in Zimbabwe, the place latest experiences in early April pointed to a possible thaw within the export suspensions launched in February.
DEMAND
BMI says still-elevated demand for lithium chemical compounds to be used in EV batteries and ESS is predicted to assist lithium costs, though the general outlook for this 12 months stays combined.
Lithium is poised to be a number one beneficiary of the accelerating adoption of EVs over our forecast interval, owing to its essential position in battery chemistry.
“Our lithium demand expectations are based mostly on our Autos group’s EV gross sales forecasts, and we anticipate world lithium demand to extend by about 4.8% year-on-year in 2026, a notable slowdown from 18.5% year-on-year in 2025”.
BMI says its Autos group forecasts that world passenger EV gross sales, together with battery electrical automobile (BEV) and plug-in hybrid electrical automobile (PHEV) gross sales, will rise by 6.4% year-on-year this 12 months, following sturdy development of 20.0% year-on-year in 2025 and 23.9% year-on-year in 2024, which is prone to place a flooring below lithium costs going ahead.
Moreover, the report signifies that China will proceed to dominate the market, though the nation’s automobile gross sales development is prone to gradual this 12 months because the anti-involution marketing campaign accelerates a shift from volume-led competitors in direction of worth and profitability.
BMI explains that policymakers are tightening the framework for competitors by means of amendments to the nationwide Pricing Legislation to curb below-cost promoting, enforced capability discount to deal with extra provide and ethical suasion geared toward limiting EV value wars.
Based on the China Passenger Automotive Affiliation (CPCA), China’s retail gross sales of passenger new-energy autos (NEVs) edged down by 14.4% year-on-year in March, marking a 3rd consecutive month of year-on-year decline.
Whereas subdued EV gross sales early this 12 months and geopolitical uncertainty are contributing to the cautious sentiment, BMI says elevated gasoline costs, given the continuing battle within the Center East, are prone to improve curiosity in additional fuel-efficient powertrains, supporting demand for EVs and PHEVs, even in markets the place electrification stays at an early stage.
“Notably, our Autos group expects {that a} sustained interval of upper oil costs would enhance the running-cost case for EVs throughout Asia, supporting stronger shopper curiosity and inspiring governments to speed up electrification as a long-term resolution to imported gasoline dependence.
“This is able to be most supportive for Chinese language EV makers, that are aggressively looking for development in export markets and may compete on value and mannequin breadth, notably in markets the place affordability is a key constraint”.
Other than the expansion within the EV gross sales phase, the report notes that different developments such because the very seemingly sturdy reputation of battery swap stations imply that the precise variety of EV batteries manufactured is prone to exceed the variety of EVs offered.
Outdoors of the autos sector, the report says utility-scale batteries, moveable electronics and e-mobility gadgets (e-bikes) may also contribute to lithium demand.
Notably, rising ESS deployment is predicted to gasoline assist to lithium consumption and is poised to turn out to be the most important development driver for lithium demand within the coming years.
“Our Energy & Renewables group anticipates that the present vitality disaster will unlock quicker allowing for renewable tasks and accelerated deployment of vitality storage
Infrastructure,” says BMI.
That stated, it notes that the sharp rise in battery steel costs, notably lithium, seen in early 2026 is prone to improve value pressures for BESS producers.
“General, our Energy & Renewables group forecasts world BESS capability to develop from roughly 325 GW this 12 months to round 1 270 GW by 2035, representing a close to fourfold improve over the interval”.
The report says Mainland China and the US will stay the dominant markets, collectively accounting for an estimated 78% of world put in capability this 12 months and about 69% by 2035, as deployment broadens to different areas.
In Mainland China, BESS capability is forecast to rise from 193.5 GW this 12 months to about 609 GW by 2035, rising at a mean annual price of 13.6%, supported by the introduction of capability funds for standalone storage in January and a structural shift from mandate-driven deployment in direction of market- and reliability-driven funding.
Within the US, BMI provides that battery storage capability is forecast to rise from about 61 GW this 12 months to 271 GW by 2035, pushed by grid reliability wants, surging demand from AI knowledge centres and inhabitants development, with the extension of funding tax credit for BESS by means of to 2032 below the One Large Lovely Invoice Act offering near-term coverage visibility.
CLEAN ENERGY
On the availability aspect, BMI forecasts the lithium market to stay in surplus this 12 months, owing to slower demand development as EV gross sales lose momentum and to a still-robust world undertaking pipeline.
“That stated, we don’t rule out the potential of the excess narrowing sharply this 12 months and the market transferring into deficit, given lagging provide restarts and that the present vitality shock may present a stronger EV demand impulse than we at present anticipate”.
BMI says it expects world lithium manufacturing to develop by 13.2% year-on-year this 12 months, pushed principally by Australia and Mainland China.
“We be aware that, whereas increased vitality prices and a doable sulphur scarcity may
strain miners’ margins, the latest restoration in lithium costs ought to nonetheless assist output development, together with a possible restart of beforehand mothballed higher-cost operations, notably in Australia.”
Within the world race to provide and purchase essential uncooked supplies, BMI says Asia will preserve its main position within the absolute manufacturing of lithium concentrates by means of Australia, which is predicted to stay the world’s high producer, bolstered by its sturdy tasks pipeline.
Moreover, Mainland China will proceed to import lithium concentrates for its battery business whereas investing to develop its home manufacturing capability and securing the lithium provides by creating tasks abroad.
Chile can be set to stay an vital world producer of lithium given its substantial lithium reserves, however we anticipate its share of manufacturing to say no by 2035, as its price of growth falls behind different markets.
General, BMI says the share of the highest three lithium producers, Australia, China and Chile, is forecast to say no over 2026 to 2035, given the ramp-up in output from comparatively new market gamers, together with Argentina and Zimbabwe.
In Argentina, the report says anticipated development within the lithium sector seems promising as a number of pivotal tasks start operations, whereas Zimbabwe will pave the best way for lithium mine development in Africa within the coming years.
“General, the present undertaking pipeline means that world lithium mine manufacturing is
anticipated to double from 2026 to 2035.”
As for the lithium refining market, the Asia-Pacific and Latin America areas are anticipated to dominate the availability of lithium chemical compounds.
Lithium extracted from hard-rock mines is transformed into lithium focus, which is additional processed into lithium hydroxide or lithium carbonate.
Conversely, lithium from brine deposits is often processed straight into lithium chemical compounds, predominantly within the type of lithium carbonate, which may subsequently be transformed into lithium hydroxide.
BMI notes that, based on the Worldwide Vitality Company (IEA), conversion of lithium carbonate to hydroxide represents about 20% of the present hydroxide provide and is led by China.
Notably, BMI says China dominates each lithium carbonate and lithium hydroxide manufacturing, with Argentina and Chile additionally among the many high lithium chemical compounds producers, principally extracting lithium from brine.
As Western markets search to scale back key-man danger in China’s refined lithium provide, BMI says Australia stands to profit by introducing home refineries and processing crops near its lithium mines.
The report factors out that the Australian Workplace of the Chief Economist estimates that Australia may maintain 9% of world lithium hydroxide manufacturing by 2027.
“That stated, Albemarle’s determination to idle the remaining working Prepare 1 at its Kemerton lithium hydroxide processing plant in Western Australia in February 2026 reinforces, but once more, the challenges confronted by ex-China hard-rock lithium conversion gamers, presenting draw back dangers to the outlook”.
LONG-TERM OUTLOOK
Wanting past this 12 months, BMI says it expects the lithium market to stay in surplus by means of to 2029, earlier than tipping into deficit over 2030 to 2035.
BMI says it anticipates longer-term lithium provide development to gradual, largely owing to underinvestment and undertaking delays all through the extended interval of oversupply and depressed costs over 2024 to 2025.
“We additionally be aware that as developments in battery applied sciences progress and choose varieties acquire priority in utilization, this precipitates corresponding fluctuations within the demand for lithium chemical compounds, notably lithium carbonate and lithium hydroxide.”
Lithium hydroxide is especially required for high-nickel cathodes utilized in nickel manganese cobalt (NMC) batteries, whereas lithium carbonate is extensively utilized in lithium iron phosphate (LFP) batteries, that are gaining reputation owing to their security and longevity.
BMI notes that rising adoption of the LFP batteries on the expense of NMC batteries is prone to exert downward strain on lithium hydroxide costs within the mid to long-term.
Based on the IEA, in 2024, LFP batteries accounted for 50% of EV gross sales in comparison with 41% in 2023 and 38% in 2022, primarily pushed by adoption in Mainland China.
“Past lithium-ion chemistries, the adoption of sodium-ion batteries, which don’t comprise lithium, might pose dangers to long-term lithium demand, ought to their growth and potential adoption progress additional,” says BMI.
