Lithium prices are set to drift lower in the current half of this year as Chinese supply resurges and Australian mines restart, but analysts say strong energy storage demand will likely prevent a sharp collapse. According to The Hindu BusinessLine, lithium carbonate — a vital chemical compound used in EV batteries — dropped to a six-month low of 140,000 Chinese yuan ($20,770) a tonne as demand risks combined with higher global supply, before recovering by $1,000 over the past week.
Prices and Forecasts
On Tuesday, lithium carbonate spot price ruled at 155,400 yuan ($23,054) a tonne, while benchmark futures ruled at 152,000 yuan ($22,550), The Hindu BusinessLine reported. Research agency BMI, a unit of Fitch Solutions, said it is revising up its 2026 average annual lithium price forecasts to $20,100/tonne for Chinese lithium carbonate 99.5 per cent and $19,600/tonne for Chinese lithium hydroxide monohydrate 56.5 per cent, citing solid upward momentum throughout Q2 2026.
Australia's Office of the Chief Economist (AOCE) said spodumene concentrate prices are forecast to stay elevated in 2026 at around $2,240 a tonne, as refiners and cathode manufacturers respond to solid demand from downstream industries. Spodumene concentrate average price to late May in the June 2026 quarter was around $2,430 a tonne CIF China, while lithium hydroxide prices averaged $20,770 a tonne free-on-board China for the same period. AOCE added that lithium hydroxide prices are expected to moderate from a 2026 high of about $19,230 a tonne in the next few years.
| Metric | Price / Forecast | Basis |
|---|---|---|
| Lithium carbonate spot (Tuesday) | 155,400 yuan ($23,054)/tonne | — |
| Benchmark lithium carbonate futures | 152,000 yuan ($22,550)/tonne | — |
| Lithium carbonate six-month low | 140,000 yuan ($20,770)/tonne | — |
| BMI 2026 average forecast, carbonate 99.5% | $20,100/tonne | Chinese |
| BMI 2026 average forecast, hydroxide monohydrate 56.5% | $19,600/tonne | Chinese |
| AOCE 2026 spodumene concentrate forecast | around $2,240/tonne | — |
| Spodumene concentrate average to late May | around $2,430/tonne | CIF China |
| Lithium hydroxide average to late May | $20,770/tonne | FOB China |
| AOCE 2026 lithium hydroxide high | about $19,230/tonne | — |
Supply-Side Drivers: Permits, Bans and Restarts
According to AOCE, two supply shocks supported the price rally over the past year. China's Jianxiawo mine saw its permit lapse in mid-2025, curbing China's battery mineral supply chains, and Jiangxi province revoked expired mining permits of the lepidolite mines in December 2025. The permit revocation sparked price jumps after a long period of weakness, The Hindu BusinessLine reported.
On the policy front, the Zimbabwean government introduced an indefinite ban on exports of all raw materials in late February 2026, including spodumene concentrate, following the mid-2025 announcement of a permanent ban on spodumene exports from 1 January 2027. On 22 May 2026, lithium was declared one of 14 critical minerals in Zimbabwe, with raw-form exports banned.
However, BMI expects lithium to drift lower this half on "imminent Chinese supply resurgence, alongside project restarts in Australia," which it said look to curtail the rally and serve as the primary bearish catalyst for the remainder of the year.
Demand and Policy Signals
The Trading Economics website said prices have also come under pressure because China said it will end tax exemption for lithium-ion batteries, a move to stop manufacturers from cutting prices to gain market share. Chinese commodity data group Sunsirs said the current lithium carbonate futures market is "caught in a game between strong fundamentals and weak expectations," adding that "the overall supply-demand pattern of domestic lithium carbonate still remains tight at present."
BMI said robust energy storage sector demand will continue to place a floor under lithium prices and may yet be sufficient to insulate the market from a more pronounced correction, shrugging off looming oversupply jitters.
Outlook Skewed to the Downside
In a note, BMI said:
Lingering uncertainty over the pace of Jianxiawo mine restart may yet temper bearish sentiment. That said, the balance of risks remains skewed to the downside
AOCE noted that lithium prices have increased dramatically over the past 12 months, with spodumene concentrate increasing almost four-fold and lithium hydroxide almost tripling from mid-2025 lows. With Chinese supply resurging and Australian restarts on the horizon, the second-half outlook is tilted toward lower prices, while energy storage demand and restart uncertainty leave a floor under the market.
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