Based on Mysteel's latest balance sheet (updated March 20, 2026), the Chinese lithium carbonate market is poised for a significant shift in the second quarter of 2026. After hovering high through Q1, the market is expected to kick off a phase of further price recovery, driven by a combination of supply-side constraints and robust downstream demand, barring impacts from macro front.
Looking back on the first quarter of 2026, the lithium carbonate prices hovered in a wide range after a sustained rally since the second half of 2025, and this was largely due to seasonal factors and a cautious market sentiment.
Nevertheless, Mysteel's data suggests that April will be a pivotal month, marking the beginning of a price rally in the traditional seasonal high.
The primary catalyst for the Q2 price increase is a tightening of supply, a direct consequence of the assumptions including Zimbabwe's export ban as well as delayed mine restarts.
With the ban still in place after taking effect on February 25, the impact of Zimbabwe's export ban is expected to fully materialize in Q2, creating a raw material feedstock shortage for Chinese converters.
In addition, the assumption that the key Jianxiawo mine will delay its restart until the middle of the year means that domestic lepidolite supply will remain constrained throughout April and May. This will keep the overall domestic production below its potential.
Source: Mysteel
As a result, total supply is forecast to be seasonally constrained, preventing a build-up of inventory, before ramping up later in the year.
Concurrently, demand is set to accelerate sharply. The balance sheet cites a critical assumption of continuous commissioning of cell and LFP capacity in Q2, which is reflected in the demand forecast.
Overall, the production of lithium iron phosphate (LFP) cathode material is projected to jump further in April from the March level and continue climbing by June. LFP remains the largest consumer of lithium carbonate.
While 8-series NCM cathode consumes lithium hydroxide, the production of 6-series NCM, which has a 50% lithium carbonate consumption rate, is expected to remain strong, supporting overall carbonate usage.
Taken together, the convergence of tight supply and rising demand will create a supply deficit in Q2. The model shows a negative supply-demand gap in the coming months, which will draw down existing inventory levels.
The domestic lithium carbonate prices are expected to break out of their Q1 range in April 2026, followed by further increase in May before moderating in June.
While the Q2 outlook is bullish, several factors warrant close observation.
First of all, any delay to the Jianxiawo mine restart beyond expectations could extend the supply shortage and push prices higher for longer.
Mysteel's current model assumes a significant influx of lithium ore from Zimbabwe, which will likely boost production starting in August. The actual quantity and speed of these arrivals in the lead-up to Q3 will be crucial.
In addition, the forecast relies on a managed drawdown of converters' inventories. If downstream demand surprises to the upside, inventory levels could fall more rapidly, adding further upward pressure on spot prices.
In conclusion, the second quarter of 2026 is shaping up to be a strong period for lithium carbonate prices, driven by a classic supply-demand mismatch. The market is expected to transition from a surplus scenario in early 2026 to a deficit, with prices projected to appreciate by roughly 20% from March lows to the May peak.
Still, persistent geopolitical instability means any macro shift could upend current assumptions.
Source: Mysteel
Written by Aggie Hu, huchenying@mysteel.com
