Lithium prices in 2026 traced a textbook curve featuring a sharp peak followed by a long tail.
In mid-May, the average spot price of lithium carbonate hit a near-two-year high, with futures briefly touching a stage peak of Yuan 209,800/tonne. Prices then trended persistently downward, breaking lower, falling from Yuan 210,000/tonne to Yuan 90,000/tonne during the year, a decline of over 55%.
On October 22, the most-traded GFEX lithium carbonate contract broke below the Yuan 95,000/tonne mark. That evening, the Guangzhou Futures Exchange issued a risk warning letter, noting elevated price volatility in lithium carbonate and urging member units to strengthen investor education and risk prevention, reminding investors to participate rationally and trade compliantly to jointly maintain orderly market operation.
On October 23, the pre-approval public notice for the environmental impact assessment of the Jianxiawo lithium mine project was released, and futures formed a deep V: the morning session probed a new yearly low before a strong rally to close higher, with intraday amplitude approaching 7%. On October 27, the main contract rose more than 5% intraday, with Mysteel's battery-grade lithium carbonate price rising in tandem.
Viewed over a longer horizon, this cycle bears striking similarities to the previous one yet differs at every turn. What is similar is sentiment, where supply disruptions amplified without limit, capital rushing in, prices peaking in a frenzy and then falling as expectations reverse. What differs is structure, that is, the previous story was resource scarcity; this one is supply reconstruction. Lithium has never truly been scarce; what is scarce is "compliant, stable, deliverable" supply.
A Deep Divergence Between Strong Reality and Weak Expectations
The core contradiction in today's lithium market is not whether prices will rise or fall, but that the market simultaneously believes two opposing things.
On the supply side, expectations of future supply growth are being continuously reinforced. The restart pace at Jianxiawo is the most sensitive variable. The mine, which once accounted for 8%–10% of national lithium carbonate output, was suspended after its mining license expired in August 2025 and entered pre-approval public notice for its EIA on October 22, 2026.
The market broadly expects a restart around late November to December 2026. It must be recognized, however, that a pre-approval public notice does not equal formal restart permission, and any major objection could disrupt the timeline. And the supply-loosening logic chain is complete and internally consistent combined with Chile's plan to launch five new lithium mine tenders after the current five projects are approved, continued port inventory accumulation, and weakening MoM downstream production schedules.
On the demand side, support is equally real. Inventories have drawn down for several consecutive months, the trading segment's buffer function has weakened markedly, and warrants have continued to fall below 20,000 lots. Lithium carbonate demand from LFP cathode has remained strong, accounting for over 80% of total demand. This means that if supply release pacing falls short of expectations, price elasticity under low-inventory conditions will be amplified exponentially.
This is the essence of "strong reality, weak expectations". The market is not trading current supply and demand, but consensus about the future. And when consensus becomes too uniform, the turning point is often just around the corner.
Resource Countries No Longer Just Raw Material Warehouses
On February 25, 2026, Zimbabwe's Ministry of Mines announced the suspension of all raw ore and lithium concentrate exports, with only enterprises holding valid mining rights and approved concentrators eligible to export. The next day, the main lithium carbonate futures contract opened up 11.83%.
This was not a new policy, but an inevitable escalation of the global wave of local value-added upgrading among resource countries. Indonesia's nickel resource controls and South American lithium policies resonate with Zimbabwe. The focus of competition in the lithium industry is shifting from "who can secure the mine" to "who can operate compliantly and process locally".
The deeper logic deserves closer examination. For over two decades, resource-rich countries held a passive position in global value chains, which export raw minerals, import high-value materials, and let profits accrue to upstream processing. Now they are using policy tools to contest control of the industrial chain. This is not merely a trade barrier but a renegotiation of how profits are distributed.
For Chinese enterprises, this is both a challenge and a differentiator. Enterprises with local lithium salt or lithium sulfate capacity in Zimbabwe can still apply for concentrate export licenses, while those lacking deep-processing layouts are being forced to accelerate local plant construction. Supply-side uncertainty has escalated from "is there enough volume" to "can it be obtained compliantly and shipped back reliably".
Energy Storage Takes Over, Sodium-ion Batteries Reach Their First Year
In 2026, energy storage formally replaced EVs as the core incremental engine of lithium demand. This is not merely a growth-rate switch, but a deep restructuring of demand.
Large-capacity cells are entering rapidly. Cells above 500Ah have been explicitly included in state-owned enterprises' procurement, and CATL's 587Ah large storage cells have achieved scaled delivery, with cumulative shipments exceeding 5GWh. Energy storage demand is characterized by project-based, centralized, and highly predictable procurement, in sharp contrast to the dispersed demand of power batteries.
The industrialization inflection point for sodium-ion batteries has arrived in tandem. CATL's three-year 60GWh sodium-ion battery cooperation with HyperStrong is the largest sodium battery collaboration globally to date. The station-level sodium-ion battery storage system launched in June began first deliveries in the Chinese market in September. On the materials side, composite sodium iron phosphate cycle life has exceeded 15,000 cycles, and processing costs for polyanionic sodium battery materials have fallen substantially.
The significance of sodium-ion batteries goes far beyond an additional technology route. It means lithium demand has, for the first time, a genuine strategic substitute. Although sodium-ion batteries remain uncompetitive with lithium-ion batteries on energy density in the near term, their cost-effectiveness advantage will gradually emerge in energy storage, a scenario extremely sensitive to cost. This sets an implicit ceiling for lithium prices. When lithium prices rise to a certain level, sodium-ion batteries' economics activate automatically.
Meanwhile, the EU Battery Regulation is moving from institutional framework to actual enforcement. Carbon footprint performance grades range from A to E, with labels required to be durable, clear, and identifiable. According to a warning from the Shandong Provincial Department of Commerce, as of August 21, 2026, the relevant delegated act had not been formally adopted and labeling obligations had not yet been triggered. This means enterprises need to build full-chain carbon emission data collection systems and complete third-party verification scheduling. Going overseas now means facing not just tariffs, but comprehensive competition in certification systems, supply chain security, and data disclosure capabilities.
At the Crossroads of the Cycle, a Deep Dialogue Is Needed
Returning to the most fundamental question: where is lithium's next turning point?
Historically, lithium price turning points have never had a single driver. In 2022, it was supply release meeting the end of subsidy-driven restocking; in 2025, low prices forced high-cost capacity offline just as demand recovered. The triggers differed, but the logic stayed the same: once the supply-demand mismatch hits a critical threshold, prices rebalance violently.
In 2026, lithium prices have trended persistently downward since peaking in May, breaking lower, with the cost center shifting down and spot prices falling below some high-cost lines, making profit squeeze once again a core operating variable across the industrial chain. Whether enterprises can accurately assess price turning points and flexibly schedule inventory and procurement pacing has become key to seizing the initiative in profit distribution.
Join Us to Explore Lithium's Next Turning Point
The questions raised here, when supply will ramp up, whether demand can hold, and where prices go next, will be the focus of our upcoming events.
Webinar: China's Lithium Market Q3 Review & Q4 Outlook: When Expectations Outperform Fundamentals
A focused discussion on Q3 price action, the supply-demand tug-of-war, and the variables shaping Q4 and 2027.
Conference: The 6th New Energy Industry Annual Conference & Lithium Battery Industry Conference
November 23–25, 2026 | Shenzhen
Industry experts, upstream and downstream enterprises, and financial institutions will gather to discuss cost control, demand shifts, sodium-ion commercialization, and the EU Battery Regulation.
We look forward to your participation!
