Goldman Sachs released a research report stating that the lithium market fundamentals have improved significantly in recent months, with supply-demand conditions expected to tighten from the second half of 2025 to the first half of 2026. This is primarily driven by strong domestic demand and exports, with energy storage systems being the most significant factor in the revised outlook, while supply-side responses remain sluggish. The bank downgraded Ganfeng Lithium (01772) from "Neutral" to "Sell," raising its H-share target price from HK$28 to HK$32. It maintained "Sell" ratings for Ganfeng Lithium's A-shares (002460.SZ) and Tianqi Lithium (09696, 002466.SZ), while increasing Tianqi Lithium's H-share target price from HK$21.5 to HK$24.5. However, Goldman Sachs warned of downside risks to current spot prices due to short-term negative feedback from downstream markets, slower growth in energy storage system installations, and inventory replenishment delays, alongside sluggish supply-side adjustments. The bank updated its lithium price forecasts, projecting an average lithium carbonate price of $11,000 per ton in H1 2026 (unchanged from previous estimates), $9,500 per ton in H2 2026 (a 14% cut), and $9,300 per ton in 2027 (a 15% reduction). Consequently, Goldman Sachs lowered its 2026-2027 earnings forecasts for covered lithium stocks by 5%-42%. However, due to rolling valuation to 2026 and assuming higher trough-cycle valuations, target prices were raised by 9%-15%. The bank estimates that current Chinese lithium stock prices already reflect lithium carbonate prices between $16,200 and $24,500 per ton for 2026-2027.
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