Goldman Sachs has released a research report indicating that the lack of greenfield investment projects in the short term suggests limited long-term supply elasticity for lithium. As a result, the direction of future lithium cycles will primarily depend on demand intensity. For the lithium market to sustain an upward cycle from 2026 to 2027, both energy storage systems (ESS) and electric vehicles will need to achieve significant growth. The target price for Ganfeng Lithium Group Co., Ltd. (01772) has been raised from HK$35 to HK$60, with a "Sell" rating maintained. Similarly, the target price for Tianqi Lithium Corporation (09696) has been increased from HK$26 to HK$48, also with a "Sell" rating. Under the bank's baseline scenario, benchmark lithium carbonate prices are expected to peak in the first half of this year, reaching RMB 164,000 per ton (approximately US$21,000), before declining to between US$10,100 and US$16,000 per ton of lithium carbonate equivalent from the second half of this year through 2028. On the demand side, data from the bank shows that the global lithium market will remain tight in the first half of this year but is projected to experience a supply surplus of 20% to 22% in the second half of 2024 and 2027. Based on monthly electric vehicle sales and energy storage system battery delivery data, global lithium demand is estimated to have increased by 25% year-on-year in the first three months of this year. On the supply side, the industry is expected to add an additional 1 million tons of lithium carbonate equivalent in new supply between 2026 and 2027, equivalent to nearly 50% of demand. Most of these projects are being developed by Chinese producers, with over 60% scheduled to commence production in the second half of this year. Potential disruptions to supply from Zimbabwe could reduce 2027 supply by 5%.
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