Lithium prices have experienced a sudden reversal. After breaking through the 200,000 yuan per tonne mark—a key annual high—the price of battery-grade lithium carbonate fell for two consecutive days. By May 15th, the spot price on the Shanghai Steel Union platform had dropped to 192,100 yuan per tonne. In the secondary market, lithium carbonate futures and lithium mining stocks also declined. The main futures contract, 2609, fell to 188,800 yuan per tonne. The Wind Lithium Mining Index (884785.WI) has declined for seven consecutive trading sessions, forming a significant technical correction on the charts.
Lithium prices had shown strong momentum in 2026, rising by 84,100 yuan per tonne, or approximately 72%, by May 15th. This rally attracted significant investor interest in lithium-related assets. The recent price reversal has dampened market sentiment, with many investors questioning the sector's outlook. On May 15th, Yahua Group (002497.SZ) stated that while it cannot provide real-time production updates, operational demand remains stable without extreme volatility.
The market has seen a swift turnaround. Prices started the year at a relatively low level, with battery-grade lithium carbonate at 117,300 yuan per tonne in early January. A gradual recovery began around the Chinese New Year, pushing the price to 153,100 yuan per tonne by the holiday's end. Despite periodic dips to around 150,000 yuan per tonne, the overall upward trend persisted.
A key turning point arrived on May 13th when the price finally reached 201,400 yuan per tonne, surpassing the long-anticipated 200,000 yuan threshold. This represented a gain of over 70% from the year's low. However, the peak was short-lived. The price began to retreat the very next day. By May 15th, it had fallen back to 192,100 yuan per tonne, a retreat of nearly 10,000 yuan.
The lithium carbonate futures contract 2609 mirrored this volatile pattern. It had closed above 200,000 yuan per tonne for three consecutive days, fueling bullish sentiment before reversing course with three straight days of losses. On May 15th, it closed at 188,800 yuan per tonne, down 3.55% for the day. Concurrently, the Wind Lithium Mining Index showed greater weakness, falling for seven straight sessions from May 7th to 15th, with a cumulative drop of about 16%, indicating notable adjustment pressure.
The 200,000 yuan price level drew intense market scrutiny, revealing significant divergence on the future direction of lithium carbonate. International investment banks hold contrasting views, creating a clear bull-bear divide.
Morgan Stanley represents the bullish camp, citing supply constraints and resilient demand. The firm believes a supply deficit for lithium carbonate will emerge in 2026, driven by explosive growth in energy storage demand and increasing electric vehicle penetration, predicting prices could rise to 250,000 yuan per tonne by year-end. Conversely, Goldman Sachs holds a bearish view, forecasting a significant global lithium oversupply in the second half of 2026, potentially reaching 20-22% of global demand. Goldman expects prices to gravitate toward marginal production costs, projecting a year-end price of 65,000 yuan per tonne.
Domestic institutions offer more cautious perspectives. CITIC Securities Futures suggests that expectations of a temporary supply-demand tightening could support higher prices, but whether previous highs can be breached remains uncertain. An analyst from Shanghai Steel Union noted that the overall price increase in 2026 has been primarily driven by strong downstream production orders. In their view, the 190,000-200,000 yuan range represents a moderate price level.
Is the Correction Limited?
Spot and capital markets reflect rapidly shifting expectations. On May 7th, lithium carbonate futures first breached 200,000 yuan intraday, with the market attributing the rally to solid industry fundamentals. Unlike the January price surge to 180,000-190,000 yuan, driven more by expectations, the recent rise was seen as stemming from actual tightening fundamentals. However, the subsequent price drop has prompted a market reassessment of the supply-demand balance.
In recent years, energy storage demand growth and supply-side tightening have been key lithium price drivers. Industry analysis suggests the current correction may be limited. Following a sustained price increase, a short-term pullback is seen as normal. Given currently high lithium mining costs, any decline is expected to be relatively contained. Multiple institutions point out that the supply-demand situation remains tight, which should provide underlying price support.
The short-term price movement is primarily influenced by supply disruptions. As operational issues in major mining areas like China's Jiangxi province and Zimbabwe dissipate and overseas supply normalizes, a short-term price dip is anticipated. However, long-term pricing will be driven by demand. Against the backdrop of a global energy transition, the importance of new energy alternatives is growing, solidifying long-term demand prospects and supporting a relatively optimistic long-term view on lithium prices.
Yahua Group confirmed that production-side demand has remained largely stable and that the impact of Zimbabwe's export ban is becoming clearer. On May 13th, the company announced it had completed export procedures for Zimbabwean lithium concentrate and initiated shipments.
Typically, shipping lithium ore from Zimbabwe to China takes 2-3 months, with current shipments expected to arrive between July and August. The company clarified that while the ban, effective from late February, affected transportation for about five months, pre-existing inventory and shipments completed before the ban have prevented any impact on current production. Mining operations in Zimbabwe continued uninterrupted during the ban period. Unsent ore will be shipped in batches later, ensuring full-year self-supply of ore remains unaffected.
Additionally, four mines in Jiangxi province have begun phased shutdowns. Industry analysis estimates that existing lithium ore inventories will be depleted by around the end of the third quarter, suggesting a potential supply gap will persist.
Synthesizing various institutional views, the tight supply of spot lithium ore is unlikely to ease in May and June. Analysis indicates that recent demand growth has outpaced monthly supply increases. The supply-demand balance is expected to remain in a destocking phase for the next two months, with monthly average lithium carbonate prices likely to gradually rise until downstream demand shows negative feedback. From a medium-term perspective, considering ongoing supply disruptions at domestic and international mines and the planned commissioning of new LFP and battery cell capacity in the second half of the year, the outlook for strong prices this year is maintained.
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