The supply shortage in the lithium market may be more severe than previously anticipated due to surging demand.
According to reports, JPMorgan analysts, including Lyndon Fagan, significantly raised their lithium carbonate price target for Q4 2026 to $18,000 per ton in a December 17 research note—far above the current spot price of around $13,500 per ton. Similarly, the target price for spodumene, a key lithium raw material, was doubled to $2,000 per ton from the current $1,100 per ton.
This dramatic shift has directly impacted capital markets. JPMorgan upgraded all pure lithium mining stocks under its coverage to "Overweight" and substantially increased their price targets, citing significant upside potential amid strong commodity prices.
The report’s core argument is that while global lithium supply is growing, it cannot keep pace with explosive demand expansion. Analysts highlighted "major demand revisions" from energy storage systems (ESS) and Chinese commercial vehicles, leading to a widening supply-demand gap in the medium term and a "prolonged incentive pricing environment."
**Demand Surge: ESS and Commercial Vehicles as Dual Drivers** Lithium demand growth is primarily driven by ESS and electric commercial vehicles (CV), exceeding market expectations.
First, ESS demand continues to soar. Bolstered by Chinese policy support, strong European order momentum, and emerging applications like AI data centers, JPMorgan raised its 2026 global ESS production forecast by 17% to 900GWh (from 770GWh), with a further 30% increase projected post-2026. By 2026, ESS is expected to account for 32% of global lithium carbonate equivalent (LCE) demand, rising to 38% by 2030.
Second, EV battery demand—especially for commercial vehicles—was revised upward. JPMorgan increased its 2026–2030 global battery-electric vehicle (BEV) battery demand forecast by 4%–22%, driven by larger battery sizes in Chinese commercial vehicles. Heavy-duty trucks (HDTs) with batteries exceeding 200KWh now have a 28% penetration rate in China, a four-year high. Consequently, commercial vehicles are projected to make up 18% of EV-related LCE demand by 2026 (up from 13%), reaching 25% by 2030 (previously 15%).
Combining these factors, JPMorgan now forecasts global lithium demand to hit 3.5 million tons LCE by 2030—the upper end of market expectations.
**Supply Growth Lags: Short-Term Gap Remains** Despite accounting for supply increases from China, Africa, and Australia—including mine restarts like Bald Hill and Ngungaju—the report stresses that reactivation and capacity expansion take time.
Data shows supply growth is trailing far behind demand. JPMorgan predicts a modest 7% supply increase in 2026, with 14%–18% growth in 2027–2030. This lag makes it difficult to bridge the widening gap in the near term.
**Widening Deficit Drives Price Revisions** Under the updated model, lithium markets face a more severe mid-term deficit, equivalent to 4%–7% of total demand. This sustained shortfall creates a "prolonged incentive pricing environment," requiring higher prices to stimulate new supply.
Accordingly, JPMorgan sharply raised its price targets: - **Spodumene**: $2,000 per ton by Q4 2026 (current spot: ~$1,100). - **Lithium Carbonate**: $18,000 per ton (current spot: ~$13,500).
The report also noted that China’s lithium chemical market has been in deficit for three consecutive months, per SMM data, further confirming tight conditions.
**Stock Upgrades Reflect Optimism** JPMorgan’s bullish commodity outlook translates to upgraded equity ratings. Since October, pure lithium miners’ shares have risen over 25%, with further upside expected under the new price forecasts.
The bank adopted a blanket "Overweight" stance on all pure lithium miners, accompanied by multiple target price hikes.
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