Prices of lithium, a key raw material used in electric vehicle (EV) batteries, are expected to decline in the current half of the year due to resurgencies in global supplies. Despite the downward pressure, steady demand from the energy storage sector is anticipated to prevent a sharp fall in prices, according to industry analysts.
Lithium carbonate prices recently dropped to a six-month low of 140,000 Chinese yuan ($20,770) a tonne, driven by a combination of consumption drop risks and higher global supply. Prices have since recovered by $1,000 over the past week. On Tuesday, the lithium carbonate spot price stood at 155,400 yuan ($23,054), while benchmark futures traded at 152,000 yuan ($22,550). Additional pressure has come from China's announcement that it will end tax exemptions for lithium-ion batteries to curb manufacturers from cutting prices purely for market share.
Research agency BMI, a unit of Fitch Solutions, has revised its 2026 average annual lithium price forecasts upward to $20,100 per tonne for Chinese lithium carbonate (99.5%) and $19,600 per tonne for Chinese lithium hydroxide monohydrate (56.5%), following solid upward momentum through the second quarter. Nevertheless, BMI expects prices to drift lower in the second half of the year due to imminent Chinese supply resurgences and project restarts in Australia.
Australia’s Office of the Chief Economist (AOCE) noted that prices for spodumene concentrate are forecast to stay elevated in 2026 at around $2,240 a tonne to meet solid downstream demand. Spodumene concentrate and lithium hydroxide have both experienced significant increases over the past 12 months, driven by supply shocks such as the lapsing of permits at China's Jianxiawo mine in mid-2025, the revocation of lepidolite mine permits in Jiangxi province, and Zimbabwe's export bans on raw minerals declared in May 2026.
Despite looming oversupply concerns, BMI highlights that robust demand from the energy storage sector will continue to place a floor under lithium prices. Meanwhile, AOCE reported that elevated global fuel costs linked to the West Asian conflict have driven faster EV uptake through the June quarter, presenting a key upside risk to ongoing lithium demand.
"The stabilization of lithium prices and upcoming supply resurgences mark a critical phase for the broader electric vehicle and clean energy sectors. While short-term supply adjustments may ease manufacturing cost pressures, long-term industry participants must remain watchful of regulatory changes and shifting export policies in key mineral-producing nations. Startups and enterprises operating within the EV and energy storage supply chain need to factor these raw material fluctuations into their strategic planning and operational forecasting." — Dr. Shishir Gupta, Founder & CEO, StartupLanes
