Has the supply and demand structure of lithium carbonate changed?

Ask AI · How did the supply and demand reverse behind the 70% rebound in lithium carbonate prices?

Written by Tai Luo

On March 24, lithium mining concept stocks rose collectively, with Salt Lake Industry, Rongjie Co., Tibet Urban Investment, Dazhong Mining, Keda Manufacturing, Guocheng Mining, and Zangge Mining all breaking upwards.

In fact, lithium prices have rebounded significantly. Since November 2025, as of March 23, 2026, the futures price of lithium carbonate has risen by over 70%, with a cumulative increase of over 19% this year.

The substantial increase in lithium carbonate prices is primarily driven by a shift in supply and demand dynamics, transitioning from previous oversupply to a state of near balance.

On the supply side, the price previously dropping below 70,000 yuan/ton had fallen below the extraction costs of most spodumene and lepidolite, forcing high-cost production to halt or reduce output, leading to a gradual recovery in supply.

According to Huatai Securities, the surplus situation in lithium carbonate supply has significantly improved in the first half of 2025. The total industry surplus in 2024 was 50,200 tons, but by the second quarter of 2025, it narrowed to 7,955 tons. In the third and fourth quarters, due to strong demand, a shortage is expected with gaps of 15,200 tons and 20,000 tons respectively, totaling 21,000 tons for the year.

From the inventory data, current lithium carbonate, whether in sample social inventory or upstream lithium salt plant inventory, is at a low level. According to Huajin Futures, as of the end of November 2025, the sample social inventory of lithium carbonate was 116,000 tons, with inventory days at 26 days, not even a month, and down nearly 50% from the peak; upstream lithium salt plant inventory is 5-6 days, hitting a new low in nearly a year.

At the same time, the recent plans to revoke 27 mining rights in Yichun and the weakened expectations for the resumption of the Ganxiawo lithium mine have exacerbated supply tightness expectations.

On the demand side, the high growth of power batteries and energy storage has confirmed that the terminal market for lithium carbonate is entering a prosperous cycle, especially with energy storage in AI data centers, parity of solar storage, and wind-solar combo storage being direct factors driving demand.

According to Gaogong Lithium Battery data, from Q1 to Q3 2025, China’s total shipments of energy storage batteries reached 430 GWh, exceeding 30% of the total for 2024. The annual shipment is expected to reach 580 GWh, maintaining a growth rate of over 75%.

According to Changjiang Securities research, the demand growth rate for power and energy storage batteries is expected to reach 30% in 2026, with energy storage battery growth reaching 40%-50%. Globally, considering regional resource endowments, policy directions, and the upper limit for solar storage parity, new energy storage installations are expected to reach 1,327 GWh by 2030, corresponding to a compound growth rate of over 30%. Combined with the impact of the lack of supporting power for data centers in the U.S., the demand space is even broader.

Due to the change in supply and demand dynamics, a tight supply of lithium carbonate is likely in the future. According to UBS research, from 2026 to 2028, due to an expanding supply gap, the average spot price of lithium carbonate in China is expected to rise to 135,000/200,000/180,000 yuan/ton, indicating significant room for price increases compared to current levels.

Driven by the rise in lithium carbonate prices, the performance of related companies has also shown signs of recovery. However, the cost differences caused by various lithium extraction technologies greatly affect the profitability of industry players.

In cyclical industries, cost is undoubtedly one of the important dimensions of competition among companies.

Currently, the lithium carbonate industry has significantly diverging process routes, which directly determine the cost and supply stability of lithium carbonate. These mainly include spodumene extraction, brine extraction, and lepidolite extraction.

From the global distribution of lithium mineral resources, they are mainly concentrated in South America, Australia, and China. The South American “Lithium Triangle” (Argentina, Chile, Bolivia) is primarily focused on brine lithium mines; Australia is the core production area for hard rock lithium mines and the largest lithium supplier globally. China, on the other hand, has a diversified distribution of “brine + hard rock + lepidolite,” including key areas in the Qaidam Basin in Qinghai and Tibet’s brine, Sichuan spodumene mines, and Jiangxi lepidolite mines.

Among the three main lithium extraction routes, spodumene extraction is currently the most mainstream process route, with a domestic total output of about 225,000 tons in the first half of 2025, accounting for half of the total production, a year-on-year increase of 74%, and serving as the main engine for the growth in lithium carbonate output. Meanwhile, lepidolite extraction and brine extraction produced 98,000 tons and 68,000 tons respectively, accounting for 23% and 16% of total production, with year-on-year growth of 22% and 21%.

Representative companies in spodumene extraction include the domestic lithium industry leaders Ganfeng Lithium and Tianqi Lithium, as well as Yahua Group, but due to differences in ore grades, processing technologies, and integrated layouts, there are significant cost disparities.

Although spodumene extraction is technically mature, it has high energy consumption and generates a significant amount of solid waste, with increasing environmental requirements, and still relies heavily on imports. Currently, the comprehensive costs of this technology route are mostly in the range of 60,000 to 100,000 yuan/ton.

To control costs, domestic companies are continuously building integrated supply chains through acquisitions of overseas high-grade lithium mines. For example, Tianqi Lithium has a controlling stake in the Greenbushes lithium spodumene mine in Australia, which has the highest grade and largest scale globally, with an average grade of up to 2.4% and cash costs of only around 20,000 yuan/ton, with comprehensive costs around 60,000 yuan/ton, giving it a significant cost advantage in the spodumene route.

Tianqi Lithium’s ability to achieve complete self-sufficiency through the Greenbushes mine is also an important reason for its lower costs. Some domestic companies, due to insufficient self-sufficiency, have to purchase spodumene, leading to higher costs. For instance, Ganfeng Lithium currently has a self-sufficiency rate of just over 55%. With the successive production of acquired projects like the Mariana brine in Argentina and the Goulamina in Mali, the self-sufficiency rate is expected to rise.

In contrast, Ganfeng Lithium’s purchased mines, including Mount Marion in Australia and Goulamina in Mali, are inferior to Greenbushes in terms of grade, scale, and infrastructure, resulting in higher comprehensive costs of around 80,000 yuan/ton.

Lepidolite extraction is another major technology route for hard rock lithium mining, with production capacity mainly concentrated domestically, with major players including Yongxing Materials and Jiangte Motor. Due to the overall lower grade, extraction costs are relatively high, compounded by refining processes, auxiliary material consumption, and transportation costs, leading to a wide range of lithium extraction costs, currently generally above 60,000 yuan/ton, with some low-grade extraction costs possibly exceeding 200,000 yuan/ton. Due to cost constraints, future production growth may slow down.

For brine extraction, China has achieved a leapfrog in the global supply chain through key technological breakthroughs, with comprehensive costs of 30,000 to 40,000 yuan/ton being the most optimal among the three technology routes. As production capacity continues to ramp up, the proportion is expected to rise to over 40% in the future. Specific companies include Salt Lake Industry, Zangge Mining, and Tibet Mining.

Taking Salt Lake Industry as an example, leveraging the Qarhan Salt Lake and using adsorption external membrane separation technology, cash costs are only 20,000 yuan/ton, with comprehensive costs around 30,000 yuan. Tibet Mining’s Zabuye Salt Lake employs the world’s first membrane separation + MVR process, with comprehensive costs for the second phase project around 35,000-40,000 yuan/ton.

Regardless of the technology route, in an industry upcycle, besides cost competition, production capacity scale, business structure, technological barriers, and financial status are also important factors influencing future profitability.

Disclaimer

This article contains information about listed companies, based on personal analysis and judgment of the author in accordance with the information publicly disclosed by listed companies in accordance with their statutory obligations (including but not limited to temporary announcements, periodic reports, and official interaction platforms); the information or opinions in this article do not constitute any investment or other business advice, and Market Value Observation does not assume any responsibility for any actions taken based on this article.

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