Resonance on Both Supply and Demand Sides Drives Continued Rise in Lithium Carbonate Prices

January 27th, News

According to the commodity market analysis system: Recently, a series of positive market-driving events have emerged, providing comprehensive support from the supply side to the demand side, which has driven the continuous rise in lithium carbonate prices. As of January 27, the benchmark price for battery-grade lithium carbonate is 16,900 CNY/ton, an increase of 9% compared to the same period last week (January 20), up 43.5% month-over-month, and up 112% year-over-year.

Supply contraction expectations are heating up, with disturbances in the Jiangxi production area being the core cause.

The core variables on the supply side come from policy constraints and production disruptions in the Jiangxi production area. With the release and implementation of the new "Mineral Resources Law" and the "Solid Waste Comprehensive Management Action Plan," the regulatory requirements for lithium mining and environmental supervision have significantly tightened, with tailings management becoming a key focus of regulation in the lithium mining process. Market information indicates that some mines in Jiangxi are considering suspending operations, which has sparked widespread concerns about supply contraction in the industry. However, there are currently no official documents or corporate announcements confirming any plans to halt production.

Demand-side policy benefits are released, providing strong support for off-season demand in China.

Last week, the price of lithium carbonate fell due to expectations of a decline in new energy vehicle demand in the first quarter. However, the release of the "Notice on Implementing Large-Scale Equipment Renewal and Trade-in Policies for Consumer Goods in 2026" by China's National Development and Reform Commission and the Ministry of Finance improved market expectations regarding the demand for new energy vehicles in the first quarter of 2026.

The energy storage sector has also shown impressive performance, with a favorable current order situation. Combined with the adjustment of the value-added tax rebate policy for battery product exports, the "rush to export" effect is significant.

Price remains high with increased market divergence.

As the price of lithium carbonate continues to rise, market divergence is gradually intensifying. From the downstream perspective, companies have limited tolerance for the current high prices, and their purchasing enthusiasm has noticeably declined. At the same time, the market is also concerned about an increase in supply. During the period of sustained price declines for lithium carbonate in 2025, some high-cost production capacities were forced to halt operations due to price inversions. However, given that the prolonged period of low prices was relatively short, these capacities have not yet been completely eliminated. Now, following the rapid rise in prices, the incentive to increase supply has become stronger, potentially prompting the resumption of operations at these previously idle capacities and thereby easing the tight supply situation.

Lithium carbonate data analysts believe: Currently, the downstream sector in China is actively stocking up, which can provide support to prices in the short term. However, once the concentrated purchasing period ends, if there is no continuous procurement demand to follow, the market will likely readjust and find a new price equilibrium. Specific developments still need to be monitored based on changes in market supply and demand.