Key Takeaways
UBS lifts its 2026 China lithium carbonate price forecast by 18% to 200,000 RMB per ton.
The bank projects a 65,000-tonne global lithium deficit in 2026, driven by a 60% surge in battery storage demand.
Global Lithium Balance (LCE Tonnes)
UBS raised its 2026 price forecast for Chinese lithium carbonate by 18 percent to 200,000 RMB per ton, anticipating a market deficit as demand from energy storage and electric vehicles accelerates.
"We now project a 65,000-tonne LCE deficit in 2026," the bank's global commodity team said in a research report, upgrading its ratings on producers Ganfeng Lithium and Tianqi Lithium.
The bank forecasts global lithium demand will grow 16 percent year-over-year in 2026 to 1.97 million tonnes of lithium carbonate equivalent (LCE). Demand from battery energy storage systems (BESS) is expected to climb 60 percent, while electric vehicle battery demand is seen rising 12 percent.
The forecast reverses previous expectations of a prolonged surplus, with UBS now seeing a supply-driven deficit emerging sooner than anticipated. The bank expects spot prices could reach 250,000 RMB per ton in the near term, a level that could challenge battery manufacturers' margins.
The primary driver of the revised forecast is the accelerating adoption of battery energy storage systems. UBS sees BESS demand accounting for 17 percent of all lithium consumption in 2026. This view is supported by research from BMI, which forecasts global BESS capacity will expand nearly fourfold from approximately 325 GW this year to around 1,270 GW by 2035, led by deployments in China and the US.
On the supply side, UBS projects global risk-weighted supply, including recycling, will grow about 13 percent to 1.91 million LCE tonnes in 2026, lagging behind the 16 percent demand growth. While production is growing, with BMI noting a 13.2 percent year-over-year increase this year led by Australia and China, the ramp-up of new projects and restarts of idled capacity may not be sufficient to meet the demand surge from the energy transition.
As a result of the bullish forecast, UBS reiterated "Buy" ratings for Ganfeng Lithium (01772.HK) and the A-shares of both Ganfeng (002460.SZ) and Tianqi Lithium (002466.SZ), two of the world's largest lithium producers. Their performance contrasts with the broader market, which had been pricing in a surplus until 2029, according to BMI research.
This article is for informational purposes only and does not constitute investment advice.
