Goldman Sachs: Repeat of 2020-2021; lithium carbonate prices may surge to 250,000 yuan/ton in the fourth quarter!

Is lithium carbonate heading back to the "eve of 2021"? As energy storage demand picks up after electric vehicles, Goldman Sachs believes Q4 could be the tightest supply period of the year.

According to Wind Trading Desk, in a report led by Hugo Nicolaci at Goldman Sachs released on June 12, it was stated: "The current lithium cycle is highly similar to 2020/21; 2025 will mark the end of this down cycle. Lithium carbonate prices have already fallen close to industry cost support. As demand recovers, supply-demand balance and prices will reverse in 2026, with Q4 showing more pronounced tightness." Energy storage is expected to become the main driver of lithium battery demand growth; at the same time, disruptions from mines, salt lakes, African export policies, and the conversion of mining licenses in China mean supply growth lags behind demand growth.

Under this framework, global lithium supply in 2026 will be about 2.1 million tons LCE, an increase of about 400,000 tons from 2025; demand will increase about 500,000 tons, with the gap filled by inventory. The price path will not be a straight upward trend: weaker in March-April, likely fluctuating within a range afterward; after August-September, downstream players will start replenishing inventory to meet annual production goals, making Q4 the tightest period of the year.

The price ceiling is also clearly stated: lithium carbonate prices in Q4 may center around 200,000 yuan/ton, with a peak close to 250,000 yuan/ton; even if it briefly breaks above that, staying above 250,000 yuan/ton for long will be difficult. The reason is not an immediate supply release, but that energy storage customers are even more sensitive than electric vehicle battery customers; excessively high prices will hurt demand.

Incremental growth shifts from EVs to energy storage; lithium demand curve may become smoother

EVs remain important, but the marginal changes in 2026 will not be as sharp as in previous years.

China's new energy vehicle sales are projected to reach about 16.6 million in 2025, with a penetration rate of about 48%. On this higher base, sales growth in 2026 is expected to slow significantly—to about 19 million units, up roughly 15% year-on-year. This means the room for further battery demand growth driven by vehicle sales alone is shrinking.

Additional battery demand from EVs comes more from increases in battery capacity per vehicle, rather than sheer numbers. This framework notes that per-vehicle battery capacity rising from about 50 kWh to 60 kWh will be an important variable for 2026; stronger overseas demand will also provide support.

Energy storage, however, is different. 2026 could be the first year that energy storage surpasses EVs as the primary source of incremental lithium battery demand.

The drivers of energy storage demand are more diverse: in China, improved economics and policy support; in developed markets, a need to manage fluctuations in renewable generation; in the Middle East and Latin America, energy security is a factor; in North America, AI data center construction is adding to electricity demand.

One detail worth noting: recent rises in raw materials prices haven't led to clear cancellations of energy storage orders. The so-called slowdown in demand is more a result of full order books and constrained production capacity, not order cancellations. Seasonality in energy storage demand is weaker than for EVs, which could make the lithium demand curve shift from "peak and off-peak" to a smoother pattern.

Supply is growing, but is a step behind

Lithium supply will still grow in 2026, mainly from spodumene, followed by salt lakes/brine; lepidolite will not perform as strongly.

Calculations show total supply will be about 2.1 million tons LCE in 2026, up about 400,000 tons from 2025; demand will increase by about 500,000 tons. This gap is not huge, but enough for inventories to serve as a buffer, and to increase price elasticity during Q4 restocking.

Price increases will bring out some marginal supply. For example, Mongolian lepidolite and high-cost Australian mines might regain economic viability if prices improve. But this doesn't change the main trend: new demand this year still outpaces new supply.

The real issue on the supply side is not the lack of resources, but whether they can be converted into deliverable lithium carbonate, hydroxide, or intermediates on schedule.

The key word for Chinese mine disruptions is "licenses", not environment

Domestic supply uncertainty is focused on Yichun.

Recently, some mines in Yichun have halted production, mainly due to mining license conversions, not environmental assessments. Two large mines associated with CATL and Gotion are still undergoing license conversions and have no clear time for resumption so far.

The scenario assumes these two mines resume in Q4 2026, but even if they do, it won't change the conclusion that annual demand exceeds supply.

More troubling, other Yichun mines may also enter the license conversion process around June-July. Some assets may remain suspended for the rest of 2026, and license renewals may extend into 2027.

This means domestic supply disruptions aren't a single-point event, but a series of administrative and operational variables occurring in batches.

Africa provides the largest additions, but bears the greatest policy risk

Africa is one of the biggest sources of new supply in 2026, with an estimated 160,000 tons LCE, according to the framework. But this figure is highly uncertain, if not optimistic.

Zimbabwe's short-term impact is more like a quota system: mining is allowed but exports are restricted. In the next 12 months, export approvals may be more tied to lithium salts than ore, but local downstream conversion capacity is limited, which will slow actual supply.

Currently, Huayou has one of the few large-scale lithium sulfate operations. For most companies, building lithium sulfate capacity before 2027 isn't realistic, with sulfuric acid supply another constraint.

Other regions in Africa add further variables. DRC faces tax-related uncertainties, while Mali has security issues. Africa could remain the biggest swing factor in supply, but there is a whole layer of policy, logistics, and conversion capacity between "resource volume" and "deliverable supply to market".

Q4 is tightest, but 250,000 yuan/ton may be the demand pressure line for energy storage

On pricing pace, March-April is a relatively weak window. After a rush to install before Chinese New Year, downstream demand is weaker than expected; post-holiday, refineries resume operations; imported mines arrive, jointly providing a favorable time for inventory restocking.

After this, the market may maintain range-bound fluctuations until August-September. The real change happens when downstream restocking begins. To meet annual production goals, buyers ramp up purchases again; coupled with supply disruptions, Q4 becomes the tightest period of the year.

Model projections indicate: lithium carbonate prices in Q4 will hover around 200,000 yuan/ton, with peaks nearing 250,000 yuan/ton.

But staying above 250,000 yuan/ton will be difficult. Energy storage customers are more price-sensitive; rapid increases in costs will directly erode project economics. Compared with EV batteries, energy storage orders tolerate high lithium prices even less, putting a lower ceiling on this rally.

The next three key verification points are clear: whether August-September restocking starts as scheduled, whether Yichun license conversions continue to be delayed, and whether African export policies tighten further. As long as any two of these tighten simultaneously, Q4 lithium price elasticity will be repriced.

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The above highlights are from Wind Trading Desk.

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