2026: The Year of Reversal, The Great Era of Secondary Boom in Lithium Mining

The rapid surge in lithium carbonate futures is pushing the lithium industry from a “current loose” trading framework toward a “forward tight” pricing logic. Supply-side capital expenditure cuts and project delays, combined with accelerated energy storage demand, are raising expectations for higher lithium price centers, while the futures-driven financial attributes amplify the slope and volatility of this process.

On the 24th, the main contract for lithium carbonate at the China Zhengzhou Commodity Exchange rose 11%, closing at 164,900 yuan/ton, with centralized futures pricing serving as the most direct market signal.

From the price level, this has entered the core range of 120,000 to 200,000 yuan/ton for lithium carbonate in the 2026 forecast by the Jiayi team at Orient Securities on February 22, reinforcing market consensus that 2026 will be a pivotal year.

Orient Securities emphasized in their report that the typical order of lithium market initiation is “stocks → futures → spot,” with turning points often leading fundamental shifts. The current sharp rise in futures indicates that long-term supply, demand, and policy variables are being priced in early, potentially further influencing spot procurement pace and inventory decisions.

Futures ignition amplifies lithium’s financial attributes and volatility

Since the launch of lithium carbonate futures in 2023, Orient Securities notes that the financial attributes of the lithium industry have significantly strengthened. Price formation is no longer solely determined by spot supply and demand but is increasingly influenced by capital market expectations, risk appetite, and hedging behaviors.

This change is supported by clear “infrastructure.” The report shows that the lithium carbonate futures delivery system has continuously expanded, with a significant increase in hedging participants. The number of lithium companies disclosing futures hedging has grown from 23 in 2023 to 71 in the first half of 2025, with the proportion of institutional holdings rising from 18.50% to 49.63%. Under this framework, futures are more likely to become a concentrated outlet for expectations and transmit through hedging and trade pricing to the spot market.

Supply: CAPEX Bottoming Out and Approval Delays Limit “Effective Increment”

The core change on the supply side is the “secondary suppression” of capital expenditure due to falling prices. Orient Securities believes that the past two years of declining lithium prices have significantly compressed global lithium resource capital spending, with core lithium companies’ CAPEX entering a cyclical low. Their estimates show that global lithium resource capacity growth will be only 17.1% in 2024-2025, with effective capacity growth expected to remain between 20%-25% in 2026-2027. The future available incremental supply is relatively limited, making a sudden supply pressure less likely.

Meanwhile, some existing and new projects domestically and abroad are affected by policies and other factors, leading to longer approval and construction timelines, causing structural delays in the supply system. The report mentions that the new Mineral Resources Law, effective from July 1, 2025, combined with stricter mineral rights reviews in Jiangxi, Qinghai, and other regions, increases uncertainty around domestic supply realization.

In terms of incremental capacity, Orient Securities estimates a net increase of about 448,000 tons of LCE in 2026, mainly from new projects ramping up. However, mining permits and ramp-up progress remain key variables. They also note that supply elasticity has a time lag: approximately 35% of the supply could be released within about three months, with the rest relying on new project ramp-ups, limiting short-term supply-demand relief.

Demand: Energy storage as a second engine, structural upward revisions dominate expectations

The key variable on the demand side is energy storage. Orient Securities forecasts that in 2026, the global lithium industry’s direct demand will reach about 1.94 million tons of LCE, with energy storage demand entering an accelerated expansion phase. The annual demand could reach approximately 570,000 tons of LCE, with a year-over-year growth rate of around 55%, accounting for nearly 30% of total demand, and potentially surpassing 30% after 2026. It will become the second-largest demand sector after power batteries.

This growth is driven by expanding wind and solar installations, grid upgrades, and increased reliance on electrochemical energy storage for AI-related infrastructure. The report also projects that global energy storage new installed capacity could reach about 900 GWh in 2026. For power batteries, lithium demand is expected to reach 1.15 million tons of LCE, a 24% increase year-over-year, with global new energy vehicle sales reaching 25.58 million units.

Price: Transition from “current loose” to “forward tight,” center shifts upward with greater elasticity

Orient Securities believes that the lithium industry completed a phased bottom in 2025 and entered an upward turning point. The core is not just a simple supply-demand rebalancing but a shift in pricing logic from loose in current trading to scarcity in the forward market.

Regarding inventories, the report shows that the inventory correction bottom gradually appeared in the second half of 2025, with lithium carbonate inventories decreasing from about 138,000 tons in mid-September to around 110,000 tons in late December. Meanwhile, the price of lithium hexafluorophosphate led the rise in lithium carbonate prices, serving as an early signal.

For price outlooks, Orient Securities forecasts a range of 120,000 to 200,000 yuan/ton for lithium carbonate in 2026. They suggest that under tight supply-demand conditions and phase-wise replenishment, prices could rise further, but “absolute heights are unlikely to replicate” past extreme market conditions. Scenario analysis indicates that price increases will trigger supply elasticity: at 70,000-90,000 yuan/ton, supply would be about 2.041 million tons of LCE, with actual demand (including replenishment) at 2.091 million tons, resulting in shortages; at 90,000-120,000 yuan/ton, supply could reach 2.170 million tons, balancing supply and demand with slight easing; at 120,000-150,000 yuan/ton, supply could reach 2.349 million tons, leading to increased oversupply.

According to previous reports, UBS sharply raised its 2026 spodumene price forecast by 74% to $3,131/ton and lithium carbonate to $26,000/ton. This is based on the realization of “triple parity” in electric vehicles and surging energy storage demand, with global demand expected to double to 3.4 million tons by 2030. UBS believes the market has entered the third supercycle of lithium prices, with persistent supply-demand gaps supporting prices well above market consensus.

Geopolitical and policy: “Critical mineral” status adds optionality

Orient Securities notes that beyond baseline supply and demand, lithium should be given additional “options” because it is listed as a critical mineral alongside nickel and cobalt in the US and EU. Policy adjustments in resource-rich countries, strategic stockpiling, and proactive industry chain replenishment could amplify scarcity pricing.

The report lists several policy and geopolitical variables, including Chile’s potential nationalization of mineral resources (which could reduce Tianqi Lithium’s SQM holdings by about 37%), Mexico’s classification of lithium as a strategic mineral and ban on granting permits to private entities, and Canada’s strengthened review of critical mineral investments. In North America, Lithium Americas (LAC) announced that the US Department of Energy (DOE) acquired a 5% stake in the company and a 5% stake in the Thacker Pass project, highlighting strategic arrangements for critical mineral supply security.

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