Prem29 Aug 2025 05:27
Optimism has returned to the lithium market, with prices rising close to 20% on mine closures in China
UBS analysts think supply cuts could deepen in the Middle Kingdom in the next 6-12 months
Investment Bank lifts spodumene price forecast 32% for 2026
A wave of euphoria has come across the lithium investment space since two key mine closures in China forced by regulators sparked speculation the surplus which torched the battery metal and thrust it into a three-year ‘lithium winter’ could be closing.
That high was enhanced further on Tuesday, as UBS’ well connected lithium team upped its near-term spodumene prices 9-32%, expecting Chinese supply cuts to deepen in the next 6-12 months.
Up to 240,000tpa of lithium carbonate equivalent – ~15% of global supply – is now at risk according to UBS analysts including Australian mining research chief Lachlan Shaw and Hong Kong based lithium expert Sky Han.
Lithium prices surged as high as US$80,000/t and above for battery chemicals and US$8000/t for the hard rock concentrate known as spodumene – the kind produced by Aussie miners – amid a post-Covid electric vehicle boom in 2021 and 2022.
But a radical uplift in supply from Australia, Africa, South America and China prompted a fast correction that sent prices for chemicals to the low US$8000/t mark and spodumene to under US$600/t earlier this year.
Acker
Lithium carbonate prices have run 18% higher since late July, when battery giant CATL was forced to idle its Jianxiawo lepidolite mine, which followed the suspension of a series of operations run by Zijin subsidiary Zangge Mining in Qinghai.
But a review has prompted another price upgrade from UBS, which says a further seven lepidolite mines in Yichun amounting to 6% of global lithium carbonate equivalent supply could be curtailed, along with Citic Guoan’s brine ops in Qinghai, which runs the risk of running over its production quota.
At its base case, UBS says lithium carbonate prices will go to 100,000RMB/t in China next year (US$13,980/t). That would flow onto the spod currently peddled by Aussie miners like Pilbara Minerals (ASX:PLS) and Mineral Resources (ASX:MIN), with UBS upping its 2026 tip 32% to US$1250/t, its 2027 forecast by 10% to US$1150/t and its 2028 prediction 23% to US$1350/t.
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