Expected JXW restart weighs on lithium prices, but supply-demand may still remain tight in 3Q26

Overview

This report is Citi's weekly tracking of the lithium market within China's battery materials sector, focusing on the impact of JXW's restart progress on lithium price expectations, as well as changes in lithium carbonate and lithium hydroxide prices, output, and inventories in the third week of June. The report argues that expectations for JXW's restart have already been partially priced in by the market and have pressured lithium ASP in the short term; however, given the large amount of new battery capacity scheduled for 3Q26, the lithium supply-demand balance may still remain tight.

Core views

The core judgments include: first, after approval of JXW's preliminary site assessment, the market became concerned about a near-term resumption of operations, putting pressure on lithium prices; second, JXW mining may resume before beneficiation, and the beneficiation and conversion stages may be handled by third parties, so the actual pace of supply release remains uncertain; third, although restart expectations on the supply side create disruption, Citi still expects lithium supply-demand dynamics to remain tight because of substantial new battery capacity additions on the demand side in 3Q26.

Analysis framework

The report combines industry contact checks, tracking of SMM price, output, and inventory data, and supply-demand balance analysis. The analysis focuses on JXW's restart timeline, lithium carbonate and lithium hydroxide ASPs, changes in lithium carbonate output by different feedstock sources, and inventory structure across downstream, smelters, and other participants.

Methodology notes

• Supply-demand analysisLithium supply-demand balance tracking

  Assess pressure on and support for lithium prices through supply recovery, output, inventories, and battery capacity scheduling.

  The report treats JXW's potential restart as a supply-side variable, while using new battery capacity additions in 3Q26 to measure demand-side support, and combines weekly output and inventory data to judge the degree of short-term tightness in the lithium market balance.

• Price trackingWeekly ASP comparison

  Compare weekly average price changes for lithium carbonate and lithium hydroxide.

  The report cites lithium carbonate and lithium hydroxide quotations as of June 18 and compares them with prices on June 11 to observe weekly trends in lithium salt prices.

• Inventory analysisLayered supply-chain inventory analysis

  Break down lithium carbonate inventories by downstream, smelters, and other participants.

  The report uses inventory changes among downstream players, smelters, and other participants to identify sources of inventory pressure, with smelter inventories down 7% week over week.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Lithium salts

  Core object tracked in the report

  Strengths

  Substantial new battery capacity additions in 3Q26 may support a tight supply-demand balance.

  Weaknesses

  Expectations for JXW's restart may increase supply pressure and depress ASP.

  Comparison

  Lithium carbonate prices rose slightly week over week, while lithium hydroxide prices were flat week over week.

  Risks

  If JXW's mining, beneficiation, and conversion recover faster than expected, lithium salt prices may face further pressure.

• Lithium carbonate

  Main indicator for tracking price, output, and inventory

  Strengths

  Total inventory fell 1% week over week, while smelter inventory declined 7%.

  Weaknesses

  The market is sensitive to potential supply recovery, and ASP weakened clearly in early trading on the report date.

  Comparison

  ASP was Rmb167.25k/t as of June 18, above Rmb166.5k/t on June 11.

  Risks

  Supply recovery, renewed inventory accumulation, or weaker-than-expected demand realization could alter the view of a tight balance.

• Lithium hydroxide

  Lithium salt price tracking indicator

  Strengths

  Weekly prices remained stable.

  Weaknesses

  Affected by overall lithium market sentiment and expectations for supply-side restart.

  Comparison

  ASP was Rmb152.5k/t as of June 18, flat versus June 11.

  Risks

  If overall lithium salt prices decline due to supply recovery, lithium hydroxide may also come under pressure.

• JXW lepidolite resources

  Key supply-side variable

  Strengths

  A recovery in mining could bring additional feedstock supply.

  Weaknesses

  Land-use designation, remaining procedures, and the timetable are unconfirmed, and beneficiation may be delayed.

  Comparison

  Mining recovery may precede beneficiation and conversion, creating inconsistent timing across the supply chain.

  Risks

  Uncertainty in the restart pace may create a gap between market expectations and actual supply.

Key data

• Lithium carbonate ASPRmb167.25k/t, as of June 18Rmb166.5k/t on June 11, a slight weekly increase.
• Lithium hydroxide ASPRmb152.5k/t, as of June 18Flat versus Rmb152.5k/t on June 11.
• China weekly lithium carbonate output26,399 tonnesBroadly flat week over week; salt lake source -1%, lepidolite source +1%, while spodumene and recycling sources were broadly flat.
• Total lithium carbonate inventory96,645 tonnesDown 1% week over week, a decrease of 1,184 tonnes.
• Downstream inventory46,690 tonnesMainly cathode material plants, broadly flat week over week.
• Smelter inventory15,373 tonnesDown 7% week over week.
• Other inventory34,582 tonnesMainly battery plants and traders, broadly flat week over week.
• Potential JXW restart timingAugust or OctoberIndustry contacts believe mining may resume, but beneficiation may be delayed.

Impact & implications

For investment and supply-chain judgment, JXW's restart is the key short-term disruptive variable for lithium prices, potentially weakening market expectations of tight supply and pressuring ASP; however, if beneficiation and conversion recover more slowly than mining, the actual release of incremental supply may be below market expectations. At the same time, battery capacity expansion in 3Q26 may continue to absorb incremental supply, limiting downside in lithium prices through demand support.

Risks

• JXW mining, beneficiation, and subsequent conversion recover faster than expected, leading to greater-than-expected lithium supply release.
• New battery capacity additions in 3Q26 may be launched or ramped up below expectations, preventing the demand side from absorbing incremental supply.
• Lithium carbonate inventories may start to accumulate again, weakening price support.
• The market may price in JXW's restart too far in advance, increasing short-term lithium price volatility.
• The report does not provide company-level ratings or target prices and therefore cannot be directly mapped into a single-stock investment recommendation.

What to watch

• Whether JXW's land-use designation, restart approvals, remaining procedures, and official timetable become clearer.
• Whether JXW mining resumes in August or October, and whether beneficiation continues to be delayed.
• Whether third parties undertake lepidolite beneficiation and conversion, and the actual processing capacity and timeline.
• The realization of scheduled new battery capacity additions and ramp-up in 3Q26.
• Weekly changes in total lithium carbonate inventory, smelter inventory, and downstream inventory.
• Whether lithium carbonate and lithium hydroxide ASPs continue to come under pressure.