UBS Raises 2026 Lithium Price to 200k, Universally Upgrades Lithium Company Target Prices

Overview

UBS released a report further upgrading its view on the Chinese lithium industry. The core change lies in significantly revising up the 2026 lithium price assumption, mainly benefiting from the strong growth of global energy storage battery (BESS) demand, Middle East conflicts pushing up energy prices thereby stimulating EV demand, and the accelerated popularization of electric trucks in China. At the same time, the supply side was disturbed by Zimbabwe's export ban. Based on this, UBS predicts a 65,000 tonne LCE supply-demand deficit in the global lithium market in 2026, with the average lithium carbonate price reaching 200,000 RMB/tonne. Accordingly, UBS revised up the 2026 earnings forecasts for the four covered Chinese lithium companies (Tianqi Lithium, Ganfeng Lithium A/H, Salt Lake Industry) by 10%-40% and accordingly significantly raised target prices, maintaining all 'Buy' ratings.

Core views

Demand Side Strongly Exceeds Expectations: UBS raised the 2026 global lithium demand forecast to 1.97 million tonnes LCE, growing 16% year-on-year. Among them, EV battery demand grew 12%, while energy storage battery (BESS) demand surged 60%. The research report points out that direct lithium demand derived from cathode and electrolyte production even exceeds terminal installation data, reflecting low inventory levels upstream in the supply chain and a rush to assemble before the cancellation of export tax refunds on battery products. Supply Side Disturbed by Geopolitics: Although the reduction in output from Jiangxi mica mines in China was smaller than expected and Sichuran lithium spodumene supply expanded, Zimbabwe implemented a lithium concentrate export ban in March-April 2026, leading to a 18% downward revision in its full-year supply forecast (accounting for 2% of global supply). Adjusted comprehensively, UBS expects the 2026 global risk-weighted supply to be 1.91 million tonnes LCE, with growth around 13%, lower than the market consensus expectation of 300,000-400,000 tonnes incremental supply. Price and Earnings Re-evaluation: Based on the supply-demand deficit, UBS raised the 2026 China lithium carbonate spot average price forecast from previous levels by 18% to 200,000 RMB/tonne (including VAT) and believes spot prices in May-June may touch 250,000 RMB/tonne. This price assumption directly drove earnings upgrades: Tianqi Lithium 2026 net profit forecast raised 26%, Ganfeng Lithium-A raised 40%, Salt Lake Industry raised 10%. These forecasts are 143%, 125% and 56% higher than market consensus respectively. Valuation and Target Price Adjustment: UBS maintains EV/EBITDA as the primary valuation method. Tianqi Lithium target price raised to 93.18 CNY (5.6x 2026E EV/EBITDA); Ganfeng Lithium-A target price raised to 110.45 CNY (13x EV/EBITDA); Ganfeng Lithium-H target price raised to 106.86 HKD (11.1x EV/EBITDA, discount narrowed); Salt Lake Industry target price raised to 49.80 CNY (10x EV/EBITDA).

Analysis framework

UBS's analysis follows the typical 'Supply-Demand Balance Sheet → Price Forecast → Earnings Sensitivity → Valuation Re-evaluation' logic chain. First, by breaking down downstream applications (EV, BESS, Consumer Electronics) installation volumes and production scheduling data, combined with high-frequency upstream cathode and electrolyte production data, it cross-validates true demand strength, emphasizing the explosive growth of BESS and the short-term rush assembly effect brought about by changes in export tax refund policies. Second, on the supply side, not only focusing on mainstream mine capacity expansion but also keenly capturing the impact of geopolitical policies like Zimbabwe's export ban on marginal supply, thus concluding that supply growth is lower than consensus. Finally, deriving the price center through supply-demand deficits and using sensitivity analysis to show each company's earnings elasticity and valuation range under different lithium price scenarios, providing investors with a clear reference for risk-return ratios.

Methodology notes

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Supply-Demand Balance Sheet Analysis

  By detailed calculation of global lithium resource supply increments (mine commissioning, recycling, etc.) and demand increments (EVs, energy storage, etc.), judging whether the market is in surplus or shortage, thereby predicting price trends. The core of this research report is based on this framework to conclude there is a 65,000 tonne deficit in 2026.

• Valuation MethodEV/EBITDA valuation

  Enterprise Value Multiple Valuation

  For cyclical resource stocks with significant capital expenditure and high depreciation/amortization, using EV/EBITDA (Enterprise Value/Pre-tax Interest Depreciation Amortization) reflects their core operating cash flow ability and asset value better than PE, avoiding interference from differences in depreciation policies. UBS adopts this method for all covered lithium companies.

• Event Gaming and Behavioral Finance

  Policy-driven Front-loading Demand

  The report mentions that before the cancellation of export tax refunds on battery products, the industry chain will produce and stockpile in advance, leading to a short-term pulse-like growth in demand. This is a typical behavior-induced demand fluctuation triggered by policy expectations, which needs to be distinguished from long-term trends during analysis.

Asset mapping & comparison

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

• Tianqi Lithium (002466.SZ)

  Benefits from lithium price rises, owns high-quality spodumene resources, with significant cost advantages.

  Strengths

  High resource self-sufficiency rate, high profitability elasticity to lithium prices.

  Weaknesses

  Lithium concentrate output and chemical production slightly lower than previously expected, production costs have risen.

  Comparison

  Compared to Ganfeng, resource endowment is superior, but industrial chain integration level is slightly lower.

  Risks

  Lithium price fluctuation risks, overseas operation risks.

• Ganfeng Lithium-A (002460.SZ)

  Full industrial chain layout, benefits from lithium price rises and energy storage battery business volume growth.

  Strengths

  Capacity expansion complies with guidance, battery business income recognition increases, diversified resource layout.

  Weaknesses

  Lithium concentrate procurement costs increase with spot price rises, financial expenses rise.

  Comparison

  Compared to Tianqi, downstream battery business ratio is higher, stronger ability to resist single price fluctuation but more affected by raw material costs.

  Risks

  Raw material cost rise, new capacity ramp-up below expectations.

• Ganfeng Lithium-H (1772.HK)

  Same logic as A-share, but enjoys the dividend of narrowing A/H premium.

  Strengths

  Significant discount compared to A-shares, recent discount rate shows a narrowing trend.

  Weaknesses

  Liquidity relatively weaker compared to A-shares.

  Comparison

  As an H-share subject, cost-performance ratio is better than A-shares at this point.

  Risks

  Exchange rate risks, Hong Kong stock market liquidity risks.

• Salt Lake Industry (000792.SZ)

  Low-cost brine lithium extraction leader, benefits from lithium price rises and stable contribution from potash fertilizer business.

  Strengths

  Strong balance sheet, expected to start dividends in 2026, potash fertilizer business provides safety cushion.

  Weaknesses

  Acquired asset capacity visibility is low, expansion speed slower than ore lithium extraction.

  Comparison

  Leftmost end of cost curve, strong anti-fallability, but elasticity slightly lower than pure ore subjects.

  Risks

  Potash fertilizer price fluctuations, environmental policy restrictions.

Key data

• 2026E Global Lithium Demand1.97 million tonnes LCEGrowth of 16% YoY, among which BESS demand grew 60%
• 2026E Global Lithium Supply1.91 million tonnes LCEGrowth of 13%, lower than consensus
• 2026E Supply-Demand Deficit65,000 tonnes LCEShortage status
• 2026E Carbonate Average Price Forecast200,000 RMB/tonneIncreased 18%, including VAT
• Tianqi Lithium Target Price93.18 CNYIncreased 19%, corresponding to 5.6x 2026E EV/EBITDA
• Ganfeng Lithium-A Target Price110.45 CNYIncreased 33%, corresponding to 13x 2026E EV/EBITDA
• Ganfeng Lithium-H Target Price106.86 HKDIncreased 44%, corresponding to 11.1x 2026E EV/EBITDA
• Salt Lake Industry Target Price49.80 CNYIncreased 11%, corresponding to 10x 2026E EV/EBITDA

Impact & implications

The research report believes that current stock prices only reflect a lithium price expectation of about 170,000 RMB/tonne, while actual spot prices are close to 190,000 RMB/tonne, and are expected to rise above 200,000 RMB/tonne in the future, so the sector has obvious valuation repair space. For investors, this means the substantial improvement in lithium company profitability is not empty talk, but has solid price support. Especially those enterprises with own resources and cost advantages (such as Tianqi, Salt Lake) and enterprises with deep layout in the energy storage field (such as Ganfeng) will benefit more. In addition, the change in A/H share premiums also hints at catch-up opportunities for Hong Kong Stock lithium enterprises.

Risks

• Global EV sales growth fails to meet expectations, especially the Chinese domestic market remains persistently weak.
• Energy storage battery demand inhibited by cost inflation, growth rate slows.
• Idle mines (such as Ningde Times Jianxia Wo Mine) restart faster than expected, or new mines (such as Zijin Mining projects) commissioning accelerates, leading to oversupply.
• Extreme scenario where lithium prices fall sharply below 130,000 RMB/tonne.
• Zimbabwe export ban is lifted or influence weakened, supply recovers.

What to watch

• Whether lithium carbonate spot prices in May-June 2026 can touch 250,000 RMB/tonne as expected.
• Whether downstream EV and energy storage battery supply chains show destocking behavior.
• Subsequent implementation situation of Zimbabwe lithium concentrate export ban and potential extended impact.
• Continuity of pull on demand caused by rush assembly effect before cancellation of Chinese battery product export tax refund policies.
• Actual commissioning progress of major lithium companies' new capacities (especially salt lakes and African mines).