Citi is bullish on lithium prices, expecting lithium carbonate to potentially test Rmb250k/t within the year

Overview

This is a Citi research report on Chinese battery materials and lithium resource companies. The core conclusion is that lithium prices still have upside elasticity in 2026, as strong NEV and energy storage battery demand, the traditional peak season in August-September and the export front-loading window, as well as temporary disruptions on the lithium mine supply side, may push lithium carbonate prices to test Rmb250k/t. The report also covers Ganfeng Lithium and Tianqi Lithium, maintaining Buy ratings and raising target prices.

Core views

The report believes the lithium sector is relatively more attractive for allocation within the battery value chain. Rising lithium prices not only reflect strong demand, but also improve the earnings and stock sentiment of lithium resource companies. Ganfeng Lithium benefits from higher attributable lithium output, low-cost upstream resources, and battery business development, giving it a higher long-term priority than Tianqi Lithium; Tianqi Lithium, meanwhile, still has short-term catch-up trading opportunities thanks to its pure-play lithium exposure and relatively undemanding valuation.

Analysis framework

The report uses a supply-demand framework, channel checks, monthly battery output and installation data, supply disruption tracking, and P/B valuation methods for analysis. On the demand side, it focuses on NEV exports, commercial vehicle electrification, and the resilience of energy storage demand; on the supply side, it closely tracks JXW restart approvals, lepidolite mine permits, the restart of high-cost Australian spodumene mines, and Zimbabwe's export policies.

Methodology notes

• Industry supply-demand analysisLithium price supply-demand balance framework

  Demand upside combined with supply disruptions supports lithium prices

  The report combines NEVs, energy storage, battery output, and mine-side supply disruptions to assess whether lithium carbonate prices could test Rmb250k/t within the year.

• Channel checksZE Consulting and industry contact research

  Battery production pipeline validates demand strength

  The report cites research from ZE Consulting and industry contacts to validate changes since the beginning of the year in battery production momentum, lepidolite inventory accumulation, mine permit progress, and other developments.

• Valuation method2026E P/B valuation

  Use price-to-book to determine target prices for lithium resource stocks

  Ganfeng Lithium-A's target price is based on 3.2x 2026E P/B, while Tianqi Lithium-A's target price is based on 2.5x 2026E P/B; H-share target prices incorporate the A/H discount and exchange rates.

• Relative allocationBattery value chain preference ranking

  Lithium preferred over cathode, batteries, and other segments

  The report adjusts the value chain preference ranking to lithium > cathode > battery > electrolyte > separator > battery components > anode, believing lithium resource stocks are more likely to outperform during a lithium price upcycle.

Asset mapping & comparison

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

• Ganfeng Lithium-A/H

  Core covered company; maintains Buy and raises target price, with a higher long-term preference than Tianqi Lithium.

  Strengths

  Benefits from rising lithium carbonate ASP, volume growth from attributable resources such as Goulamina, PPG, and Cauchari, increasing contribution from low-cost upstream resources, and rapid development of the battery business.

  Weaknesses

  Sensitive to overseas mine progress, ramp-up of resource projects, and the lithium price cycle; H-shares are also affected by the A/H discount.

  Comparison

  Compared with Tianqi Lithium, Ganfeng Lithium has more attributable output growth over the next 2-3 years, plus upside support from its battery business.

  Risks

  Geopolitical risks at overseas mines, weaker-than-expected lithium-ion battery demand, and slower-than-expected ramp-up at Goulamina and Mariana.

• Tianqi Lithium-A/H

  Core covered company; maintains Buy and raises target price, benefiting in the short term from valuation recovery and rising lithium prices.

  Strengths

  Has pure-play lithium exposure from upstream spodumene to downstream lithium carbonate, holds an interest in Talison, and benefits from Greenbushes' low-cost resources.

  Weaknesses

  The report believes output growth over the next 2-3 years is relatively limited, and earnings are sensitive to lithium prices and operating disruptions at Greenbushes.

  Comparison

  Has catch-up potential in the short term due to its not-high valuation, but ranks below Ganfeng Lithium in long-term priority.

  Risks

  Weaker-than-expected lithium-ion battery demand, supply disruptions caused by policy uncertainty, dilution of the SQM stake, and unexpected production cuts at Greenbushes.

• CATL-A、Hunan Yuneng、EVE、CALB

  Listed by the report as some of its preferred names in the value chain, though the analytical focus remains on lithium resource stocks.

  Strengths

  Benefit from strong battery demand, capacity ramp-up, and continued prosperity in NEVs and energy storage.

  Weaknesses

  High lithium prices may raise raw material costs, putting pressure on margins in the battery and materials segments.

  Comparison

  In Citi's value chain ranking, batteries and cathodes rank below lithium resources, but still above electrolytes, separators, battery components, and anodes.

  Risks

  Raw material cost inflation, demand destruction, and slower-than-expected capacity ramp-up.

Key data

• Lithium carbonate price viewMay test Rmb250k/t within the year, possibly in August to SeptemberThe report believes the traditional NEV peak season and export front-loading window will bring incremental demand.
• Recent lithium price referenceOnce touched Rmb200k/t before pulling backEven with the recent correction, the report still believes fundamentals support a new round of upside momentum.
• 4M25 battery output874 GWh, up 41% YoYOf this, NEV batteries were 567 GWh, up 22% YoY; energy storage batteries were 307 GWh, up 99% YoY.
• 1Q26 China EV battery installationsAbout 176 GWh, up 18% YoYCommercial vehicle battery installations were 39 GWh, up 109% YoY, accounting for 22% of 1Q26 installations.
• FY26/FY27 lithium price assumptionsLithium carbonate at Rmb175k/t and Rmb160k/t; spodumene at US$2,300/t and US$2,050/tThese are the shared core assumptions in the earnings models for Ganfeng Lithium and Tianqi Lithium.
• Ganfeng Lithium earnings forecastFY26/FY27 headline net profit: Rmb8,457mn/Rmb8,161mnModel updates incorporate stronger lithium prices, higher attributable output, and improving battery business.
• Tianqi Lithium earnings forecastFY26/FY27 headline net profit: Rmb6,969mn/Rmb5,269mnModel updates incorporate rising lithium prices, lithium conversion, and spodumene business performance.
• Potential lepidolite supply impactAbout -8k tons LCE/month, accounting for 7-8% of China's lithium supplyIf remaining lepidolite mines need to suspend production to renew permits, this could create downside supply risk.

Impact & implications

If Citi's lithium price view plays out, lithium resource stocks could become the higher-beta segment within the battery value chain. Ganfeng Lithium benefits from low-cost resources, rising attributable output, and expansion of its battery business, giving it stronger long-term overall competitiveness; Tianqi Lithium benefits from rising lithium prices and a lower valuation, offering short-term catch-up potential. For downstream battery, energy storage, and NEV chains, rising lithium prices on the one hand reflect strong demand, but on the other hand may also bring cost pressure and concerns about demand destruction.

Risks

• If high lithium prices lead to demand destruction in NEVs or energy storage, the report's bullish logic may weaken.
• JXW restart approvals, the restart of high-cost Australian spodumene mines, or arrivals of supply from Zimbabwe may ease spot tightness and pressure lithium prices.
• Weaker-than-expected lithium-ion battery demand would affect the earnings elasticity of Ganfeng Lithium and Tianqi Lithium.
• Ganfeng Lithium's overseas mines face geopolitical risks, and projects such as Goulamina and Mariana may ramp up more slowly than expected.
• Tianqi Lithium faces risks such as dilution of its SQM stake, unexpected production cuts at Greenbushes, and policy uncertainty.
• The A/H share discount and valuation volatility may affect the realization of H-share target prices.

What to watch

• Whether the traditional NEV peak season and export front-loading window in August-September bring incremental battery demand.
• Whether lithium carbonate prices can break above Rmb200k/t again and move toward Rmb250k/t.
• The timeline for JXW environmental permit approvals and restart.
• Permit renewals for remaining lepidolite mines, production suspension arrangements, and lepidolite inventory digestion.
• After Zimbabwe spodumene exports resume, the impact of arrivals from late June to early July on China's spot market, as well as the cost pass-through of the 10% export levy.
• The restart or expansion pace of high-cost Australian spodumene mines in 2H26.
• Monthly output and installation volumes of China's NEV and energy storage batteries, as well as changes in the share of commercial vehicle electrification.
• Progress of Ganfeng Lithium's projects such as Goulamina, PPG, Cauchari, and Mariana, as well as related changes at Tianqi Lithium's Greenbushes and SQM.