Citigroup Inc. has cut its lithium price targets for the next two years, citing a slowdown in battery demand growth, rising trade uncertainty and broader macroeconomic headwinds. Analysts including Shreyas Madabushi said fears of weaker demand next year have triggered a “lithium reset,” and warned that prices will remain depressed in the near term.
In a note released Friday, the bank said supply is expected to improve in 2027 while uncertainty around next year's demand remains elevated. As a result, consumers are likely to defer purchases and keep inventories lean. “Sentiment and positioning are likely to remain the dominant drivers in the near term, keeping risks skewed to the downside,” the bank said.
Citi cut its three-month lithium carbonate price target to $12,000 a ton from $20,000 and its hydroxide target to $17,000 from $17,000 previously noted as $17,000 for hydroxide, while reducing its spodumene forecast to $1,200 from $2,000. The bank also lowered its estimates for all three battery ingredients through the end of 2028.
The most-active lithium carbonate contract on the Guangzhou Futures Exchange rose 1.2% to 91,160 yuan ($13,710) a ton in the morning session, but has shed more than 40% since the end of August. Concerns about car battery and energy-storage demand have grown after a plan to limit Chinese hybrid-vehicle exports to the European Union and Beijing's phase-outs of some tax benefits. Goldman Sachs Group Inc. forecast last month that the market will move from deficit to near balance this quarter, followed by surpluses over the next two years.
The fate of Contemporary Amperex Technology Co. Ltd.'s Jianxiawo mine in Jiangxi province has also been a key driver of prices since it was shut last August. The battery maker received environmental approval for the project from the local government on Friday, and CATL's share price rose as much as 4.2% in Shenzhen on Monday.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing