Gasgoo Munich-Battery-grade lithium carbonate prices have recently climbed to around 170,000 yuan per ton. To put that in perspective, they stood at just 60,000 to 70,000 yuan a year ago. The pressure was immense back then; most companies were selling below cost, barely turning a profit, as the entire supply chain languished in a prolonged slump.
In just one year, lithium carbonate prices have nearly tripled. This key material for lithium batteries—dubbed "white oil"—has finally emerged from a two-year trough.
Market conditions are steadily improving. Several lithium carbonate producers in Qinghai with annual capacity of 10,000 tons or more report robust downstream demand. Output is snapped up by customers the moment it leaves the line, leaving factories with virtually no inventory. Annual supply quotas have long been allocated, and the current strategy prioritizes fulfilling orders for long-term partners.
Profitability at upstream lithium miners has improved markedly in turn. In the first quarter of 2026, Tianqi Lithium saw its profit surge roughly 17-fold year-on-year, while net profits at Salt Lake Industry, Zangge Mining, and others doubled.
The Lithium Carbonate Price Rollercoaster
Over the past five years, lithium carbonate has navigated a full commodity cycle: a surge, a crash, a grind at the bottom, and now a rebound. Behind every price swing lies a fundamental reshaping of the supply chain's supply-demand balance.
This cycle began in 2021. That year, explosive growth in China's new energy vehicle market directly drove demand for power batteries and upstream lithium carbonate. Yet global supply chains were unstable: the pandemic disrupted overseas mining and logistics, while geopolitical conflicts pushed up raw material costs. To make matters worse, new lithium mining capacity has long construction lead times and came online too slowly to keep pace with demand.
Image Source: Ganfeng Lithium
This severe mismatch drove battery-grade lithium carbonate prices from 40,000 yuan per ton at the start of 2021 to over 120,000 yuan by year-end. The cost pressure rippled downstream: compared to 2020, costs for lithium iron phosphate (LFP) and ternary power batteries rose by 30% to 40% in 2021.
By 2022, the shortage intensified further. A convergence of terminal restocking, channel hoarding, and expanding overseas demand pushed battery-grade lithium carbonate prices to a historic high of over 600,000 yuan per ton, with an annual average near 500,000 yuan. Those super-normal profits attracted global capital, triggering a wave of new mining and lithium salt projects at home and abroad—sowing the seeds for the overcapacity that followed.
The turning point arrived in the second half of 2023. Massive amounts of new capacity commissioned over the previous two years flooded the market: Australian hard-rock lithium, South American salt lakes, and domestic mica-based lithium extraction all expanded significantly, easing supply constraints.
At the same time, growth in new energy vehicles normalized as the pandemic eased. Power battery makers stopped scrambling for supplies and focused on destocking, cooling demand. The supply-demand balance flipped, sending lithium prices tumbling from over 500,000 yuan to the 100,000-yuan range by the end of 2023—an 80% plunge.
The industry then entered a prolonged bottoming-out phase over the next two years. By early 2025, battery-grade lithium carbonate prices had slid back to 60,000 yuan per ton, falling below the cost line for most small and medium-sized smelters. Widespread losses forced capacity cuts across the sector.
It wasn't until the second half of 2025 that the market hit an inflection point. On the supply side, environmental rectification of domestic mines, compliance adjustments, and export controls in regions like Zimbabwe slowed the release of new capacity, causing a temporary contraction in effective supply. On the demand side, new momentum emerged: while steady new energy vehicle demand provided a floor, the energy storage industry took off faster, becoming a key driver lifting lithium prices back up.
So, how does this rally differ from 2021? Industry insiders told Gasgoo: "This round of lithium carbonate price increases has little to do with electric vehicle demand; it's mainly about energy storage demand.
Put simply, 2021 saw an across-the-board shortage triggered by a boom in new energy vehicles compounded by pandemic-related supply disruptions. In 2026, it is a structural tight balance dominated by energy storage. The logic of the cycle has shifted.
Lithium Miners Rise Again
The rise and fall of lithium prices largely dictate the health of upstream lithium companies. Over the past three years, domestic lithium miners have weathered a cycle of "super-profits, losses, and recovery," climbing out of the trough and back into an upward channel of profit restoration.
The 2024–2025 period was a painful adjustment. With lithium carbonate prices below the industry's average cost line, many smelters reliant on purchased lithium concentrate suffered persistent cost inversions. Capacity utilization rates slipped, new project expansions stalled, and investment enthusiasm cooled.
Even leaders like Tianqi Lithium and Ganfeng Lithium saw profits swing like a rollercoaster. Over five years, they moved from losses to profits, then surged to over 20 billion yuan in 2023, only to slip back into the red in 2024, before showing signs of recovery last year.
Entering the first quarter of 2026, industry sentiment warmed further. Benefiting from this, related companies gradually shook off their losses. As the industry leader, Tianqi Lithium posted a net profit of 1.88 billion yuan in the first quarter—a roughly 17-fold year-on-year increase. The quarter-on-quarter data better reflects the actual pace of recovery: compared to 283 million yuan in the fourth quarter of 2025, first-quarter profit jumped more than fivefold.
Rising lithium product prices, combined with the low-cost advantage of stable output from high-quality overseas mines, unleashed profit potential and became the primary engine for Tianqi Lithium's performance growth.
Ganfeng Lithium also demonstrated a strong recovery momentum. Its estimated first-quarter net profit reached 1.84 billion yuan, marking three consecutive quarters of profitability. Downstream energy storage operations have become a key pillar supporting this turnaround. Currently, Ganfeng's energy storage cell capacity is running at full tilt, with production fully matched to sales and sufficient order books both at home and abroad. The stable growth of the storage segment has, to some extent, hedged against the risks of upstream cyclical fluctuations.
Salt Lake Industry, leveraging its natural low-cost advantage, delivered standout profitability in this cycle. It achieved a net profit of 3.03 billion yuan in the first quarter, up 147.4% year-on-year. Zangge Mining posted a first-quarter net profit of 1.574 billion yuan, a 110% increase, maintaining a gross margin of over 62% even at current market prices—a testament to its resilience through market cycles.
At the market level, the tight supply-demand balance persists. However, it is worth noting that this recovery is no longer the "easy money for all" model of earlier years. Industry differentiation is stark: leaders with abundant proprietary resources and high self-sufficiency rates are reaping rich rewards, while smaller players heavily reliant on purchased ore are seeing limited profit repair. The industry is entering a phase of consolidation where the strong get stronger.
Super-Profits Unlikely to Last
The first-quarter earnings rebound, warming lithium prices, and market shortages have lifted optimism in the industry. But from a long-term perspective, this rally is more likely a phased structural recovery than the dawn of a new super-cycle. Industry insiders believe that price levels above 400,000 yuan per ton are unlikely to return.
Why are super-profits unlikely to return?
First, global lithium resource capacity has expanded massively, removing the foundation for a sustained, one-sided surge. Huatai Securities estimates that global lithium carbonate output will reach 2.16 million tons in 2026, a year-on-year increase of over 30%, indicating generally sufficient supply.
The current tight balance is a temporary mismatch: new capacity is concentrated in ramping up during the second half. On the demand side, increased battery capacity in electric vehicles underpins the baseline, while energy storage has become the core growth variable supporting lithium price recovery. Both Huatai Securities and Morgan Stanley predict lithium prices could test 250,000 yuan per ton in the second half of 2026. However, as capacity fully releases in 2027, the market will return to a loose balance, making it difficult for the industry to revisit the super-profits of the past.
Image Source: Tianqi Lithium
Second, this round of demand is driven primarily by energy storage. Since storage relies on project-based investment, it is price-sensitive and has a strict economic viability threshold. UBS estimates that energy storage battery demand will jump 60% year-on-year in 2026, representing the industry's largest incremental growth. However, if lithium prices surge too high, they could erode project returns and suppress installation demand, creating a natural check on prices.
Additionally, current market trading is relatively rational. Domestic social inventories of lithium carbonate are at their lowest in three years, providing some floor support for prices. However, there is no large-scale stockpiling or speculation along the supply chain, weakening the foundation for a frothy price surge.
Yet, viewed through the lens of long-term cyclical patterns, the lithium industry's loop of "prices rise, capacity expands; overcapacity leads to price drops; production cuts lead to price increases" remains unbroken. The current profit restoration could stimulate further capacity releases both domestically and abroad. Institutions predict that global lithium capacity will face concentrated oversupply in 2028, potentially pushing the industry back into a down cycle.
At the same time, the profit ceiling has clearly lowered. At the 2022 peak, gross margins for leading companies generally exceeded 60%, with salt lake firms topping 80%. In this cycle, however, gross margins for leaders hover around 30%, signaling that the era of ultra-high super-profits is largely over.
All things considered, future lithium carbonate prices will likely fluctuate within a range of 140,000 to 200,000 yuan per ton, with little probability of significant deviation from that band.
How to Break the Cyclical Trap?
Cyclical fluctuation is the intrinsic nature of commodities. Lithium miners cannot change the cycle of rises and falls, but they can mitigate the impact through proactive strategic positioning, reducing the passive plight of "one profitable year followed by three loss-making years."
After navigating multiple bull and bear markets, leading domestic lithium companies have gradually developed a mature playbook for weathering cycles: locking in core resources, extending the downstream chain, deeply binding with terminal customers, and continuously iterating core technologies. This multi-dimensional approach smooths out industry volatility.
Fortifying the resource base is the core confidence required to survive cycles. In recent years, domestic lithium resource development has accelerated, continuously strengthening resource security capabilities.
Data from the China Nonferrous Metals Industry Association shows that China's lithium resource self-sufficiency rate has risen to around 50%, further solidifying the foundation of resource security.
The resource barriers of leading companies are particularly pronounced. Tianqi Lithium controls the Greenbushes hard-rock lithium mine in Australia, giving it a resource self-sufficiency rate approaching 100%. This low-cost overseas resource base builds a formidable cost advantage, giving it industry-leading risk resistance during market troughs.
Ganfeng Lithium has established multiple lithium resource bases in Australia, Argentina, and Africa, with its overall resource self-sufficiency expected to reach 80% this year. Salt Lake Industry and Zangge Mining, relying on high-quality domestic salt lake resources, also boast far superior profit stability thanks to extremely low mining and extraction costs.
Building on locked-up upstream resources, leading lithium companies are accelerating their expansion downstream. The aim is to break the shackles of relying solely on lithium resource sales and weaken the direct impact of lithium price fluctuations on operations.
Image Source: Ganfeng Lithium
Ganfeng Lithium is a prime example, having established a complete industrial ecosystem spanning "lithium resource mining, lithium salt smelting, battery manufacturing, energy storage system integration, and battery recycling." Revenue from downstream lithium battery businesses now accounts for nearly 40% of the total. Its self-developed 588Ah and 648Ah large-capacity energy storage cells align with mainstream market needs. When new capacity comes online in the third quarter of 2026, it will further hedge against upstream cyclical volatility and bolster overall corporate performance.
Tianqi Lithium is focusing on high-value-added products, doubling down on premium categories like lithium hydroxide and metal lithium. It is gradually transforming from a single raw material supplier into a comprehensive lithium battery solution provider.
At the same time, some lithium miners are deeply binding with downstream terminal customers. They have moved beyond simply locking in sales volumes to building a community of interest along the supply chain, relying on long-term pricing, capacity coordination, and joint technology creation. This has become a crucial tool for hedging against cycles.
For instance, Ganfeng Lithium took a stake in Aion as a strategic investor; Tianqi Lithium invested in the smart brand's operating entity; and Zijin Mining participated in funding 01EV. The goal of these equity stakes or partnerships is largely to deepen synergy across the upstream and downstream supply chain, covering lithium resource development, battery materials, and recycling.
On the sales volume front, mainstream lithium companies are continuously reducing volatile spot sales, opting instead to sign long-term supply agreements of more than three years with leading terminal customers to lock in stable shipments.
Specifically, Ganfeng Lithium has signed long-term agreements with Volkswagen, Hyundai, and several other automakers, securing a stable revenue foundation even during deep price downturns. Tianqi Lithium's long-term cooperation with companies like BYD has effectively mitigated the risk of order loss during off-peak seasons.
On the profit front, many lithium miners' long-term agreements employ flexible pricing mechanisms linked to market prices or cost-plus terms. This effectively cushions gross margin volatility caused by sharp lithium price swings. Even when lithium prices are low, gross margins on long-term orders remain significantly higher than those on spot sales.
On the technology front, deep upstream-downstream binding fosters synergistic innovation. Ganfeng Lithium is co-developing high-purity lithium salts tailored for new power batteries with leading battery manufacturers, achieving product differentiation and premium pricing. Tianqi Lithium synchronizes its pace with downstream battery technology iterations, continuously optimizing product specifications and completing an upgrade from raw material supplier to enabler of supply chain synergy.
Image Source: Tianqi Lithium
Technological iteration also continuously empowers long-term steady operations by reducing costs and boosting efficiency. For example, Ganfeng Lithium has significantly improved the performance and yield rates of its energy storage cells through production structure optimization and cell formula upgrades.
With these strategic initiatives in place, China's lithium industry is bidding farewell to an extensive development model reliant on market cycles. It is gradually shifting toward a model of high-quality, steady growth underpinned by resources, technology, industrial chains, and customer ecosystems.
From the super-profit cycle of high prices in 2022 to the loss-making trough of 2024, and now to the structural recovery phase of 2026, the five-year cycle of the battery lithium carbonate market has given every link in the supply chain a deeper understanding of the industry's underlying dynamics.
However, influenced by this new demand pattern dominated by energy storage, the lithium carbonate industry may be gradually waving goodbye to wild swings, entering a stage of relatively stable and controllable development. This implies that the era of universal gains and losses—where everyone benefited—is essentially over. Leading companies with strong resource reserves, comprehensive layouts, and technological leadership are more likely to continue gaining market share during industry consolidation, and the trend of concentration among giants is set to persist.
For China's lithium industry, cycles cannot be eliminated, but risks can be hedged. The model of passively relying on price fluctuations is no longer sustainable. Looking ahead, the focus of industry competition will likely shift from short-term price movements to the comprehensive strength of resource reserves, full supply chain layout, technological capability, and customer ecosystems.
