Lithium Prices Jump in China as Demand Outlook Strengthens — Analysts Warn of Sharp Rally Risks
Lithium prices in China extended their rally for a third consecutive day on rising optimism about demand, especially from the fast-growing energy storage sector. However, the sharp upward move has sparked concerns about the sustainability of the surge.
Futures Break 100,000 Yuan Before Easing
The most-active lithium carbonate contract on the Guangzhou Futures Exchange briefly climbed above 100,000 yuan ($14,065) per ton on Wednesday before trimming some of its gains. Spot prices also jumped, reaching their highest level since July 2024.
Futures have risen nearly 20% this month, supported by growing confidence in long-term demand. Bullish sentiment strengthened after Ganfeng Lithium Group Co.’s chairman predicted that prices could reach 200,000 yuan next year if demand increases more than 30%. Lithium has struggled since its 2022 peak due to oversupply and slower-than-expected electric vehicle (EV) sales.
Analysts Highlight Potential Correction Risks
“The short-term fundamentals still offer upward momentum, but the surge has slightly surpassed expectations,” said Su Jinyi, analyst at Sublime China Information Co.’s Fubao lithium battery division. Su warned the market to watch for potential price corrections if investor sentiment cools or if profit-taking and hedging increase.
In a move to curb speculation, the Guangzhou exchange announced higher transaction fees for January delivery contracts starting Thursday—a common tool used by Chinese futures markets to temper excessive trading activity.
Supply and Downstream Pressures Could Limit Further Gains
“There is a near-term lithium price pullback risk in end-2025,” said Dennis Ip, analyst at Daiwa Capital Markets Hong Kong Ltd. He noted that the market may be underestimating future supply growth, particularly if higher price expectations become embedded in planning for 2026. Ip added that passing cost increases on to EV and energy-storage manufacturers will be challenging.
Producers’ Shares Rally as Prices Climb
Chinese lithium producers have echoed the gains in futures and spot markets. Tianqi Lithium Corp. jumped as much as 8% in Shenzhen on Wednesday, on track for its highest close in more than two years.
Ganfeng Lithium rose as much as 7%. Meanwhile, Chilean miner SQM said in its earnings presentation that it expects the upward price trend to continue through the fourth quarter.
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