Goldman Sachs: The future lithium cycle will be driven by demand, and it is expected that lithium carbonate prices will peak in the first half of this year.

Goldman Sachs released a research report stating that due to the lack of greenfield investment projects in the short term, it indicates that the long-term supply elasticity of lithium is limited. Therefore, the future direction of the lithium cycle will mainly depend on demand intensity. In order to maintain the upward trend of the lithium market from 2026 to 2027, there needs to be significant growth in energy storage systems (ESS) and electric vehicles. The target price of Ganfeng Lithium Group (01772) has been raised from HK$35 to HK$60, with a rating of "sell"; the target price of Tianqi Lithium Corporation (09696) has been raised from HK$26 to HK$48, with a rating of "sell". The bank's base case scenario expects the benchmark lithium carbonate price to peak in the first half of this year, reaching RMB 164,000 per ton (approximately $21,000), and then fall to between $10,100 and $16,000 per ton of lithium carbonate equivalent from the second half of this year to 2028. On the demand side, the bank's data shows that the global lithium market will remain tight in the first half of this year, but a 20% to 22% supply surplus is expected in the second half of this year and in 2027. Based on monthly electric vehicle sales and energy storage system battery delivery data, the bank estimates that global lithium demand grew by 25% year-on-year in the first three months of this year. On the supply side, the bank estimates that the industry will add an additional supply equivalent of 1 million tons of lithium carbonate from 2026 to 2027, which is nearly 50% of demand. Most projects are being developed by Chinese producers, with over 60% expected to come online in the second half of this year. Potential disruptions in supply from Zimbabwe could lead to a 5% reduction in supply in 2027.