Carbon Lithium Futures Break Through 150,000 Yuan/Ton Again! What's Next for the Market?

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Source: Futures Daily

On March 19, lithium carbonate futures prices fluctuated downward, once again falling below 150,000 yuan/ton this year, with the main contract dropping 6.37% to 142,600 yuan/ton.

Industry insiders believe that the current decline in lithium carbonate futures is a result of both fundamental and macroeconomic factors resonating.

From a macro perspective, Yu Shuo, an analyst at Chuangyuan Futures, believes that ongoing geopolitical risks in the Middle East are driving crude oil prices sharply higher, causing intense volatility in global capital markets. Assets outside the energy and chemical sectors are being sold off, and lithium carbonate is also affected.

Fundamentally, industry experts think that the supply and demand for lithium carbonate are currently in a tight balance.

Yu Shuo notes that the main bearish factor from the fundamentals is the decline in new energy vehicle sales. According to CAAM data, in January-February 2026, China’s new energy vehicle sales totaled 1.71 million units, down 6.9% year-on-year. Domestic sales were 1.126 million units, down 27.5% year-on-year, while exports reached 583,000 units, up 110%. It’s worth noting that despite the year-on-year decline in domestic sales, the battery capacity has increased significantly. Data from the Automotive Power Battery Alliance shows that from January to February this year, the average battery capacity per vehicle for new energy vehicles in China was 64.9 kWh, up 32.3% year-on-year. “The increased proportion of commercial new energy vehicles has significantly boosted per-vehicle battery capacity. The rapid growth in exports and the increase in battery capacity per vehicle help offset some demand,” Yu added.

On the supply side, Yu states that disruptions continue at the supply end. Since the Spring Festival, Zimbabwe announced an immediate ban on lithium concentrate exports. Although Chinese companies are working to resume exports, the issue has not been fully resolved. Domestic smelters can produce for about two months relying on existing inventories. If Zimbabwe’s exports do not normalize in April, lithium concentrate imports will decline in May, which will have a noticeable impact on the fundamentals.

CITIC Construction Investment Futures analyst Zhang Weixin also said that, excluding news-driven disturbances, lithium carbonate supply may continue to grow while demand growth slows month-on-month, leading to a short-term weakening of the fundamentals. According to SMM data, for the week ending March 19, lithium carbonate production continued to slightly increase, up 760 tons to 24,200 tons; inventories continued to decline slightly, down 86 tons to 98,900 tons. Upstream inventory reduction and downstream accumulation are occurring simultaneously. Zhang believes this is one of the reasons why downstream procurement enthusiasm is beginning to weaken.

Sources interviewed by the reporter indicated that if Middle East geopolitical conflicts continue to escalate, they could have some impact on the lithium carbonate fundamentals.

FuBao Lithium Battery analyst Su Jinyi said that the impact of Middle East conflicts on lithium carbonate supply mainly focuses on transportation and processing. In transportation, upstream lithium mines face rising sea freight costs, especially from Africa, where freight pressure is greater, and buyers are generally cautious. Australian lithium mines are less affected. In processing, for high-energy-consuming lithium extraction companies, rising fuel prices increase theoretical processing costs. Fuel costs account for about 25% of the costs in lithium extraction and processing (excluding raw material costs), but some companies have inventories and long-term contracts that buffer the immediate impact of rising fuel prices.

“Under current lithium prices, some self-owned raw material lithium salt companies still have good profit margins. Most external raw material procurement companies’ core costs remain lithium ore costs, so the impact of fuel costs is relatively limited,” Su said.

From the demand side, Zhang Weixin believes that Middle East geopolitical conflicts could create some potential demand for lithium carbonate. If oil prices remain high, it could cause significant shocks to global inflation and U.S. monetary policy, potentially slowing global economic growth. In the long term, this could accelerate the global energy transition, creating potential demand for lithium carbonate.

“Long-term lithium carbonate prices are still primarily driven by their own fundamentals. Historically, the correlation between oil prices and lithium prices has not been stable or positively linked. Lithium prices fluctuate based on industry logic, and short-term market sentiment driven by geopolitical conflicts is unlikely to fundamentally change the long-term trend of lithium carbonate prices,” Zhang said.

Looking ahead, Zhang believes that the impact of Middle East conflicts on the lithium market can be summarized as “short-term sentiment, medium-term disturbance, and long-term support.” A sharp rise in oil prices in the short term will only cause minor fluctuations in lithium prices. Disruptions in shipping logistics will only affect industry operations temporarily and will not change the overall price trend. However, sustained high oil prices will support long-term demand for new energy alternatives, providing a long-term foundation for lithium carbonate. The key factors influencing lithium carbonate prices are the pace of lithium ore supply release, genuine downstream demand from new energy vehicles and energy storage, and industry capacity optimization.

Su Jinyi also believes that the theoretical cost increase caused by fuel and freight will depend on demand performance. Currently, geopolitical risks are not the core drivers of the lithium carbonate market. The impact of Middle East tensions on the market is marginal and has not altered the fundamental logic dominated by supply and demand.

Yu Shuo further states that macro narratives currently have a noticeable influence on lithium prices. Before geopolitical tensions ease, the non-ferrous metals sector remains relatively weak. As for specific varieties, after six months of continuous destocking, the total social inventory of lithium carbonate has fallen below 100,000 tons, with available days less than 25. Coupled with declining prices and gradually improving spot transactions, this provides some price support. Once prices rise to a certain level, industry hedging willingness will increase, limiting further upward movement. In the short term, lithium carbonate prices are likely to fluctuate within a wide range.