Amidst conflicting reports of lithium inventory levels, Benchmark’s latest Monthly Lithium Inventory China shows that chemicals inventory across carbonate and hydroxide fell a further 2.8% m-o-m in August. This continues the trend seen so far in 2026 where inventory levels have fallen 10.0% year-to-date and the typical H1 build and H2 draw down pattern has been absent. “It leaves the market without the buffer between supply and demand that dampens price movements as participants near the final quarter of the year, where consumption is typically strongest,” said Adam Megginson, Benchmark’s principal lithium price analyst.

Rising chip prices are forcing portables manufacturers to look at increasing retail prices, reducing specifications or absorbing some of the cost and accept lower margins. This is acting to increase the gap between the prices of premium and budget products. Premium brands such as Apple or Samsung are better positioned to pass through cost increases due to stronger brand power and higher average selling prices, whilst more budget brands are more exposed to demand reduction if they increase prices. “While some stabilisation may occur, chip costs are expected to remain elevated in the near term, favouring companies with strong pricing power, efficient supply chains, and differentiated ecosystems,” said Benchmark battery analyst Anya Sidhu.

Operating lithium supply will need to expand by over three million tonnes LCE to meet expected 2040 base demand, according to analysis in Benchmark’s new Capex Briefing. It is a gap that is forecast to require USD ~$64 billion in capital spending to close, as demand for the mineral continues to expand at 7.3% CAGR under Benchmark’s base demand view. As noted in Benchmark’s recent Lithium Forecast Report, lithium demand is expected to grow on the back of sustained electric vehicles (EV) adoption as well as an increase in deployment of battery energy stationary storage (BESS). While a tightening of the market is expected in the medium term, the long-term trend is one of strong growth; though the market could remain looser in the case of a more challenging economic environment or diminished policy support, the broad direction of demand is expected to remain the same.

The US Department of Energy (DoE) announced $500 million in grants for battery materials, manufacturing and recycling towards the end of August 2026. The grants went to a range of battery minerals and materials including next-generation anodes, direct lithium extraction (DLE), cobalt, electrolyte, and recycling. These are the third round of grants from the DoE’s “Battery Manufacturing and Recycling” and “Battery Materials Processing” programmes, which each have $3 billion in funding available. Previous rounds were announced in 2022 and 2024 under the Biden Administration. These grants follow a recent announcement of $2 billion in investment for critical supply chain projects.