Continued rally before reversal: Q2 2026 Lithium Price Review

The second quarter of 2026 began with a straightforward continuation of Q1's lithium price rally before turning to an uneven reversal.

The two main trends played out as an inventory- and feedstock-driven surge through April and early May, followed by a rumour- and policy-sensitive correction through June. Underlying demand from EV and ESS production consistently proved more stable than the volatility in spot pricing suggested.

After a reduction in export tax rebates took effect on 1 April, domestic Chinese lithium carbonate prices rose under improving consumption and still-tight chemical inventories, with stockpiles moving downstream rather than accumulating with producers or traders.

Hydroxide followed, albeit less aggressively. Outside China, seaborne Asia lagged notably. European and North American prices remained slower to react as buyers approached procurement with caution.

Upstream constraints continued

Upstream, spodumene prices were pushed higher by fears that rising Australian diesel costs would force mine curtailments, before easing as the panic faded, though supply remained fragile. Zimbabwe's export suspension continued to weigh on sentiment until mid-April, when six operators were granted export permits subject to quota conditions, this partial relief giving way to logistical friction. By late April, Middle East tensions and resultant high sulphuric acid prices added a cost floor beneath Chinese chemical prices.

The rally accelerated sharply into early May. Benchmark’s Lithium Price Assessment recorded EXW China lithium carbonate trading as high as RMB 182,500/tonne (US$26,825) on 6 May, driven by depleting downstream inventories, tight feedstock availability and rising sulphuric acid costs, with rising quotations still failing to deter buyers.

By mid-May, as carbonate briefly pushed above the psychological RMB 200,000/tonne ($29,400) threshold, downstream resistance started to build, and speculation spread regarding 38,000 LCE tonnes of allegedly unaccounted-for chemical inventory in China. Hydroxide again lagged, kept in check by ample seller availability, while feedstock tightness peaked on declining Q1 ore grade from Australian site Greenbushes coincided with Zimbabwean shipment bottlenecks.

Jianxiawo speculation exerted downward pressure

The rally subsided in late May as Chinese prices drifted lower, crystallised by renewed speculation over a possible restart at CATL's Jianxiawo mine in Jiangxi, which prompted a reversal across Benchmark’s assessed Asian grades. The downtrend spread to European and North American price grades after a multiweek lag. The market stayed divided on Jianxiawo's restart timeline after a land-use permit cancellation, but the quarter ended with the release of a safety permit for the site, confirming that restart was underway.

Feedstock prices were further weighed down by stronger-than-expected Zimbabwean export volumes as stockpiled African material finally cleared ports. The Australian supply side response continued, with a positive Mt Marion expansion decision as well as resumption announcements at Bald Hill, Finniss and Pioneer Dome. These added to the resumption of activity already underway at Ngungaju. These added to the market’s expectations of longer-term supply relief and weighed on market prices.

June saw the correction deepen, even as EV and ESS production indicators remained robust, with speculation over the removal of a domestic battery tax exemption and potential new EU tariffs on Chinese EVs and batteries adding to the unease. Hydroxide prices proved more resilient than carbonate, aided by steadier high-nickel NCM demand, despite some South Korean consumers selling contract material back into the market. Feedstock prices continued to soften in step with chemicals, though availability remained constrained because the market was still awaiting the arrival of meaningful Australian restart volumes.