BMI, a Fitch Solutions company, has revised its lithium price forecasts for this year to $20 100/t for mainland Chinese lithium carbonate and $19 600/t for mainland Chinese lithium hydroxide monohydrate, reflecting sold upward price momentum sustained throughout the first half of the year.

The company notes that while it expects lithium prices to drift lower in the second half of the year, robust energy storage demand is likely to keep prices from dropping much lower and prevent any big market crashes.

Moreover, BMI highlights that the lingering uncertainty over the pace of Chinese manufacturing company Contemporary Amperex Technology Limited’s (CATL’s) Jianxiawo mine restart may reduce negative sentiments in the market.

In the longer term, the company says, lithium prices are likely to be impacted on by innovations in battery chemistries, including the adoption of batteries either without lithium or requiring a reduced amount of lithium.

Additionally, advancements in battery recycling technology are said to present downside risks to lithium prices by significantly expanding sustainable lithium supply.

“Prices are likely to be caught in a tug-of-war between oversupply worries dampening bullish sentiment and solid demand-side fundamentals, with the balance of risks skewed to the downside as we continue to view current prices as elevated beyond what fundamentals alone would justify,” BMI states.

Further, the company says lithium carbonate is also expected to maintain a premium over lithium hydroxide owing to the continued rise of lithium iron phosphate (LFP) battery adoption, with LFP accounting for more than half of electric vehicle (EV) batteries and over 90% of battery energy storage applications.

BMI anticipates that global lithium demand will increase by 5.8% year-on-year this year, a notable slowdown from the 18.5% year-on-year increase recorded in 2025.

The company forecasts that global passenger EV sales, including battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) sales, will rise by 3.9% year-on-year this year, following strong growth of 22.8% year-on-year in 2025 and 24% year-on-year in 2024.

At the same time, elevated fuel prices as a result of the conflict in the Middle East are expected to support demand for more fuel-efficient powertrains, boosting interest in EVs, PHEVs and non-plug-in hybrids (HEVs), including in markets where electrification remains at an early stage.

BMI says the extent to which this will translate into a sustained shift in consumer preferences represents a major upside risk to lithium demand over the forecast period.

“China will continue to dominate the market, with new domestic new-energy vehicle (NEV) sales rising by 23.6% year-on-year and 9.8% month-on-month in June to reach 1.6-million units and NEV penetration touching an all-time high of 58.5% (of total new-vehicle sales) for a third consecutive month, according to the China Association of Automobile Manufacturers.

“NEV penetration has already surpassed 50% of new passenger car sales, signalling a transition from a high-growth phase to a more mature demand environment, shaped by the withdrawal of purchase incentives and broader structural pressures bearing down on the industry,” BMI notes.

The company expects global lithium production to grow by 13.2% year-on-year this year, driven mostly by Australia and China. It also notes that while higher energy costs and a possible sulphur shortage could pressure miners’ margins, the recent recovery in lithium prices could still support output growth, including a restart of higher-cost operations, notably in Australia.

BMI concludes that the share of top three lithium producers Australia, China and Chile are forecast to decline over 2026 to 2035, given the ramp-up in output from relatively new markets such as Argentina and Zimbabwe.

In Argentina, the company notes that anticipated growth in the lithium sector looks promising as several pivotal projects begin operations, while Zimbabwe could pave the way for lithium mine advancement in Africa in the coming years.