What is driving the lithium carbonate price rebound from its 2025 trough, and how sustainable is the current rally?

Lithium carbonate has staged a remarkable recovery, climbing from a June 2025 trough of about 58,000 yuan/ton to over 160,000 yuan/ton by January 2026, with futures peaking near 210,000 yuan/ton in May 2026. The rally is underpinned by a genuine shift from surplus to shortage. Weekly industry inventories have fallen for 16 consecutive weeks, dropping to around 86,000 tons by late August, with available days below 20—well under historical norms. Supply-side discipline is key: domestic lithium salt producers cut output when prices fell below 150,000 yuan/ton, Zimbabwe export policy changes slashed spodumene imports by 48% month-on-month, and high-cost conversion and recycling routes are loss-making. Meanwhile, demand is robust, with August 2026 battery output hitting 304 GWh, a record, driven by energy storage cells surging nearly 200% year-on-year to 125 GWh.