What Are the Main Reasons for a Potential Minor Shortage of Global Lithium Resources in 2026?

Analyst: James Zhao

Chief Executive Officer (CEO) @ ETD (HK) Co., Ltd

A potential minor shortage of global lithium resources in 2026 will be primarily driven by the confluence of three core factors: a slowdown in supply growth, the explosive dual growth drivers in demand, and structural changes in inventory.

1. Supply Side: Project Lull and Insufficient Capital Expenditure

• Lull in Major New Projects: Following the concentrated capacity expansion in previous years, the global lithium industry is entering a lull period for major new projects between 2026 and 2027.
• Constrained Growth by Capex Cuts: Insufficient capital expenditure (Capex) in the lithium sector over the past two years has directly constrained the growth potential of lithium resources in 2026 and beyond.
• Limited Supply Increment: The global incremental lithium supply in 2026 is projected to be approximately 317,000 tonnes LCE. This growth rate is expected to once again lag behind the growth in demand.

2. Demand Side: Strong Dual Engines of EV and Energy Storage

• Structural Growth in Power Batteries: In 2026, the global penetration rate of new energy vehicles (NEVs) will continue to rise. Coupled with increased battery capacity per vehicle (driven by new regulations on pure electric range for PHEVs and the popularity of long-range models) and the accelerated electrification of commercial vehicles, the growth rate of power battery production will outpace that of vehicle sales.
• Energy Storage Enters a Long-Term Growth Trajectory: Global energy transition and higher storage-mandate ratios for wind and solar power have significantly improved the internal rate of return (IRR) of energy storage projects. Global shipments of energy storage batteries are expected to maintain a high growth rate of around 40% in 2026.
• Technological Pull from Solid-State Batteries: Major automakers are scheduled to begin mass adoption of solid-state batteries between 2026 and 2030. These batteries require nearly double the lithium content per kWh (approximately 2kg/kWh) compared to traditional NCM batteries, significantly elevating long-term lithium demand expectations.
• Demand Outpaces Supply: Comprehensive calculations indicate that the incremental demand for lithium carbonate from the power and energy storage sectors in 2026 will reach approximately 360,000 tonnes LCE, exceeding the 317,000 tonnes LCE supply increment. This will result in an estimated market deficit of around 43,000 tonnes LCE.

3. Inventory & Market Mechanics: From “Tight Balance” to “Minor Shortage”

• Inventory De-stocking Logic: The market successfully entered a de-stocking phase in the second half of 2025. By the end of 2025, the inventory structure is expected to adjust to “low inventories at salt lakes and high inventories downstream”. Against the backdrop of demand growth outpacing supply growth in 2026, continued inventory drawdown will significantly strengthen the bargaining power of upstream suppliers and enhance upward price elasticity.
• Weakening Cost Support: As the market shifts from surplus to deficit, the previous pricing logic anchored by “lepidolite integrated production costs” will no longer be the primary benchmark. Instead, demand-driven dynamics will become the dominant theme in price formation.