Goldman Sachs Bears Market for Lithium, Claims Oversupply in the Second Half

Goldman Sachs recently published an in-depth report on Chinese commodities, systematically analyzing the lithium and electric vehicle metals sector. The report states that lithium demand grew by 25% year-on-year in the first half of 2026, with the market maintaining a tight balance; however, with about 1 million tons of LCE new capacity being released in the second half, the entire industry will enter a significant surplus phase, with an estimated overcapacity rate of 20% to 22%.

The turning point of supply and demand will arrive in the second half of 2026. Goldman Sachs estimates that between 2026 and 2027, there will be approximately 1 million tons of new lithium supply globally, equivalent to nearly 50% of current total demand, with over 60% of it entering the market in the second half of 2026. To maintain a tight balance, energy storage installations must reach 1.2 to 1.4 TWh by 2027, and global electric vehicle sales must increase by 30% compared to 2025—Goldman Sachs believes that these conditions are far above the base forecast, and oversupply is inevitable.

On the price front, Goldman Sachs forecasts that the benchmark price of lithium carbonate will peak in the first half of 2026, with a peak value of about 164,000 yuan/ton (approximately $21,000/ton), and then fall to a range of $10,100 to $16,000/ton from the second half of 2026 to 2028. As of May 7, 2026, the SMM spot average price for battery-grade lithium carbonate reported was 190,500 yuan/ton, up by 3,000 yuan from the previous day; Mysteel's high-quality battery-grade lithium carbonate (morning) quoted a range of 188,000 to 193,000 yuan/ton, with the mid-price at 190,500 yuan/ton. TradingEconomics tracked the Chinese spot price for lithium carbonate at 190,500 yuan/ton on the same day, with a year-to-date increase of over 50%, approaching the high levels since 2023.

At the stock level, Goldman Sachs maintains a "Sell" rating for Ganfeng Lithium, Tianqi Lithium, Yahua Group, Yongxing Materials, and Huayou Cobalt, with only Green Eco-Tech receiving a "Neutral" rating. The report believes that the stock prices of the aforementioned companies have already implied an extremely high lithium price expectation of 18,700 to 31,300 US dollars/ton, far higher than Goldman Sachs's price forecast for the next two years, and the risk-reward ratio is unattractive.

Ganfeng Lithium (1772.HK / 002460.SZ) has its target price raised to 60.0 Hong Kong dollars for H shares and 53.0 yuan for A shares, implying a downward space of about 29% to 39%. Exceeding expectations in regular earnings for 2025, with a lithium chemical output target of 230,000 tons of LCE for 2026, a year-on-year increase of 26%. Tianqi Lithium (9696.HK / 002466.SZ) has its target price raised to 48.0 Hong Kong dollars for H shares and 42.0 yuan for A shares, implying a downward space of 24% to 44%; the production expectation for the Yajiang Cuola lithium mine has been significantly delayed by Goldman Sachs to 2029 due to slow approval. Ya Hua Group (002497.SZ) has its target price raised to 21.5 yuan, with a lithium compound sales target for 2026 exceeding 100,000 tons of LCE, an increase of at least 46% year-on-year; it has obtained