Morgan Stanley: Lithium Prices Down 40% From Peak, Still Too Early to Buy the Dip
nashnova research
Morgan Stanley says China's lithium price has fallen roughly 40% from its May peak, but with Q1 2027 demand likely to slow quarter-on-quarter, it is still too early to buy the dip — and target prices for Ganfeng and Tianqi have been slashed.
Lithium is down 40% — why does Morgan Stanley say it's still too early?
China's lithium price has fallen about 40% from its May 2026 peak, but Morgan Stanley sees the market still digesting mine restarts, rising inventories, and demand uncertainty.
One near-term support: Jiangxi lepidolite mine restarts may be delayed, giving prices a floor around current levels. Q4 could see a bounce from seasonal demand and front-loading ahead of a January 2027 VAT rebate cut.
This means → a short-term rally is possible, but Q1 2027 demand is likely to slow quarter-on-quarter — and that is the core reason Morgan Stanley stays cautious.
In plain terms = there may be a brief uptick, but once that wave passes, buyers who entered now risk being caught holding.
How deep are the target-price cuts for Ganfeng and Tianqi?
Ganfeng Lithium: 2026–2028 EPS estimates cut by 25%, 33%, and 40% respectively. H-share target price lowered from HK$70 to HK$43.7; A-share from RMB 87.7 to RMB 62.4.
In plain terms = the further out the forecast, the bigger the cut — Morgan Stanley sees depressed lithium prices as structural, not temporary.
Tianqi Lithium: 2026–2028 EPS estimates cut by 9%, 14%, and 19%. H-share target price lowered from HK$66.2 to HK$44.3; A-share from RMB 83 to RMB 63.
This reflects a systematic de-rating of the entire lithium sector — not a single-company story.
How hard were Huayou Cobalt and Sinomine hit?
Huayou Cobalt faces falling price forecasts across lithium, nickel, and cobalt plus rising production costs. 2026–2028 EPS estimates cut by 46%, 45%, and 42%; target price lowered from RMB 75 to RMB 49.
Sinomine Resource target price cut from RMB 78 to RMB 59.
This means → when multiple metals weaken at once, a diversified-commodity player like Huayou takes a bigger hit than a pure-play lithium name.
Why is Morgan Stanley bullish on fiberglass instead?
AI demand is driving sustained price increases for electronic cloth — a fiberglass-woven substrate used inside circuit boards. China Jushi's electronic-cloth inventory has dropped to just 3 days of sales, versus a normal level of about one month.
Electronic-cloth prices have more than doubled year-to-date, reaching roughly RMB 11.8 per square meter.
Morgan Stanley expects this upcycle to last through Q1 2028, and has raised China Jushi's 2027–2028 EPS estimates by about 19% each, with a target price of RMB 87.7.
This means → the same report is cutting lithium valuations and raising fiberglass valuations — two opposite calls driven by fundamentally different supply-demand dynamics.
Why is uranium rallying again?
Uranium spot prices have climbed from the US$84–86/lb range back to about US$90/lb. Long-term contract prices rose from US$86.5/lb at year-start to US$96.5/lb by late August.
The key supply-chain risk: Russia has temporarily restricted sulfuric acid exports through year-end, and roughly two-thirds of Kazakhstan's imported sulfuric acid comes from Russia.
In plain terms = sulfuric acid is essential for processing uranium ore. With Russia choking off exports, Kazakh mines face a "ore in the ground, no way to extract it" problem — pushing uranium prices higher.
Morgan Stanley reiterates its positive view on Kazatomprom and CGN Mining, but cuts CGN Mining's target price from HK$4.6 to HK$3.1 to reflect valuation pressure from US rate hikes.
What is the key checkpoint for this entire report?
The central bet for the lithium sector: whether Q1 2027 demand slows quarter-on-quarter as Morgan Stanley expects.
This means → if the slowdown is worse than expected, the current valuation cuts may still not be enough — target prices could be cut further.
For investors, Morgan Stanley's message before that checkpoint is clear: wait.
市场有风险，内容仅供研究参考，不构成投资建议。