Morgan Stanley DataDig: Lithium Restarts? Limited Near-Term Impact
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Morgan Stanley notes that current lithium prices have risen above the firm's long-term incentive price, with spot lithium carbonate around $20,000 per ton against a long-term forecast of $15,000. This dynamic has brought the potential restart of idled capacity back into focus. However, the overall near-term impact remains limited. The commodities team's supply-demand model already factors in approximately 60,000 tons of lithium carbonate equivalent production this year from CATL's Jianxiawo project, meaning upcoming restarts will not affect the 2026 market balance, which is projected to have an 80,000-ton deficit.
Australian restart leverage represents the key variable. PLS's Ngungaju could contribute roughly 6,000 tons of LCE in 2026, assuming a third-quarter restart. Mineral Resources' Wodgina Train 3 could add approximately 33,000 tons annually at full capacity, but effective output may be delayed until 2027. Additionally, Zimbabwe's recent export ban, affecting about 11% of 2026 supply, may further tighten raw material availability. Among covered stocks, Morgan Stanley prefers PLS (Overweight) over IGO (Underweight), citing PLS's near-term expansion potential, including the P2000 and Colina studies, with the former expected in the fourth quarter of 2026.