China Lithium: Yichun Site Visit Takeaway — Prices to Stay Elevated Before Supply Comes Out
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Following a site visit to Yichun, JPMorgan reports that lithium carbonate prices are likely to remain elevated in the near term, primarily due to continued uncertainty surrounding the restart of CATL's Jianxiawo mine. Local management anticipates a production restart after the Spring Festival, but experts warn that tailings and environmental permitting issues could delay the resumption to the second half of 2026.
The analysis highlights that the cost structure for integrated lepidolite mining has become highly competitive. Lithium carbonate costs have dropped to approximately 60,000 to 70,000 yuan per ton. Technological upgrades, including the adoption of rotary kilns, may further reduce refining costs by an additional 5,000 yuan per ton. Despite these lower costs, current lithium prices exceeding 120,000 yuan per ton are stimulating expansion plans across the sector.
However, JPMorgan emphasizes that bringing new supply to market requires time. Production has not yet meaningfully increased. While companies like Lopal are exploring spodumene sourcing from Africa and Australia, and establishing refining operations in the Middle East, significant volume additions from Qinghai Salt Lake, Xinjiang Nonferrous, and Zijin Mining remain pending.
Recycled battery materials offer another future supply avenue, with Lopal achieving 95% lithium recovery rates. Nevertheless, recycled supply is expected to scale significantly only by 2028. Consequently, JPMorgan maintains a bullish short-term outlook on lithium prices but adopts a more cautious medium-term stance as low-cost supply eventually enters the market, potentially creating a short-term trading opportunity for lithium equities.