Analysis of the Impact of Continuous Limit-Ups in Lithium Carbonate Prices on Cost Transmission and Profitability in the Lithium Battery Industry Chain

Based on the collected data and market information above, I will provide you with a systematic and comprehensive analysis report.

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As of January 12, 2026, the price of the main lithium carbonate futures contract closed at

, hitting the limit-up (12% increase), marking the second consecutive trading day the contract has hit the limit-up[1][2]. From a longer-term perspective, lithium carbonate prices have continued to rebound from their June 2025 cyclical low of approximately 59,900 yuan/ton, achieving an to date, setting a new price high since November 2023[3][4].

In the spot market, data from Shanghai SteelUnion shows that on January 12, the market price range of battery-grade lithium carbonate was

, an increase of 8,550 yuan/ton from the previous working day[2]. This price level has approached the key psychological threshold of 150,000 yuan/ton, becoming the most closely watched “price anchor” for the entire new energy industry chain.

Driving Factor	Details	Impact Mechanism
Tightened Supply Side	Production enterprises in Qinghai, Jiangxi and other regions have suspended production; CATL’s Jianxiawo lithium mine has not resumed production	Annual supply reduced by approximately 42,000 tons
Surge in Demand Side	NEV sales up over 30% YoY, power battery loading volume up over 40% YoY, energy storage bidding volume doubled	Demand exceeds expectations
Policy Guidance	Ministry of Industry and Information Technology rectifies irrational competition in the industry and strictly controls redundant construction	Changes expectations of overcapacity
Inventory De-stocking	As of November 2025, inventory has decreased by 24,750 tons cumulatively from the annual high	Improves supply-demand relationship

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As the core raw material for lithium battery cathode materials, lithium carbonate accounts for over

of the cost structure of lithium iron phosphate batteries, and is a key variable determining the basic cost landscape of the industry[5][6].

• Lithium Carbonate: ~42%
• Lithium Iron Phosphate: ~25%
• Other Auxiliary Materials: ~18%
• Energy and Labor: ~15%

This highly concentrated cost structure determines the significant transmission effect of lithium carbonate price fluctuations on the industry chain. When lithium carbonate prices rise, cathode material enterprises face direct cost pressure, which is transmitted downstream along the industry chain.

Lithium Ore/Salt Lake → Lithium Carbonate Processing → Lithium Iron Phosphate Cathode → Battery Manufacturing → Vehicle Manufacturer
   (Immediate)   (1-2 Weeks)    (1-2 Weeks)    (1-2 Months)  (2-3 Months)

1. Upstream (Lithium Ore/Salt Lake):
   Directly benefits from price increases, inventory value rises, and sales volume and price both increase
2. Midstream Processing (Lithium Carbonate):
   Benefits from expanded price spreads, with gross margin significantly improved
3. Midstream Materials (Lithium Iron Phosphate):
   Faces the greatest cost pressure, but has initiated price increase transmission
4. Downstream Batteries:
   Cost transmission is in progress, with leading enterprises having strong bargaining power
5. End-User Vehicle Manufacturers:
   Cost transmission lags, and some models face price adjustment pressure

Notably, the industry structure is shifting from the previous “buyer-dominated” market to a “structural seller’s market”[1]. In November 2025, the China Chemical and Physical Power Sources Industry Association held a meeting with representatives from seven mainstream lithium iron phosphate enterprises, explicitly proposing to rebuild the industry pricing logic with cost indices as the core reference, fundamentally avoiding vicious competition[6].

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Enterprise	Ticker	6-Month Stock Performance	Financial Characteristics
Ganfeng Lithium	002460.SZ	+111.29%	Q3 performance exceeded expectations, EPS up 233% YoY
Tianqi Lithium	002466.SZ	+93.36%	High resource self-sufficiency rate, strong risk resistance

1. Price Elasticity Effect:
   For every 10,000 yuan/ton increase in lithium carbonate prices, the gross profit of upstream enterprises can increase by hundreds of millions of yuan
2. Inventory Value Reassessment:
   Inventory is reassessed at the latest market price, contributing one-time non-recurring gains
3. Increases in Both Order Volume and Price:
   Strong downstream demand, with sales volume growth coupled with price increases

Ganfeng Lithium’s Q3 2025 financial report shows that the company achieved operating revenue of 6.25 billion yuan, exceeding market expectations by 33.11%[7]. Tianqi Lithium, with a high resource self-sufficiency rate (over 70%), has a significant cost-side advantage and greater room for profitability improvement.

Lithium iron phosphate cathode material enterprises are the link under the greatest pressure in this round of price increases. Data from the China Chemical and Physical Power Sources Industry Association shows that only

of enterprises in the lithium iron phosphate industry are profitable, far lower than other core lithium battery materials such as ternary cathodes and anodes[6].

• First Round of Price Increases:
  Processing fees increased by approximately 1,000 yuan/ton
• Second Round of Negotiations:
  Leading enterprises continue to strive for processing fee increases
• Maintenance and Production Cuts:
  Three leading enterprises—Hunan Yuneng, Wanrun New Energy, and Desay Nanotech—have simultaneously reduced production for maintenance, with a combined market share of over 47%[8]

• Gross Margin: Expected to decrease by 15-20 percentage points
• Net Profit Margin: Expected to shift from losses to break-even
• Order Scheduling: Orders of leading enterprises are scheduled through Q1 2026

CATL (300750.SZ), as the global leader in power batteries, has strong cost transmission capabilities due to the following advantages:

Financial Indicator	Value	Industry Status
Gross Margin	22.84% ROE	Global No.1
Market Share	~37%	Absolute Leader
Customer Structure	Covers all mainstream vehicle manufacturers	Strong bargaining power
Cash Reserves	Sufficient	Strong risk resistance

CATL issued a price adjustment notice in November 2025, deciding to

based on the current price[1]. This indicates that cost pressure is effectively being transmitted downstream.

Vehicle manufacturers such as BYD (002594.SZ) face a more complex situation:

• Lagging Cost Transmission:
  The vehicle production cycle is long, with a 2-3 month lag in cost transmission
• Vertical Integration Advantage:
  BYD has in-house battery production capabilities, which can partially hedge against cost increases from external purchases
• Product Pricing Strategy:
  Against the backdrop of a “price war”, the room for price increases is limited

From the perspective of stock performance, BYD’s 6-month stock performance (-8.95%) is significantly weaker than that of the upstream industry chain, reflecting market concerns about the uncertainty of cost transmission.

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The figure above shows the lithium carbonate price trend and its impact on various links in the industry chain. The analysis shows:

1. Upstream Enterprises:
   Benefit from increases in both volume and price, with high certainty of profit improvement
2. Midstream Materials:
   Experiencing a painful period, but leading enterprises are expected to break through first
3. Downstream Batteries:
   With the bargaining power of leading enterprises, cost transmission is relatively smooth
4. Vehicle Manufacturers:
   Face cost pressure, but can pass it on through product upgrades

The figure above details the industry chain transmission path and the predicted impact on the financial indicators of different enterprises.

Institution/Enterprise	2026 Lithium Carbonate Price Forecast	Core Logic
Ganfeng Lithium	150,000-200,000 yuan/ton (demand growth exceeds 30%)	Supply and demand are basically balanced or even in short supply
CITIC Construction Investment	Center of gravity shifts upward, fundamentals significantly improved	Consumption-driven growth replaces supply-side pressure
Guotai Junan Futures	Range-bound volatility, upper limit of approximately 133,000 yuan/ton	Interplay of multiple factors
Huatai Securities	80,000-90,000 yuan/ton	Slight oversupply may occur in 2026
Institutional Research Sample	Nearly 50% believe it is expected to reach 200,000 yuan/ton	Short-term optimism dominates

1. Price Volatility Risk: High volatility in lithium carbonate prices may affect the stability of corporate profits
2. Capacity Release Risk: Progress of lithium mine projects in Africa and salt lake projects in Argentina may change the supply-demand pattern
3. Policy Risk: Adjustments to export tax rebate policies (effective April 2026) may affect short-term demand rhythm
4. Technology Substitution Risk: The development of technologies such as sodium-ion batteries and solid-state batteries may change expectations for lithium demand

• Overweight:
  Upstream resource enterprises (Ganfeng Lithium, Tianqi Lithium)
• Equal Weight:
  Leading battery enterprises (CATL) with cost transmission capabilities
• Underweight:
  Cathode material enterprises; profit recovery still needs to be observed
• Avoid:
  Small and medium-sized material enterprises lacking bargaining power

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1. Price Trend:
   Lithium carbonate prices have rebounded by over 120% from their June 2025 low, and are currently in a new boom cycle

2. Transmission Mechanism:
   The cost transmission path is clear; upstream enterprises benefit immediately, midstream enterprises are under pressure but have initiated price increases, and downstream transmission is in progress

3. Profit Differentiation:
   Industry chain profits are concentrated upstream, with leading enterprises gaining more market share through technological, cost, and customer advantages

4. Industry Structure:
   Shifting from “involutionary competition” to “value-focused cultivation”, with long-termism becoming a consensus

In the short term (Q1 2026), affected by factors such as the off-season during the Spring Festival, upstream maintenance, and adjustments to export policies, lithium carbonate prices may experience periodic adjustments. However, in the medium to long term, the expansion of energy storage installations and the development of “going global” business will bring incremental demand, and the resonance of policy benefits and technological iteration will further enhance industry resilience.

For industry chain enterprises, the construction of core competitiveness will shift from “scale expansion” to “technological upgrading, supply chain resilience building, and cost control”. Enterprises that truly possess resource control capabilities, technological advantages, and cost advantages will gain a first-mover advantage in the new cycle.

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[1] Securities Times - Lithium Battery Industry Chain Knocks on the Door of Value Restoration (https://www.stcn.com/article/detail/3582465.html)

[2] Jiemian News - Main Lithium Carbonate Futures Contract Breaks the 150,000 Yuan Threshold (https://www.stcn.com/article/detail/3587082.html)

[3] Cailianshe - Expectations of Tight Supply-Demand Balance Drive Sharp New-Year Increases in Lithium Carbonate Futures and Spot Prices (https://www.cls.cn/detail/2249901)

[4] Southern Metropolis Daily - Doubled in Half a Year, Approaching 150,000 Yuan/Ton! The Battery Industry Has Changed Behind the Skyrocketing Lithium Prices (https://www.163.com/dy/article/KISC20QR05129QAF.html)

[5] Huanqiu Finance - 140,000 Yuan/Ton! Lithium Carbonate Hits a Two-Year High, Energy Storage Ignites a New Bull Market for “White Petroleum” (https://news.futunn.com/post/67203868)

[6] The Economic Observer - Behind the Lithium Iron Phosphate Price Hike: The Anti-Involution Game in the Lithium Battery Industry (http://auto.cyol.com/gb/articles/2025-12/23/content_v62JGghMYv.html)

[7] Eastmoney - Doubled in Half a Year, Approaching 150,000 Yuan/Ton! The Battery Industry Has Changed Behind the Skyrocketing Lithium Prices (https://finance.eastmoney.com/a/202601093614636369.html)

[8] EET-China - Three Listed Lithium Iron Phosphate Enterprises Reduce Production for Maintenance (https://www.eet-china.com/mp/a463162.html)

[9] Jiemian News - Lithium Battery Prices Enter an Uptrend: Rebalancing of Industrial Cycles and Value Logic (https://m.jiemian.com/article/13841727.html)