UBS has increased its lithium price outlook by 74% as a result of an "extensive review" of global electric vehicle and energy storage demand, it said in a research note released this week.
The analyst team at UBS noted that prices of lithium have been strong, rallying 65% since their last update, but they said there would be continued strong demand from the electric vehicle sector, with EVs close to reaching so-called "triple parity".
This meant that EVs were becoming competitive across cost, range, and charging time when compared with traditional internal combustion engines.
The UBS team said it expects lithium demand to increase 14% in 2026 and 16% in 2027.
They said further:
We continue to be positive long-term and see demand volumes 2x by 2030 to 3.4Mt (vs 1.7Mt in 2025e). We see the market growing at a 13% CAGR through to 2035.
UBS is expecting EV sales to reaccelerate over the medium term, and it expects global EV penetration of 58% by 2035.
With regard to battery energy storage systems (BESS), UBS said new policy moves in China led it to upgrade its 2035 outlook by 30% to 53%.
Supply not meeting demand
On the supply side, UBS said primary supply grew at 18% in 2025, or closer to 23% once recycling was factored in, which was short of demand growth of 29%.
UBS added:
This resulted in a market deficit and inventory drawdown through the year. For 2026, we assess risk-weighted supply as likely to grow by about 14% (excluding recycling). By country, China, Australia, Argentina and Zimbabwe lead the pack for growth in risk weighted supply from 2025 to 2027.
On the price front, UBS has upgraded its price outlook by 74%.
The broker said:
We are wary of the difficulties of picking a suitable price level when spot prices have historically been more than eight times higher than long-term incentive prices and with converter margins historically poor in providing guard rails around reasonable feedstock pricing. However, from a qualitative perspective, we note that our current price forecasts remain well within historical range and note i) for EVs, automakers have previously been able to adapt with modest impacts on overall demand, and ii) for BESS, that material costs are less significant (vs. module/battery costs).
UBS now has a forecast spodumene price of US$3,131 per tonne, up from its previous price target of US$1,800.
The forecast will be good news for Australian companies such as IGO Ltd (ASX: IGO), Mineral Resources Ltd (ASX: MIN), and Core Lithium Ltd (ASX: CXO), with the latter looking to bring its Finniss operations in the Northern Territory back online if lithium prices are high enough.
