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Investing.com -- Rothschild & Co said the lithium market has reached its cyclical bottom after a three-year supply glut and expects prices to rise sharply as demand from electric vehicles and battery storage outpaces new supply later this decade.
The firm said current lithium prices are too low to justify investment in new mines or expansions, calling the market “unsustainably cheap.”
It estimates prices will need to double by the end of the decade to reach levels that make brownfield expansions and greenfield projects economically viable.
Rothschild forecast demand for lithium carbonate equivalent to rise at a compound annual rate of 19% through 2030, driven by EV batteries and grid storage.
But the firm said much of the pipeline capacity is still awaiting final investment decisions, leaving supply growth lagging. It expects shortages to emerge as early as 2026, with prices responding before the decade ends.
Analysts at Rothschild launched coverage of Albemarle with a Buy rating given its greater exposure to spodumene, the hard rock mineral used in lithium production, and limited exposure to Chile’s royalty regime.
It started coverage of Chile’s SQM at Neutral, saying high royalties and limited spodumene production would cap its earnings upside.
While bullish on resource assets, Rothschild warned that lithium refining capacity remains oversupplied and margins will stay low as converters compete for limited feedstock.
“The market reaction to any sign of shortage will be swift,” Rothschild said, noting that lithium prices jumped nearly 50% during a brief rally in mid-2025. It expects lithium producers such as Albemarle to outperform broader equities over the next year as investors anticipate the next price cycle.