Key Takeaways:
Citi raised price targets on Ganfeng Lithium and Tianqi Lithium, forecasting lithium prices may test RMB250,000 a ton this year.
"Lithium and battery materials have emerged from difficulties since the second half of 2025, mainly driven by strong demand," Citi analysts wrote in a June 2 report. The bank remains positive on lithium prices given continued demand strength and supply disruptions.
The bank lifted its H-share target for Ganfeng to HKD78.12 from HKD66.7 and for Tianqi to HKD68 from HKD61. Citi now forecasts FY2026 net profit of RMB8.46 billion for Ganfeng and RMB6.97 billion for Tianqi. For FY2027, the bank sees net profit of RMB8.16 billion and RMB5.27 billion, respectively.
The upgrades place lithium producers at the top of Citi's battery value chain ranking, ahead of cathode makers and battery manufacturers. The bank's updated preference order runs lithium, cathode, battery, electrolyte, separator, battery components and anode. Citi named Ganfeng, Contemporary Amperex, Hunan Yuneng, Eve Energy and CALB as its top picks.
Citi's bullish call is supported by "continued strengthening demand confidence and intermittent supply disruptions," the analysts said. Prices may test RMB250,000 per ton between August and September, they added. The forecast represents a significant premium to current spot levels.
For Ganfeng, Citi cited strong battery demand and rising contributions from low-cost upstream resources such as Goulamina in Mali and Mariana in Argentina. The company's equity-attributable lithium production is expected to grow over the next two to three years, laying the foundation for long-term competitiveness. Its fast-growing battery business will provide additional upside to net profit in the coming years, the bank said.
Tianqi is among the best-positioned companies to benefit from the lithium upcycle, given its pure exposure from upstream spodumene to downstream lithium carbonate, Citi said. Rising lithium prices supported a notable earnings recovery in the first quarter of 2026 and point to solid financial performance for the full year. Compared with Ganfeng, Tianqi's valuation is not expensive and remains attractive to investors in the near term, the bank said.
Ganfeng shares fell 2.8% on Tuesday, while Tianqi dropped 1.6%, as China lithium stocks adjusted on concerns that high prices may hurt demand, Citi noted. The bank raised its preference for lithium stocks, believing that producers will outperform other segments of the battery value chain when prices rise.
The upgrades show that Citi sees the lithium upcycle as durable, with supply constraints and demand growth supporting prices through 2027. Investors will watch second-half demand data from China's EV and energy storage sectors as a test of the RMB250,000 price target.
This article is for informational purposes only and does not constitute investment advice.
