Lithium prices go parabolic, but Scotiabank warns it's 'Too Fast, Too Furious'

Lithium prices have shown significant volatility at the start of 2026, with Scotiabank analysts describing the recent surge as disconnected from underlying market fundamentals. Domestic lithium carbonate prices in China are up 34% year-to-date, while spodumene prices have risen by 46%. The rapid increase saw lithium carbonate spike from approximately $18,000 per metric tonne to $23,000 per metric tonne in just one week. Futures markets have reacted similarly with trading at higher premiums. Scotiabank’s analysis indicates this rally is not due to end-user EV demand but rather regulatory changes in China that have triggered a wave of preemptive export demand. Analysts warn of significant retracement risks once this activity concludes, stating that while equity markets had priced lithium around $17,000 to $18,000 per tonne, spot prices have outpaced these levels. There are indications of lower lithium prices today, with equities dropping significantly, notably Albermale down 6%. Scotiabank suggests a defensive rotation for risk management, recommending a shift from Albermale to Sociedad Quimica y Minera de Chile (SQM) due to its lower sensitivity to lithium price movements, potentially offering more resilience in case of a correction.