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Lithium Market Rebound: Energy Storage Drives Demand
5 Jan
Summary
- Energy storage demand is set to become a game changer for lithium.
- China's power sector reforms spurred stronger-than-expected lithium demand.
- Lithium prices surged 130% from recent lows following policy changes.
The lithium market is showing signs of recovery, with demand for battery storage expected to significantly bolster the sector's outlook for 2026. Following a period of oversupply that began in the latter half of 2022, stronger-than-anticipated demand for lithium in power system storage, influenced by China's power sector reforms and global data center growth, has supported a more optimistic view.
China's clean-tech exports, particularly battery storage systems, have seen substantial growth, surpassing electric vehicle exports in value. Analysts forecast a lithium deficit in 2026, contrasting with an expected surplus in 2025. Lithium carbonate prices on the Guangzhou Futures Exchange experienced a significant surge of 130% from their 2025 low, reaching their highest point since November 2023 by December 29, 2025.
While demand from energy storage is projected to grow substantially in 2026, potential shifts to sodium-ion battery technology and slowing EV sales could temper future demand. Nevertheless, the increasing reliance on lithium for energy storage is poised to reshape market dynamics, with projections indicating this sector will account for a larger share of overall consumption by 2026.
