Jakarta, INTI - The outlook for lithium demand in 2026 is expected to strengthen due to the rapid expansion of battery storage, raising hopes for a faster recovery in an industry still grappling with oversupply.
Previously, the lithium market faced a supply surplus starting in the second half of 2022, as demand failed to keep pace with the surge in supply that had driven significant price increases during the electric vehicle battery boom.
However, China’s electricity reforms have spurred stronger demand for lithium used in energy storage system batteries in the second half of 2025, creating an optimistic outlook for early 2026.
Analysts at Fubao Consulting, including Jinyi Su, noted that the development of data centers in China and globally has also contributed to increased demand for lithium based energy storage.
Su added that the rapid growth in lithium demand from the energy storage sector in the latter half of 2025 has exceeded expectations.
“Going forward, energy storage will likely be a game changer for lithium, improving its fundamentals. However, excessively high prices could undermine the economics of energy storage and limit price increases." said Su, as cited by Reuters on Monday (5/1).
Battery storage systems have emerged as China’s most profitable clean technology export, generating nearly US$66 billion (Rp 1,105.7 trillion at an exchange rate of Rp 16,750/US$) in the first ten months of 2025, followed by approximately US$54 billion (Rp 904.72 trillion) from electric vehicle exports.
Morgan Stanley predicts a global deficit of 80,000 metric tons of lithium carbonate equivalent (LCE) in 2026, while UBS estimates a smaller deficit of 22,000 tons, compared with a projected surplus of 61,000 tons in 2025.
Three other Chinese analysts also expect the lithium market surplus to shrink this year.
Global lithium demand is projected to grow between 17% and 30% in 2026, while supply is expected to increase by 19% to 34%. Analysts anticipate prices ranging from 80,000 to 200,000 yuan (US$11,432–US$28,580) per ton in 2026, up from 58,400–134,500 yuan in 2025.
Will 2026 Mark a Turning Point for Lithium Demand?
Lithium prices continued to fall in the first half of 2025, hitting a 2025 low of 58,400 yuan (Rp 140.16 million) per ton on June 23, 2025. The decline in lithium prices has squeezed margins and stock prices of mining companies worldwide, forcing some producers to reduce output.
However, China’s commitment in July 2025 to curb excess capacity in several sectors, including lithium, along with the suspension of production at the Jianxiawo mine owned by Chinese battery giant CATL in August 2025, which accounts for roughly 3% of global supply, triggered a surge in global prices.
Lithium carbonate prices on the Guangzhou Futures Exchanges jumped 130% from this year’s low to reach their highest level since November 2023, at 134,500 yuan (Rp 322.8 million) per ton on December 29. Spot prices assessed by information provider Fastmarkets rose 108% over the same period.
According to Reuters calculations based on UBS data, lithium demand for energy storage is expected to grow 55% in 2026, following a 71% increase in 2025.
Broker Guotai Junan projects that lithium carbonate-equivalent demand from energy storage will account for 31% of total consumption in 2026, up from 23% in 2025, reducing the market share previously dominated by electric vehicle batteries.
However, a potentially faster than expected shift to sodium-ion battery technology for storage systems, along with slower electric vehicle sales, could weigh on demand, while increased supply may limit price gains, analysts said.
In December 2025, the head of China’s passenger car association warned of declining lithium battery demand in the first quarter, partly due to falling electric vehicle sales following the gradual removal of tax incentives.
Conclusion
Rising demand for lithium, driven by energy storage and EV growth, is pushing global prices higher, but supply increases and shifts in battery technology may moderate future gains.
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