The global lithium carbonate market exhibited a distinct "V-shaped" volatility pattern throughout 2025.
Source: Mysteel
In the first half of the year, a concentrated release of mining capacity from Africa and domestically, coupled with a slower-than-expected recovery in downstream demand, highlighted the supply pressure. This led to sustained price declines, with battery-grade lithium carbonate hitting an annual low of Yuan 60,000/tonne by late June.
The second half saw an encouraging rally driven by a surge in energy storage demand, a recovery in the power battery market, and the catalytic impact of production halts at lithium mines in China's Jiangxi Province. With the supply-demand dynamic shifting to a tight balance, the lithium carbonate inventories across the industry were rapidly drawn down, and the prices touched Yuan 120,000/tonne by year-end. In this case, the annual price volatility exceeded 60%.
On the fundamentals, global lithium resource supply reached 1.78 million tonnes of lithium carbonate equivalent (LCE, including recycled material) in 2025, with spodumene remaining the most important feedstock.
Global lithium resource demand reported 1.68 million tonnes LCE, resulting in an overall surplus of around 103,000 tonnes. Profit distribution tilted towards upstream resource holders in 2025, narrowing margins for lithium refineries relying on outsourced feedstock and highlighting the advantage of vertically integrated enterprises.
Looking ahead over 2026, on the supply side, global lithium resource supply is projected to increase to 2.266 million tonnes LCE, representing a 21.5% year-on-year growth, driven by the continued ramp-up of African spodumene and South American salt lake projects. While lithium carbonate capacity expansion in China is slowing, new capacity remains concentrated in the spodumene route, with limited contribution from recycled materials.
Looking at the demand end, the energy storage sector remains the core growth engine. At the policy level, energy storage is listed as a key focus area in China's 15th Five-Year Plan. Policies like "No. 136" document aim to bring all new energy power generation projects into the grid and achieve marketization, with means of widening peak-valley price differentials and significantly improving the economics of energy storage systems. The "No. 114" document for the first time establishes a national-level capacity price mechanism for grid-side independent and new energy storage systems.
Driven by these policies, the demand for energy storage is experiencing rapid, non-linear growth. As estimates for full-year energy storage-related demand have been revised upward, some battery cell manufacturers are planning to convert power battery production lines to energy storage battery lines.
The power battery sector also maintains momentum. The vehicle "trade-in" subsidy has already been extended in early January 2026. With the increase in battery capacity per vehicle and the expansion of overseas markets, lithium demand from the power battery sector is expected to maintain steady growth.
The adjustment to the export tax rebates (reducing the VAT export tax rebate rate for battery products from 9% to 6% starting April 1, 2026, and to 0% from January 1, 2027) has, in the short term, spurred a "rush to export" among battery companies. This has front-loaded some demand in 2027, boosting procurement for upstream lithium chemicals. Nevertheless, the increasing market share of lithium iron phosphate technology may constrain the demand growth for lithium hydroxide.
Taken together, the global lithium resource market is projected to shift to a tight balance in 2026, with the annual average price expected at around Yuan 150,000 per tonne. In the longer run, rising barriers to resource development and increasing policy-related costs will support lithium prices at a higher range compared to historical levels.
In summary, the lithium carbonate market underwent a deep adjustment in 2025 through supply-demand rebalancing with driving forces from unexpected events. 2026 will see a contest between supply increments and demand resilience. The market players are advised to focus on cost control and supply chain stability to manage cyclical volatility risks. Industrial chain diversification and technological iteration (e.g., solid-state batteries) will emerge as long-term directions for development.
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