Lithium Market Forecast: Top Trends for Lithium in 2026
The lithium market heads into 2026 after one of its most punishing years in recent memory, shaped by deep oversupply, weaker-than-expected electric vehicle (EV) demand and sustained price pressure.
In 2025, lithium carbonate prices in North Asia sank to four year lows, forcing production cuts and project delays as the industry grappled with the consequences of years of aggressive supply growth.
The second half of the year saw a rebound as lithium carbonate began a slow ascent. By December 29, prices had risen 56 percent from their January start position of US$10,798.54 per metric ton to US$16,882.63.
While volatility and brief price rallies highlighted the market’s sensitivity to sentiment and policy signals, analysts increasingly see the sector’s first-half downturn as an inflection point. With high-cost supply under strain and inventories gradually tightening, expectations are building that 2026 could mark the start of a rebalancing phase, supported by long-term demand tied to electrification, energy storage and the broader energy transition.
Battery energy storage systems to drive lithium growth
Energy storage is emerging as the fastest-growing pillar of battery demand, with major implications for the lithium market heading into 2026. Indeed, according to Benchmark Mineral Intelligence’s Iola Hughes, growth in this segment is accelerating well ahead of the broader battery market.
“We’re expecting about 44 percent growth (in 2025),” she said. That’s compared with roughly 25 percent growth across total battery demand. As a result, energy storage is set to account for about a quarter of total global battery demand in 2025, a share that is rising rapidly. The shift is even more pronounced in the US, where Hughes expects storage to make up a significant “35 to 40 percent of battery demand in the next few years.”
That growth is being driven by falling costs and the growing role of lithium iron phosphate (LFP) chemistry, which Hughes described as the dominant technology in stationary storage.
“It very much is the story of LFP right now,” she said, pointing to recent innovation and lower costs, which have helped to make LFP “the best chemistry” for most storage applications.
Globally, deployment remains highly concentrated. China and the US account for roughly 87 percent of cumulative grid-scale storage installations, but new markets are emerging quickly.
Saudi Arabia, Hughes noted, has surged from effectively zero to the world’s third largest market in a matter of months, deploying around 11 gigawatt-hours in the first quarter alone. “That really goes to show just how early this market is in its story,” she said; it also indicates how quickly new sources of battery demand can materialize.
Cost declines sit at the core of the expansion. Fully integrated storage systems in China are now approaching, and in some cases falling below, US$100 per kilowatt-hour. Hughes said this has fundamentally…
