SunSirs: Lithium Carbonate: Prices Fluctuate at High Levels, Energy Storage Demand Underpins the Supply Chain

Recently, lithium carbonate prices experienced a temporary correction following a sharp surge. Having previously peaked at 209,880 RMB per ton, the cumulative year-to-date increase remained above 42% as of May 29. The persistence of these high price levels is not merely the result of speculative capital inflows; rather, it stems from the combined effects of a global boom in energy storage demand, supply-demand mismatches within the lithium battery supply chain, and a restructuring of the global energy landscape. Furthermore, the supply chain has established a mature cost-transmission mechanism, allowing price fluctuations to flow smoothly from upstream to downstream sectors, while the end market has gradually come to accept the reality of rising costs.

I. Demand Side: The Global Energy Storage Boom Serves as a Core Pillar of Support

The current demand structure for lithium batteries has undergone a significant shift, with the energy storage sector emerging as the primary growth engine—expanding at a pace far exceeding that of the power battery sector. Driven by geopolitical instability in the Middle East and persistently high international energy prices, many nations have heightened their focus on energy security; consequently, energy storage is evolving from a supplementary energy solution into an essential, mandatory infrastructure requirement. Europe is accelerating its strategic push toward energy autonomy, maintaining robust growth in both large-scale utility storage and residential storage systems. Australia, bolstered by government subsidy policies, is witnessing a concentrated surge in its residential storage market. Meanwhile, the U.S. market—specifically energy storage systems integrated with data centers—has entered a phase of rapid expansion, promising substantial demand for energy storage solutions over the coming years.

Overall, the global demand growth rate for energy storage is projected to reach 50% to 55% in 2026, while the growth rate for power batteries is expected to hover between 20% and 25%. This dynamic is projected to drive the overall demand growth for lithium batteries to a range of 30% to 35%. Although production lines for energy storage batteries are currently operating at full capacity, the construction cycle for new energy storage production lines is relatively long—typically requiring 7 to 18 months. As a result, short-term production capacity cannot be rapidly scaled up to meet demand, leading to significant order backlogs; this situation, driven by the demand side, provides a solid foundation of support for lithium carbonate prices. Compared to the power battery sector, the energy storage sector demonstrates lower sensitivity to fluctuations in lithium carbonate prices and possesses a greater capacity to absorb higher costs, thereby further reinforcing the price floor for lithium.

II. Supply Side: Capacity Expansion Lags Behind, Maintaining a Tight Supply-Demand Balance

Against the backdrop of rapidly expanding global demand, the pace of capacity expansion within the lithium battery industry has notably lagged behind. Whether involving production lines for energy storage batteries or upstream capacity for lithium salts and cathode materials, operations are constrained by factors such as construction cycles, resource extraction, and process commissioning; consequently, they are unable to keep pace with the growth in demand. To alleviate this capacity crunch, the industry has adopted new models—such as technology licensing and contract manufacturing—that leverage existing idle production lines for collaborative production, thereby revitalizing underutilized industry capacity. However, these measures offer only short-term relief for order pressures and cannot fundamentally alter the prevailing landscape of tight supply. Global progress in lithium resource extraction and the expansion of lithium extraction from salt lakes remains sluggish; consequently, the volume of new lithium carbonate supply entering the market in the short term is limited, leaving the market in a state of delicate balance.

III. Mature Price Transmission Mechanisms Across the Supply Chain, Yet Localized Tensions Persist

As fluctuations in lithium carbonate prices become the norm, the lithium-ion battery supply chain has established a sophisticated framework for price linkage and risk hedging, ensuring generally smooth price transmission throughout the system.

First, upstream and downstream entities engage in linked pricing; the industry widely adopts formula-based price adjustments, wherein fluctuations in lithium carbonate prices directly trigger corresponding adjustments in the quoted prices for battery cells and cathode materials, thereby establishing a standardized transmission pathway.

Second, downstream players engage in direct procurement of raw materials; terminal manufacturers—specifically automakers and large-scale energy storage providers—directly secure their channels for purchasing lithium salts, entrusting midstream material manufacturers solely with the processing stages to mitigate the risks associated with raw material price volatility.

Third, a "prepayment-to-lock-price" model is employed, wherein downstream companies make advance payments to secure raw material supplies and prices for the medium to long term, thereby buffering against short-term market fluctuations.

Despite the generally smooth transmission of costs, structural disparities persist within the industry. Large-scale entities within the supply chain, possessing strong bargaining power, can effectively pass on their costs; conversely, small and medium-sized midstream enterprises face pressure from both ends—unable to suppress raw material quotes from upstream suppliers while struggling to fully pass on price increases to downstream buyers—and are thus compelled to absorb costs by compressing profit margins, optimizing production processes, or seeking alternative raw materials.

IV. Formation of a Closed-Loop System: Price Increases Filter Down from Top to Bottom

The upward trend in lithium carbonate prices has ultimately been fully transmitted to the consumer terminal. Numerous new energy vehicle models in the domestic market have successively raised their retail prices, with the magnitude of these price adjustments varying across a widening spectrum; this development signals the completion of a closed-loop cycle for cost transmission within the lithium-ion battery supply chain. Against the backdrop of the broader energy transition, terminal demand—spanning new energy vehicles, energy storage power stations, and consumer electronics—remains highly inelastic. Consequently, market acceptance of high raw material prices is gradually increasing, thereby providing a fundamental demand-side basis that sustains lithium carbonate prices at elevated levels. V. Outlook on Overall Market Trends

In the short term, the pattern of high-level volatility in lithium carbonate prices is expected to persist, with limited room for correction. Firm demand from the energy storage sector continues to provide a floor for the market; coupled with the slow pace of new capacity coming online, prices are likely to remain in a phase of high-level consolidation. In the medium term, as new production capacity gradually comes on stream and raw material supplies steadily increase, the tight supply-demand balance will slowly ease. Consequently, the magnitude of price increases is expected to narrow; however, given the sustained, inelastic demand from the global energy storage and new energy vehicle sectors, a sharp decline in prices remains unlikely. From a long-term perspective, as the wave of energy transition continues to advance, demand growth across the lithium-ion battery supply chain is poised to be a sustained, long-term trend. Consequently, the central price level for lithium carbonate is expected to remain relatively high, marking the industry's entry into a normalized operational phase characterized by high demand and stable price fluctuations.

As an integrated internet platform providing benchmark prices, as of June 1, the benchmark price for battery-grade lithium carbonate—as reported by SunSirs—stood at 178,000.00 RMB per ton. This represents an increase of 0.56% compared to the price at the beginning of the previous month (177,000.00 RMB per ton).

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