- Lithium prices rebound sharply on supply disruption concerns and tightening market sentiment.
- Rising upstream costs drive energy storage cell prices in China to multi-year highs.
- Energy storage system bid prices firm as suppliers pass through costs and competition shifts beyond price.
Lithium prices have surged over recent weeks, rippling through the energy storage value chain and pushing cell and system prices in China to cycle highs, according to analysis from InfoLink Consulting.
Prices for lithium ore and lithium carbonate rebounded strongly after the start of the year, driven by expectations of supply side disruptions and increasingly bullish capital sentiment. In China, the State Council’s newly issued Action Plan for Comprehensive Governance of Solid Waste has raised concerns across the market by tightening requirements for ore processing projects. The policy in principle prevents approval of beneficiation projects without self-owned mines or adequate tailings disposal facilities, intensifying uncertainty around the restart timeline of key lithium operations.
Geopolitical developments have added to market anxiety. A recent United States strike on Venezuela has heightened risk perceptions in South America, with investors wary of potential spillover effects on the supply of strategic resources such as lithium, copper and silver. Unverified reports of disruptions at Chilean lithium mines have further reinforced expectations of tighter global supply.
On the supply side, lithium carbonate inventories continue to decline, although at a slowing pace, with no clear signs of an oversupply emerging. While some downstream cathode material producers have announced production cuts and maintenance plans, demand projections for commercial vehicles and energy storage in 2026 have been revised upward. This outlook is providing near term support to prices and bolstering confidence in the resilience of downstream demand.
Against this backdrop, lithium prices have reached their highest levels of the past year. InfoLink notes that although demand expectations remain relatively optimistic, prices are highly sensitive to capital flows and market sentiment and are likely to remain volatile at elevated levels in the near term.
Upstream pressures are feeding directly into energy storage cell pricing in China. Quotes for LFP prismatic cells have continued to rise, with 100 Ah cells averaging RMB 0.403 per Wh, while 280 Ah and 314 Ah cells are both averaging RMB 0.320 per Wh. Over the past two months, cumulative cost increases for energy storage cells have exceeded 10 percent.
From January 1, 2026, leading battery material suppliers including Lopal Tech and Wanrun New Energy implemented a uniform increase of RMB 3,000 per tonne in LFP processing fees. Prices for energy storage grade LFP have now exceeded RMB 40,000 per tonne, while electrolyte prices have surpassed RMB 34,000 per tonne, both at cyclical highs. Delivery lead times for cells have extended beyond the first quarter of 2026, with manufacturers reluctant to accept small spot orders, keeping supply conditions tight and supporting firm pricing.
Energy storage system prices have also edged higher. Recent winning bid prices in China show DC side liquid cooled containerised systems averaging RMB 0.45 per Wh for two-hour configurations, while AC side systems range from RMB 0.48 per Wh for four-hour systems to around RMB 0.80 per Wh for one-hour systems.
InfoLink attributes the price increases to a seasonal slowdown in tender activity ahead of the Lunar New Year, more pronounced cost pass through from rising cell prices, and higher qualification thresholds in tenders. Greater emphasis is now being placed on operational track records, grid compatibility, safety compliance and warranty commitments, reducing the scope for aggressive price competition.
Policy developments are also reshaping the market. In December 2025, China’s National Development and Reform Commission and National Energy Administration released the Basic Rules for the Medium- and Long-Term Power Markets. The framework strengthens standardisation of contracts and settlement mechanisms, improving revenue visibility and cash flow stability for grid side and standalone energy storage projects, and supporting financing access.
At the industry level, CRRC Zhuzhou Institute has issued a direct procurement notice for more than 20 GWh of energy storage cells from CATL, signalling a shift toward locking in volumes and delivery schedules. This move highlights a broader trend toward procurement strategies that prioritise delivery certainty and integrated supplier capabilities, while accelerating the adoption of large capacity cell formats such as 587 Ah.
InfoLink concludes that both policy and market signals point toward a structural shift in the sector. As renewable penetration increases, competition in 2026 is expected to move away from pure price undercutting toward execution capability, quality consistency and full life cycle value, with price volatility gradually moderating as the market matures.
Author: Bryan Groenendaal
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