Lithium Carbonate Hits Record Highs: What’s Really Driving This Energy Storage Boom?

The lithium carbonate market just had a moment.

On January 12-13, futures contracts hit their daily upward limit, sending shockwaves through the energy storage and EV industries.

We’re talking about real money here—and real implications for anyone betting on the energy transition.

The Numbers: Lithium Carbonate Breaking Records

Let’s start with what happened.

The continuous main lithium carbonate futures contract surged 11.99%, landing at ¥174,060 RMB ($24,202 USD) per ton—a new two-year high.

Spot prices moved in lockstep.

Battery-grade lithium carbonate hit ¥157,250 RMB ($21,865 USD) per ton on January 13, up ¥3,850 RMB ($535 USD) from the day before.

That’s the highest price we’ve seen in the past year.

A-share lithium battery stocks reflected the momentum instantly.

Tibet Summit Resources (Xizang Zhufeng 西藏珠峰), Sinomine Resource Group (Zhongkuang Ziyuan 中矿资源), and Ganfeng Lithium (Ganfeng Liye 赣锋锂业) all saw gains exceeding 8% during intraday trading.

The Policy Catalyst: Environmental Mandates Are Reshaping The Industry

This isn’t random price volatility.

There’s a major policy shift happening, and it’s forcing manufacturers to rethink their supply chains.

On January 13, Zhou Haibing (周海兵), Deputy Director of the National Development and Reform Commission (Guojia Fazhan He Gaige Weiyuanhui 国家发展和改革委员会), addressed this head-on.

The government just released an “Action Plan for Comprehensive Management of Solid Waste.”

Here’s what it does:

• Clarifies responsibility boundaries between government and enterprises
• Implements the “polluter pays” principle
• Prevents scenarios where enterprises profit while leaving environmental cleanup costs to the public

The NDRC is now moving forward with several concrete steps:

• Issuing management measures for power battery comprehensive utilization for New Energy Vehicles (NEVs)
• Revising the Industrial Structure Adjustment Guidance Catalog
• Increasing restrictions and elimination of backward technical processes and equipment

Translation: older, cheaper production methods are getting squeezed out.

That means pressure on costs, pressure on margins, and a race to secure reliable supply chains.

The Tax Refund Bombshell: Why Battery Makers Are Panicking

But the real driver of this lithium rush?

Export tax policy.

On January 9, the Ministry of Finance (Caizheng Bu 财政部) and State Taxation Administration (Shuiwu Zongju 税务总局) dropped an announcement that’s reshaping procurement timelines across the entire industry.

Here’s the timeline you need to know:

Photovoltaic Products:

• VAT export tax refund canceled effective April 1, 2026

Battery Products:

• VAT export tax refund rate reduced from 9% to 6% (April 1, 2026 – December 31, 2026)
• Export tax refund abolished entirely starting January 1, 2027

Industry experts are calling this a “window of opportunity” for battery manufacturers.

Here’s the logic: if you can get products out the door and claim the higher 9% refund before April, that’s real savings.

“To avoid the pressure of rising costs, battery manufacturers may launch procurement plans ahead of schedule, which will transmit upstream and trigger a scramble for lithium carbonate,” explained an industry analyst.

Even though Q1 is traditionally the off-season, the 3% subsidy difference is motivating companies to accelerate their lithium purchases now.

That’s the real driver behind the price surge.

Energy Storage Is Now Bigger Than EVs

• Total Expected Demand: 2.02 million tons
• New Annual Demand: 495,000 tons
• Year-on-Year Growth: 32%
• Sector Shift: New demand for energy storage projected to exceed EV battery demand for the first time.

But here’s what’s interesting: the EV story is old news.

The new growth engine is energy storage.

For the first time in 2026, new demand for energy storage will exceed new demand for power batteries.

Global lithium carbonate demand is expected to reach 2.02 million tons, with new demand reaching 495,000 tons—a year-on-year increase of 32%.

Battery companies are now racing to capture this shift before tax refunds disappear.

“Until the tax refund is canceled in 2027, battery factories will have a continuous need for ‘rush exports,'” noted one market participant.

This isn’t a one-quarter phenomenon.

This is sustained buying pressure that could persist through 2026-2027.

The Supply Side Reality Check

Here’s where things get interesting though.

Lithium carbonate producers aren’t exactly overwhelmed yet.

A representative from a Sichuan (Sichuan 四川)-based lithium salt enterprise shared some candid perspective:

“Sales have recovered significantly since the second half of 2025. Currently, our production capacity is fully utilized. Even if customers have new demands, we may not be able to meet them.”

Translation: supply constraints are real.

While rising lithium prices have boosted sentiment, the actual growth in downstream demand still needs time to materialize.

The company noted that margin expansion is helping, but operational capacity is maxed out.

This creates an interesting dynamic: price momentum is building before actual supply meets demand.

From Oversupply To Tight Balance: The Market Inflection

For years, lithium has been in oversupply.

That’s changing.

Since the second half of 2025, something shifted: inventory in the lithium battery supply chain has been effectively cleared.

Energy storage demand exceeded expectations.

The market supply-demand relationship has improved substantially.

A market analyst broke down the factors driving this transition:

• Uncertainties in the resumption of lithium mining in Jiangxi (Jiangxi 江西)
• Accelerating growth of energy storage demand
• Geopolitical instability affecting supply routes

The practical implication?

The downward space for lithium prices may be limited.

The market is shifting from “oversupply” to a “tight balance.”

That’s the kind of transition that sustains higher prices for years, not quarters.

The Real Risk: Rising Material Costs Could Kill The Energy Storage Boom

But not everyone is celebrating.

There’s a legitimate concern brewing in the industry.

“Most companies in the industrial chain are optimistic about the growth of energy storage demand. However, the current investment boom in energy storage is partly related to the previously low prices of lithium battery materials. If material prices rise too sharply, it may affect the investment enthusiasm in the energy storage industry,” warned an insider familiar with lithium materials.

This is the paradox: rising lithium prices could undermine the very demand that’s driving the price increase.

Energy storage companies made their investment decisions based on lower material costs.

If lithium carbonate keeps climbing, project economics deteriorate.

That could pull the trigger on the supply chain scramble before demand materializes.

What This Means For Investors & Founders

If you’re in the energy storage or battery space, this is the moment to pay attention.

The policy environment is tightening.

Supply is constrained.

Tax incentives are disappearing.

These three forces are creating a window—a narrow one—where procurement decisions made now will define competitiveness for the next 18-24 months.

For lithium producers, this is validation that the oversupply era is ending.

For battery makers, this is a scramble to lock in supply before costs climb further.

For energy storage companies, this is a gut-check on unit economics.

The lithium carbonate market hitting new highs isn’t just about price discovery—it’s about an entire industry recalibrating around tighter supply, stronger demand, and fundamentally different cost dynamics than the past five years.

References

• Important Policies to be Released, Lithium Carbonate Hits Limit Up – Shanghai Securities News
• National Development and Reform Commission Official Website – NDRC
• Official Policy Announcements – State Taxation Administration
• Lithium Carbonate Market Price Index – MySteel