Prices of lithium, a crucial raw material for electric vehicle (EV) batteries, are expected to rise further in 2026, having already increased nearly 50% to reach a two-year high. Analysts indicate that fluctuations will largely depend on geopolitical factors, including developments in the Iran conflict, as well as the dynamics of supply and demand.
“We anticipate lithium prices to remain stable in the short term; however, we do not discount the possibility of prices climbing higher due to an unexpected surge in EV demand. This will, however, hinge upon addressing the existing supply gap, which may limit prolonged increases into 2026,” stated research agency BMI, part of Fitch Solutions.
The World Bank highlighted that “the rapidly increasing global investment in clean energy technologies, digital infrastructure, and defense-related technologies, all of which heavily depend on critical minerals, is expected to support strong demand growth.”
Price Outlook
“Lithium battery shipments for data center energy storage could increase by over 80% in the next five years. This increase in demand from emerging markets complements the conventional battery requirements of electric vehicles,” noted Carboncredits.com.
BMI has adjusted its 2026 average annual lithium price forecasts, projecting $17,000 per tonne for Chinese lithium carbonate at 99.5% purity and $16,700 per tonne for Chinese lithium hydroxide monohydrate at 56.5% purity, following an earlier upward revision this year.
At present, lithium carbonate is trading at 177,000 Chinese yuan ($25,628) per tonne, while lithium hydroxide is priced at $20,690 per tonne. Analysts reported that prices are stabilizing as supply expectations tighten, despite early-year levels appearing to exceed fundamentals based on mixed short-term demand signals.
Growth in Energy Storage
Lithium carbonate is primarily sourced from brine deposits and is utilized in the cathodes of lithium-ion batteries. Lithium hydroxide, derived from lithium carbonate, is also an essential material for EV batteries.
The World Bank indicated that prices for critical minerals like lithium are likely to fluctuate in response to both actual and anticipated trade restrictions. Furthermore, challenges related to environmental permitting and prolonged mining development times are expected to continue constraining output expansion.
According to Carboncredits.com, strong growth in stationary energy storage systems, increased production in China, support for EV initiatives in Europe and North America, and concerns regarding supply constraints have collectively contributed to the rise in lithium prices.
BMI noted that fluctuations in supply, combined with potential demand surges from low-carbon industries amid current energy challenges, particularly through accelerated electric vehicle adoption, will facilitate a rebalancing of the lithium market after a period of oversupply.
Supplies Vulnerable
The rapid reactivation of previously dormant high-cost capacity during a price recovery phase could lead to quick production increases; however, prolonged disruptions may be sufficient to maintain upward price trajectories.
The World Bank warned that mining and processing activities are mainly concentrated in a limited number of countries, leaving global supplies vulnerable to unique disruptions and geopolitical tensions.
BMI mentioned that the US-Iran conflict that began in late February has heightened broader demand expectations for low-carbon industries, especially as it could spur increased EV demand amid rising energy prices. The conflict has also raised concerns about narrowed profit margins for lithium producers due to heightened energy costs and potential sulfur shortages caused by restrictions on shipments through the Strait of Hormuz.
BMI concluded that lithium prices are likely to remain stable in the near term, exhibiting sensitivity to geopolitical developments in West Asia. The resumption of Chinese supply, combined with robust demand expectations, will be crucial for any potential price decline.
Published on May 4, 2026
