Recent industry research reports and lithium market statistics indicate that the global lithium industry, previously weighed down by oversupply concerns since 2022, is now expanding rapidly amid unprecedented excitement over large-scale battery energy storage demand fueled by the AI boom. This shift has reversed the long-term bearish pricing trend that disrupted lithium metal trading and related stock prices due to oversupply anxieties. The surge in demand is now driving lithium prices and lithium-sector stocks toward a new bull market.

The most active lithium carbonate futures contract, a core material for EV batteries, continued its upward trajectory during Tuesday's early trading session on the Guangzhou Futures Exchange, following a roughly 5% jump in the previous session. Spot prices for lithium carbonate have risen to their highest level since late August, though they remain more than 85% below their 2022 peak.

In equity markets, lithium-related stocks have rallied globally, buoyed by rebounding lithium prices driven by strong energy storage demand and China's "anti-involution" policy stance. Sociedad Quimica Y Minera De Chile SA (SQM), which owns one of the world's largest lithium mines, has surged over 20% since October, while several lithium-sector stocks in China's A-share market have hit consecutive daily price limits.

"We believe the recent lithium price rally is primarily demand-driven rather than due to potential supply disruptions," Citigroup analysts noted in a November 9 report. "We are increasingly confident in robust battery energy storage demand over the coming years."

As shown in the chart above, lithium prices have maintained strong upward momentum. Market focus has shifted from supply concerns to energy storage demand prospects, lifting prices for key battery materials.

**From Supply Worries to Storage Demand** The lithium market has experienced extreme volatility in recent months, with particular attention on a production halt at a mine operated by CATL, the world's largest EV battery maker. Now, the focus has pivoted decisively to demand.

"Leading lithium iron phosphate (LFP) cathode producers are mostly operating at full capacity due to energy storage demand," said a senior analyst at Sublime China Information Co.'s Fubao Lithium division. "Looking ahead, strong energy storage system (ESS) performance could sustain long-term lithium carbonate demand, but industry players must closely monitor how this translates into actual market dynamics."

Unprecedented AI-driven power demand, government policy incentives, improving economic expectations, and EV expansion plans are bolstering confidence in ESS demand. Citigroup data projects ESS will account for over one-third of global battery demand by 2030, up from about 20% last year.

"Historically, forward-looking ESS indicators have been limited," Citigroup analysts acknowledged. "However, we believe global capital flows are unlikely to be wrong." The bank forecasts 31% year-on-year growth in global battery demand by 2026, with ESS and EV demand rising 45% and 26%, respectively. Analysts added that a potential full restart of CATL's major mine "would unlikely alter the strong destocking trend."

Some caution that lithium's rally may be overheating. A China Futures Co. analyst warned, "The current surge is too rapid—sentiment-driven corrections are possible. While 2026 ESS demand dominates trading logic, severe supply shortages may not materialize next year."

**Lithium Riding the AI Supercycle** Lithium-ion batteries dominate new energy storage projects, cementing lithium's position as the primary beneficiary. The IEA reports lithium-ion batteries account for nearly all EV and new storage installations, with the U.S. Solar Energy Industries Association noting lithium-based storage as the main renewable energy pairing, poised for explosive growth this decade.

With 85%-90% round-trip efficiency and millisecond-level response, lithium storage excels in peak shaving, frequency regulation, and backup power. Alternatives like flow batteries and sodium-ion lag in scale, cost, and market acceptance, leaving lithium's dominance unchallenged near-term.

As Microsoft, Google, and Amazon aggressively expand AI data centers, skyrocketing power needs are making lithium a key AI beneficiary. The IEA predicts global data center electricity demand will more than double to 945 TWh by 2030—surpassing Japan's current usage—with AI driving a fourfold increase in related power consumption.

U.S. grids, strained by AI/HPC facilities' 24/7 power hunger, increasingly rely on battery storage + demand response for peak loads. Diesel generators are being supplemented or replaced by large-scale lithium storage for instant switching, arbitrage, and grid buffering.

UBS highlights energy storage as lithium's "second growth engine," rivaling EVs in importance. The bank projects ESS will comprise nearly 30% of total battery demand by 2030, transitioning from "marginal" to "core variable." This reflects structural power gaps—U.S. electricity demand may grow 3% annually amid AI data centers, while new generation infrastructure takes 7-10 years to build, making ESS the critical bridge.

UBS forecasts global ESS demand will skyrocket from 396 GWh in 2026 to 873 GWh by 2030 (24% CAGR from 2025). Combined with supply disruptions, this could turn Citigroup's predicted 2026 surplus of 55,000 tonnes into deficit territory. The bank concludes lithium prices have bottomed and will enter a steady upward trajectory.