The lithium market is showing signs of a long-awaited recovery, trading around $13,500 per metric ton. It is a rally of nearly 50% from the intra-year lows, and more than 25% year-over-year. Still, the price is far below its $80,000 peak from 2022.
While electric vehicles remain the dominant source of lithium demand, analysts increasingly point to energy storage systems as the next major growth engine. Large-scale battery installations that store electricity for later use are expanding rapidly. Utilities, data centers, and governments seek grid stability and better integration of renewable energy.
The relative maturity of EV adoption means growth in energy storage remains the largest swing factor for battery-cell production, and therefore lithium demand, in 2026, Adamas Intelligence analyst Chris Williams said, according to Bloomberg. As EV markets in China mature and growth in the U.S. faces policy uncertainty, energy storage is expected to grow at a faster pace than electric vehicles next year.
Supporting the Critical Infrastructure
Energy storage systems range from massive utility-scale batteries to smaller grids designed to support homes, buildings, and other infrastructure. These systems can operate independently from the main grid during outages, storing excess electricity and redistributing it when power is disrupted.
In an interview with Benzinga, Benjamin Tran, Executive Chairman of Bimergen Energy (OTC:BESS), explained the benefit of this technology.
“A micro or nano grid, a smaller local grid connected to the national grid, can operate independently in times of crisis,” he said, adding that integrated energy storage allows excess supply to be saved and used when it is needed most.
Meanwhile, Chinese lithium producers have been optimistic about this emerging demand. Executives at major producers, including Tianqi Lithium and Ganfeng Lithium, have said they expect the global lithium market to reach balance in 2026 and 2027, citing faster-than-expected growth in energy storage installations.
At the same time, Bernstein analysts noted a bottoming market for lithium, anticipating “tightening through 2026 and 2027.”
DLE is Starting to Matter
After years of promises as the next big thing, direct lithium extraction (DLE) is entering the era of commercial production.
According to Reuters, Albemarle Corporation (NYSE:ALB) completed validation of its Chilean DLE pilot plant last week. The producer achieved recovery rates above 94% and water reuse of up to 85%. The milestone allows the company to finalize plans for a commercial facility and move into environmental review.
Albemarle’s stock has been volatile, trading as low as $57.76 earlier in the cycle before rallying to $133.59 last week. The broad range reflects both market uncertainty and optimism around technological advances.
Still, as energy storage demand accelerates and environmentally friendly extraction methods improve, lithium bulls are betting the recovery still has room to run.
Price Watch: Global X Lithium & Battery Tech ETF (NYSE:LIT) is up 53.76% year-to-date.
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