Energy Storage Drives Lithium Battery Industry Chain Recovery as Domestic and Overseas Demand Accelerates

Recently, many companies in the lithium battery industry chain released their 2025 financial reports. From upstream lithium salts, midstream materials, to downstream battery manufacturing, all segments show signs of recovery and warming. Meanwhile, overseas energy storage demand remains strong. Since the beginning of 2026, several battery companies have successively announced long-term GWh-level domestic and international energy storage battery supply agreements.

Currently, the high prosperity of energy storage both domestically and abroad has become the main driver of lithium demand growth.

Domestically, the new capacity electricity price policy has recently been implemented nationwide, fully promoting independent energy storage capacity electricity prices, which may further stimulate new energy storage installations. Following the issuance of Document No. 114 on January 30, 2026 (“Notice on Improving the Capacity Electricity Price Mechanism for Power Generation”), on February 25, Qinghai Province introduced its first provincial-level energy storage capacity electricity price compensation policy (draft for comments). The profitability threshold for energy storage could exceed 6%, reaching a relatively high level. As the economic viability of domestic energy storage gradually improves, demand is expected to grow rapidly.

Internationally, under the context of energy transition and grid upgrades in Europe and America, demand for energy storage systems is experiencing explosive growth. Recently, several major AI technology giants in the U.S. signed “Protection Commitments for Electricity Bill Payers,” building their own power sources to cope with the surge in AI data center power consumption and the conflicts with aging power grids, shielding residents from rising electricity prices. Power infrastructure is shifting from traditional utility-driven models to enterprise self-investment and construction. This benefits Chinese equipment companies going global; meanwhile, the construction speed of AI data centers may be prioritized over price sensitivity, with demand for grid equipment and gas turbines expected to remain steady. The likelihood of large-scale energy storage orders with shorter construction cycles increasing is also rising.

For the lithium battery industry chain, current battery capacity supply is tight, utilization rates are high, and leading companies are expanding capacity first. Lithium battery materials, due to later capacity expansion, are just beginning to see profit recovery as downstream demand grows. On the battery side, leading companies are expected to gradually bring capacity online in the second half of 2025, and in 2026, they may maintain profitability and market position through price controls and long-term agreements.