Everbright Securities released a research report stating that, according to Shanghai Metals Market (SMM) analysis, lithium iron phosphate (LFP) companies and downstream battery cell manufacturers are continuing price increase negotiations. Leading companies have entered a second round of talks, while most other material producers are still struggling to implement their first round of proposed hikes. Meanwhile, Tianqi Lithium's adjustment to its spot transaction settlement price model also provides indirect evidence of robust downstream demand. On the energy storage front, benefiting from lower costs, expanded peak-valley electricity price differentials following policy Document No. 136, and the introduction of capacity pricing/compensation policies in some Chinese provinces, domestic energy storage project returns are expected to improve, thereby stimulating demand. The main views of Everbright Securities are as follows.
On December 25, 2025, Hunan Yuneng, Dynanonic, and Wanrun New Energy successively announced production line maintenance and output reduction plans. Hunan Yuneng expects a one-month maintenance period, reducing cathode material output by 15,000-35,000 tons; Wanrun New Energy anticipates a one-month shutdown, cutting LFP production by 5,000-20,000 tons; Dynanonic also plans a one-month maintenance period. Concurrently, Tianqi Lithium announced that due to a significant deviation between the SMM price quote and the fair spot price as well as futures prices, it will adjust its spot transaction settlement benchmark to the Mysteel or the Guangzhou Futures Exchange lithium carbonate main contract price.
Cathode material producers are cutting output to support prices, which is expected to facilitate the downstream transmission of rising lithium costs. According to SMM analysis, while downstream battery cell manufacturers generally acknowledge the trend of rising raw material costs leading to higher cathode material prices, the actual implementation of these increases still depends on further negotiation outcomes between upstream and downstream players. If cathode material price hikes are successfully implemented, it would more effectively transmit lithium price increases downstream, opening up further upside potential. Tianqi Lithium's settlement price adjustment further corroborates strong downstream demand.
High-frequency downstream data continues to support high industry景气度. Weekly total lithium carbonate inventory stood at 109,773 tons on December 25, 2025, a decrease of 652 tons week-on-week, marking the 19th consecutive week of inventory drawdown and reaching the lowest level since February 20, 2025. According to a survey of the top 20 battery manufacturers by Daddyn Times (TD), China's total lithium battery (energy storage + power + consumer) production scheduling for January 2026 is approximately 210 GWh, down 4.5% month-on-month but better than market expectations.
Energy storage demand expectations are improving, with the supply-demand balance anticipated to turn more favorable in 2026. Benefiting from the aforementioned factors, domestic energy storage收益率 is projected to rise, driving demand. According to ICCSINO statistics, global energy storage lithium battery shipments reached 620 GWh in 2025, a 77% year-on-year increase, and are forecast to hit 960 GWh in 2026, growing 54.8%. From a capital expenditure perspective, major global lithium mining companies have seen a turning point with declining CAPEX since 2024, suggesting that supply growth from new or expansion projects in 2026 and 2027 is likely to slow. Energy storage is poised to take over from electric vehicles as the second major growth driver for lithium demand, improving the supply-demand outlook for 2026.
In the long term, solid-state batteries present new potential demand momentum for lithium. Solid-state batteries, valued for their high energy density and safety, are considered the next-generation technology. ICCSINO predicts solid-state battery shipments will reach about 5.1 GWh in 2025, nearly 80 GWh by 2030 (a 64% CAGR from 2025-2030), and 456 GWh by 2035 (a 53% CAGR from 2025-2035). Semi-solid-state batteries have already entered mass production and shipment in 2024, while all-solid-state batteries are currently primarily in the lab verification stage, with GWh-scale shipments expected to commence around 2027. Many domestic companies are actively布局 solid-state batteries. According to an Albemarle announcement, all-solid-state battery lithium consumption could reach nearly 2 kg/KWh, doubling that of current lithium battery systems, potentially further boosting lithium demand.
For investment recommendations, focus on companies with significant mine-side production growth, such as Tianhua New Energy (300390.SZ), Shenghong Lithium Energy (002240.SZ), Dazhong Mining (001203.SZ), Guocheng Mining (000688.SZ), Zangge Mining (000408.SZ), Salt Lake Co., Ltd. (000792.SZ), Yahua Industrial Group (002497.SZ), Ganfeng Lithium Group (002460.SZ), and Tianqi Lithium Corporation (002466.SZ).
Risks include downstream demand falling short of expectations, and uncertainties surrounding new domestic and international policies as well as geopolitical factors.
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