The boundaries of demand are expanding, yet the long-established pricing system remains anchored in the old order. At the 2026 Battery Raw Materials Conference, Xia Juncheng, Director and President of Tianqi Lithium Corporation, brought the lithium carbonate pricing mechanism to the forefront. He pointed out that the price rules currently used across the upstream and downstream lithium industry chain are not unified. Upstream transactions are often closer to futures-based pricing, while downstream segments still primarily reference monthly average prices from price reporting agencies, leading to price transmission discrepancies. The intermediate processing segments bear the most significant squeeze from this misalignment.
Accompanying this assessment is a newly extended list of demand drivers. Beyond new energy vehicles, new applications such as AI data center energy storage, humanoid robots, the low-altitude economy, and solid-state batteries are being incorporated into lithium demand projections for the next decade. The information from this speech suggests that the lithium industry currently faces more than just price volatility itself. A deeper change lies in the expanding demand boundaries, while the pricing system used for many years remains stuck in the old paradigm. The tensions between resources, futures, long-term contracts, spot prices, and downstream processing margins are now being openly discussed.
On the demand side, new energy vehicles remain the primary driver, while new scenarios like AI data center storage are being written into future growth curves. There is no complete consensus within the industry regarding lithium supply and demand balance projections for the next ten years. Estimates from different institutions and brokerages for the period around 2035 vary significantly, ranging from a surplus of over one hundred thousand tonnes to a potential shortage of over one million tonnes, indicating a wide range of forecasts. The common ground, however, is that the expectation for long-term demand growth remains unchanged. Xia Juncheng indicated that from 2026 to 2035, lithium demand will overall remain on an upward trajectory, with new energy vehicles still the main engine. Simultaneously, new variables like the low-altitude economy, humanoid robots, and energy storage are entering the demand calculation framework.
Among these new applications, AI data center energy storage is the most quantifiable segment. According to GGII estimates, global shipments of AI data center energy storage batteries are projected to grow from 15 GWh in 2025 to 300 GWh by 2030. Calculating based on approximately 600 tonnes of lithium carbonate equivalent per 1 GWh of storage batteries, the related demand could reach 180,000 tonnes by 2030. For upstream resource companies, this is no longer a marginal variable but a significant new sector warranting inclusion in mid-to-long-term demand frameworks.
Humanoid robots and the low-altitude economy represent more forward-looking developments. Over the next five to ten years, the contribution of these two sectors to lithium demand is still in a phase of scaling up from hundreds or thousands of tonnes to higher volumes. Their absolute scale is currently unable to match that of power batteries and energy storage, but they have officially entered the industry's discussion on long-term demand. Their significance lies not in immediately altering the total demand picture in the short term, but in the fact that resource companies have begun incorporating factors like human replacement by machines, volume production of low-altitude aircraft, and electrification upgrades of terminal devices into their long-term demand mapping.
Solid-state batteries connect to another, longer-term growth curve. The period from 2027 to 2030 is seen as a critical window for GWh-scale capacity construction of all-solid-state batteries. By around 2030, global shipments of solid-state batteries are expected to reach several hundred GWh, representing a multi-fold or even tens-of-fold increase compared to 2023.
This implies that the scope of lithium demand is being redefined. Whereas the market previously habitually linked lithium demand solely to new energy vehicle sales, resource-side companies are now beginning to place energy storage, computing infrastructure, robotics, and low-altitude aircraft into the same demand table. For price formation, the significance of this change lies not only in the total volume increase but also in the demand structure becoming more diversified and complex.
On the pricing front, a split between futures and spot markets exists, with long-term contracts dominating, placing pressure on the middle segments of the industry chain. While the demand side is extending, the rules on the price side have not converged accordingly. Xia Juncheng noted that China is already the world's primary supplier and consumer of lithium products, accounting for over 70% of lithium consumption, with more than 90% of cathode material production capacity concentrated in China. Trading activity across the lithium industry chain is high, and the market is gradually forming pricing anchors.
The problem is that the lithium industry chain does not operate under a unified set of pricing rules. It is understood that some transactions between mines and lithium chemical plants are settled based on monthly average prices, while some spot purchases use prices derived from futures. The majority of transactions for lithium chemical plants are still linked to the monthly average prices from reporting agencies, with a small volume of spot trades using futures-based pricing plus premiums/discounts. Transactions between traders and cathode material factories more frequently employ futures-based pricing plus premiums/discounts. At the battery manufacturer level, suppliers are often required to settle raw material prices based on the reporting agencies' monthly averages.
This means that within the same industry chain, mines, lithium chemical producers, traders, cathode material makers, and battery cell manufacturers are not using the same pricing language. Long-term contracts remain the ballast of this system. Data shows that although the proportion of long-term contract sales of lithium carbonate in the Chinese market saw some adjustment in 2025, it generally remained between 60% and 80%. Stability is the most significant advantage of long-term contract pricing and maintains the strong influence of price reporting agency quotes in industry chain transactions. However, when futures prices deviate significantly from agency quotes, stability itself translates into transmission lag.
Between 2024 and 2025, the deviation between the average price from reporting agencies and the settlement price of the main futures contract generally narrowed from several percentage points to near parity. Yet, during more specific trading periods, the deviation rate between agency quotes and futures prices could still reach double digits, with extreme cases showing deviations of up to 17%. In such situations, if upstream procurement is based on futures or more flexible point-price models, while downstream settlement still relies on monthly agency averages, the intermediate processing segments simultaneously endure pressure from spot prices, futures, basis spreads, and processing fees.
Xia Juncheng emphasized that if the entire industry chain used the same mechanism from end to end, the damage from price inversions to intermediate segments would be much smaller. Under the current coexistence of different rules, it is difficult for certain links in the supply chain to achieve reasonable profit margins, indicating an inherently unhealthy mechanism.
Addressing this issue, Tianqi Lithium Corporation proposes moving towards a more unified and diversified pricing system. This involves expanding the sample of price references, reducing distortions between different rules, and allowing value distribution within the industry to better reflect actual transaction conditions. The underlying aim is not merely transactional convenience for a single company but a broader re-evaluation, following intense price volatility, of the need for a more stable and effectively transmitted set of price rules for the lithium industry chain.
It is evident that two key trends are emerging simultaneously in the lithium industry. One is the outward expansion of demand boundaries, with new applications like AI data center storage, solid-state batteries, humanoid robots, and the low-altitude economy beginning to be formally calculated by upstream resource companies. The other is the increasing difficulty for the old pricing system—characterized by the coexistence of futures, long-term contracts, and agency quotes—to transmit smoothly along the entire chain.
When demand is no longer defined solely by the automobile, price can also hardly continue to be measured solely by the old ruler. The next phase of competition in the lithium industry will still revolve around resources, costs, and production capacity. However, determining who defines the price, who bears the volatility, and who can translate the potential of new applications into tangible demand is becoming a sharper dividing line.
Comments