Lithium Prices Fall on CATL Supply Fears as Battery Storage Buildout Accelerates
Citi expects tight lithium supply-demand through Q3 even as the global BESS market heads toward $150 billion by 2030, driven by AI data center demand.
Lithium prices fell on Thursday (2026-06-25) as traders positioned for a supply surge from CATL, the world's largest battery manufacturer, with analysts at Citi writing that the market appeared to have priced in the near-term resumption of the Jianxiawo mine. The analysts nonetheless forecast a continuation of tight supply-demand dynamics through the third quarter, citing new battery capacity scheduled to come online.7
The drop comes as the global battery energy storage market is heading into one of its fastest expansion phases. Industry data cited by OilPrice.com put the global BESS market on course to nearly triple to $150 billion by 2030, with installed capacity projected to multiply between five and fifteen times by the decade's end — a buildout powered significantly by AI data center demand.7
The International Energy Agency projects that AI and data centers alone will account for as much as 4% of global electricity use by 2030, a level that has pushed hyperscalers into direct off-take deals with battery storage developers rather than relying solely on grid utilities to manage their power needs.6
Fluence Energy, the Nasdaq-listed battery storage integrator, advanced significantly in May 2026 following record backlog disclosures and new master supply agreements with two major hyperscalers. Management reaffirmed its 2026 revenue target of approximately $3.2 billion to $3.6 billion, with 85% of the midpoint already contracted, according to Google Finance. Analysts project a strong third quarter as roughly $80 million in deferred revenue from Q2 shipments is recognized, though a secondary offering of 20 million Class A shares priced around $21.00 in mid-May 2026 triggered immediate price volatility and concerns about institutional exits. Persistent net losses remain a drag on sentiment.1
The hyperscaler agreements mark a change in how storage is sold. Battery developers have historically depended on grid operators and utilities as their primary customers. Direct data-center deals create a different demand channel, one less exposed to the regulatory timelines that continue to produce years-long interconnection queue delays across the US.4
But supply constraints are complicating the deployment picture. Battery pack prices remain elevated, global shipping bottlenecks are dampening near-term installations, and the industry's dependence on Chinese suppliers for lithium-ion cells and upstream processing exposes Western developers to both pricing shocks and geopolitical risk, panelists at the BloombergNEF Summit said in April 2026.5
In Europe, those risks have been overshadowed by an unexpected revenue windfall. Battery storage revenues in the United Kingdom more than doubled from late February 2026 onwards, following the US and Israeli strikes on Iran, as volatile power and gas prices made frequency response and arbitrage services significantly more lucrative, Montel reported. Fintan Devenney, senior energy analyst, attributed the surge directly to the conflict-driven price volatility.2
Smaller markets are joining the buildout. Greece connected its first two battery storage systems — totaling 16 MW and 32 MWh — to its power grid on Thursday (2026-05-21), with a further 300 MW planned for connection within the same month, Montel reported. The scale is modest, but the milestone illustrates how broadly the technology is spreading across European power markets.3
Citi's lithium note, published on Thursday (2026-06-25), captured the central tension in the sector: demand is absorbing supply additions faster than the market expected, yet any large new source coming online — whether Jianxiawo or a competing hard-rock project — has the potential to reprice the input cost that underpins much of the sector's investment case. How quickly that additional supply materializes, and how much capacity the AI buildout absorbs in the meantime, will determine whether the current boom extends into 2027 or runs into a wall of its own making.7