On October 12, 2026, futures expiration date the contract LC2701 for the lithium carbonate in China was down by 11.79% to 104740 yuan/tonne, thus marking the first close below the level of 110000 yuan since late 2025. The price briefly touched 104680 yuan/tonne. Starting from October 13, battery-grade lithium carbonate is traded in the spot market at the price of 108850 yuan/tonne, having lost 2900 yuan in price over the last day.
Three forces drove the collapse: supply, demand, and trader liquidations. On supply, the Jianxiawo lithium mica mine in Yichun, Jiangxi-China's largest single lithium mica deposit-re-entered environmental public notice on October 8, with full capacity of about 100,000 tonnes of lithium carbonate equivalent per year. Zimbabwean ore shipments resumed, and a major Brazilian mine secured its restart permit. Domestic September output was estimated at 128,517 tonnes, up about 10% month-on-month. On demand, the traditional "Golden September, Silver October" peak failed. September NEV retail sales fell 16.7% year-on-year to 1.084 million units, and January–September sales were down 12.8%. Market rumors said a leading storage integrator halved its September schedule and cut full-year plans by 30%, while a major battery maker revised down by 5%. Traders then liquidated inventory, creating a decline–selloff–accelerated decline loop.
Nevertheless, the physical fundamentals are still much stronger than prices predicted in the futures market. As per SMM statistics, the domestic inventory of lithium carbonate as of October 8 stood at 139,517 tons, which is a reduction of 9,260 tons, or 6.2%, from pre-holiday levels. At 113,600 tons by the end of September, inventories were down from about 203,000 tons in early June – a reduction of 44% in total. The downstream production sector is thriving, with LFP cathode output during September being 603,200 tons. The total production is expected to rise to 625,000 tons in October and reach almost 650,000 tons in December. Thus, the market has priced itself on "strong reality, weak expectations." Goldman Sachs expects that the global lithium market deficit of 404,000 tons in 2026 will turn into a surplus of 444,000 tons by 2028, with the average spot price in China at around 100,000 yuan/ton in 2027 and 84,000 yuan/ton in 2028.
For energy storage, lower lithium prices are a double-edged sword. Every 10,000 yuan/tonne decline cuts the material cost of a 314Ah LFP cell by roughly 0.006 yuan/Wh. From May's peak to current levels, that implies a cost reduction of about 0.054 yuan/Wh. China Electricity Council data show 2-hour lithium storage EPC prices at about 0.95 yuan/Wh, down nearly 50% from the 2022 peak, with project IRRs around 6.5%–7.5%. Lower costs improve project economics and could accelerate approvals. But high-cost miners are hurt. Below 110,000 yuan/tonne, producers relying on purchased ore-with costs near 140,000 yuan/tonne-are under severe pressure. Self-sufficient miners can tolerate current levels, but sustained declines may force production cuts and consolidation.
Sodium-ion batteries are relatively new compared to previous technologies in batteries. CATL made a contract to use 60 GWh of sodium-ion batteries in April 2026 with HyperStrong. The cost structure of sodium cells is currently between 0.35 and 0.40 yuans/Wh. When the difference in costs between sodium battery cells and lithium-iron phosphate (LFP) batteries becomes less than 0.10 yuan/Wh, the price of sodium batteries is still considered lower if lithium prices stay above approximately 81,000 yuan. If lithium prices decline to the region of 80,000-90,000, the case for storage using sodium will be less compelling.
Prices at 100,000–110,000 yuan/tonne are approaching the high-cost floor, which may limit further downside. But forward expectations still dominate. Watch production cuts, Jianxiawo's approval, fourth-quarter inventory drawdown, and storage project economics. For the energy storage industry, cheaper lithium is a cost tailwind-but also a reminder to diversify technology and reduce reliance on any single raw material.
