Lithium Market Growth Could Reach 25pc in 2026 as Battery Storage Demand Surges

SQM BESS

Lithium market growth could reach 25pc in 2026 as stronger battery energy storage demand combines with steady electric vehicle consumption, according to Chilean producer SQM. The outlook suggests that the lithium market is entering a new demand phase led not only by EVs, but also by large-scale stationary storage.

SQM raised its 2026 production guidance to 260,000t of lithium carbonate equivalent, up from 230,000t in 2025. The company also expects sales to rise by 10pc this year, supported by strong Asia-Pacific demand and full-capacity operations at its Atacama assets.

Lithium market growth is also improving short-term pricing expectations. SQM expects first-quarter sales to rise by more than 15pc from the same period in 2025, which would set a record for January-March sales. The company also expects prices to be substantially higher than the $10/kg level recorded in the fourth quarter.

Battery Storage Demand Changes the Lithium Growth Model

Battery energy storage is becoming a stronger driver of lithium demand. This matters because Bess demand can grow independently of passenger EV cycles, especially as grids add more renewable power and require storage for stability.

SQM’s outlook shows that lithium producers are increasingly watching storage demand alongside EV sales. EV consumption remains steady, but storage growth can absorb additional lithium carbonate equivalent volumes and tighten the market faster than expected.

The company has already secured contracts covering 80pc of its 2026 LCE volumes. That leaves 20pc, or around 52,000t, available for spot market sales. This structure gives SQM exposure to higher prices if demand remains strong, while also protecting much of its volume through contract coverage.

SQM Output Expansion Strengthens Chile’s Lithium Position

SQM produced 233,000t of lithium carbonate equivalent in 2025, up 14pc from the previous year. A record fourth quarter drove the result, with NovaAndino Litio producing 66,000t LCE, up 52pc from the same period in 2024.

NovaAndino Litio is the new name of SQM’s Chilean lithium subsidiary following its merger with Codelco. The rebrand signals the growing importance of Chile’s state-linked lithium strategy and the central role of the Atacama operations in global supply.

SQM’s Australian operations also continued to progress. Its attributable production from the Mt. Holland extraction site reached 156,400t of lithium concentrate in 2025, while the Kwinana hydroxide refinery produced 1,600t LCE during its ramp-up phase. These assets give SQM a broader lithium platform across both brine and hard-rock supply chains.

The Metalnomist Commentary

SQM’s forecast shows that lithium demand is becoming more diversified and less dependent on EVs alone. If battery storage continues to outperform expectations, producers with flexible sales exposure and reliable capacity could regain pricing power faster than the market expected.