Lithium carbonate prices have surged to 200,000 RMB/ton—how is the lithium price 'scissors effect' systematically severing the lifeline of large-scale energy storage?

• Arbitrage in electricity market trading—both the largest revenue source and the greatest uncertainty In provinces with active electricity markets—such as Shanxi, Shandong, and Inner Mongolia—the spot price spread can reach 0.35–0.48 RMB/kWh, whereas in nearly half of all provinces, the spread remains below 0.30 RMB/kWh. Impact of lithium carbonate price fluctuations on energy storage IRR (Source: Everbright Securities) According to calculations, when lithium carbonate prices stand at 120,000 / 200,000 / 240,000 RMB/ton—with all other conditions unchanged—the required spot market arbitrage price spread must reach 0.37 / 0.39 / 0.41 RMB/kWh to achieve a target IRR of 6.5%. Average hourly spot price spreads across provincial electricity markets in January 2026 (Source: Everbright Securities) This may explain why contract breaches have clustered in provinces such as Ningxia, Hebei, and Shaanxi—not due to poor corporate operations, but because local electricity pricing structures and capacity subsidies are insufficient to offset rising costs. Sunshine Power recently stated in an investor exchange that, given domestic energy storage business gross margins hover around single digits, the company has had to proactively abandon certain projects as part of its operational strategy. Hibosun, during a J.P. Morgan research briefing, cited a hard threshold: once lithium prices hit 120,000 RMB/ton, some projects become unsustainable; at 170,000 RMB/ton, demand begins to experience significant disruption. If even industry leaders face such pressure, mid- and lower-tier players are undoubtedly feeling even greater strain. A notable signal is that central SOEs and state-owned enterprises have begun relaxing their IRR thresholds. According to a Morgan Stanley research report, since late 2025, many such entities have lowered their minimum acceptable IRR for energy storage projects—from 6.5% down to 5%. This can be interpreted as the entire industry being forced to 'recalculate from scratch' amid the lithium price storm: only projects with financially viable models can proceed—and only then can the industry sustain growth. 03 Where is lithium headed? How this storm ultimately resolves hinges largely on one question: how much longer will lithium prices keep rising? Industry views on this issue remain divided: • Goldman Sachs expects lithium prices to peak in the first half of 2026, followed by a correction phase, and a relatively looser trend emerging in the second half; • UBS bluntly declares 'a new upward cycle for the lithium industry,' sharply raising its lithium carbonate target price to USD 41,875/ton (approx. RMB 298,000/ton); • Albemarle (the world’s largest lithium producer) and SQM (the second-largest), respectively project long-term stable ranges of USD 12–25/kg and USD 15–18/kg—equivalent to RMB 90,000–180,000/ton and RMB 100,000–120,000/ton. Historical spodumene prices and future outlook (Source: UBS) Although specific forecasts vary, there is broad consensus: lithium prices are undergoing a 'structural uplift,' with the overall price center shifting upward. For energy storage system integrators, this means the era of low-cost 'dividend periods' is over—and what lies ahead is a contest of supply chain resilience under persistently high and volatile lithium carbonate prices. Here, the strategic approaches adopted by industry leaders offer valuable insights: • Sunshine Power has deliberately shifted its business focus toward overseas markets—where price sensitivity is lower and gross margins higher. • Hibosun has transformed its business model—from pure equipment sales to full-cycle power plant operation—capturing more value across the asset’s entire lifecycle.

Tianqi Lithium: profits surge 1,800%!

Tianqi Lithium: Rising from the ashes! On April 20, Tianqi Lithium released its Q1 2026 earnings preview. The company’s attributable net profit for Q1 2026 stood at RMB 1.7–2.0 billion, representing a staggering year-on-year increase of 1,530.31%–1,818.01%—more than five times its full-year 2025 profit! Tianqi Lithium attributes this explosive growth to two main factors: First, improved sectoral prosperity. This is indeed accurate: in Q1 2026, China’s new-energy vehicle market fully rebounded, with over half of mainstream brands reporting sequential sales growth exceeding 70%; meanwhile, lithium carbonate prices continued climbing—reaching RMB 172,500/ton on April 20, up nearly 50% from the start of the year. Second, strong performance by its equity investee SQM, which generated substantially higher investment income compared to the prior-year period. So—who exactly is SQM? What is Tianqi Lithium’s historical relationship with it? And looking ahead, can SQM continue delivering robust profits for Tianqi Lithium? A RMB 28-billion gamble Securing an eight-year profit engine SQM—short for Sociedad Química y Minera de Chile—holds the most prominent asset in global lithium: the mining and operating rights to the Atacama Salt Flat in Chile, the world’s largest lithium brine reserve. For Tianqi Lithium—a lithium-focused enterprise engaged in lithium resource development, spodumene concentrate production, and lithium chemical manufacturing—this was an irresistible opportunity. Moreover, acquiring equity stakes in lithium producers had already become a proven strategy for the company. In 2013, Tianqi acquired Talison, gaining control of Greenbushes—the world’s largest spodumene mine; in 2014, it acquired a 20% stake in Zhabye in Tibet, securing exclusive mining rights to Zhabye Salt Flat—the largest lithium salt lake in Asia. Thus, in 2018, Tianqi set its sights on SQM. That year, it raised USD 4.066 billion (RMB 2.7811 billion at the time of payment) entirely through self-funded sources to acquire a 23.77% equity stake in SQM. Recall that at year-end 2017, the company’s net assets totaled just RMB 10.635 billion, and its cash balance stood at only RMB 5.524 billion—making the RMB 2.8-billion price tag seem astronomical. Faced with this challenge, Tianqi demonstrated unwavering resolve, borrowing USD 3.5 billion from several banks. By end-2018, Tianqi’s short-term and long-term borrowings reached RMB 1.941 billion and RMB 25.326 billion respectively—up 2.31-fold and 17.67-fold from end-2017; its debt-to-asset ratio soared from 40.39% to 73.26%! Its cash balance also plummeted—from RMB 5.524 billion to RMB 1.943 billion—shedding nearly two-thirds within a single year. This RMB 28-billion acquisition was, without exaggeration, a 'high-stakes gamble' for Tianqi Lithium. History proved Tianqi right. The results were immediate and profound: with this one move, Tianqi secured an unshakable lithium supply chain. In the very year of acquisition, SQM supplied 13% of global lithium output, while Talison—acquired earlier by Tianqi—supplied 27%. Together, Tianqi controlled 40% of the world’s lithium supply.

Sociedad Quimica y Minera (NYSE:SQM) Upgraded by JPMorgan Chase & Co.

Nov 6, 2026

JPMorgan upgraded Sociedad Quimica y Minera (SQM) to overweight with a $71 price target after the lithium and chemical producer beat earnings expectations. SQM reported EPS of $2.31 and revenue of $2.47 billion, marking significant year-over-year increases.

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