Admitting that energy storage demand exceeds expectations, but Goldman Sachs still maintains a "bearish outlook" on lithium prices in the medium term
Goldman Sachs acknowledged in its latest report that the explosive demand for energy storage is rewriting the short-term supply and demand dynamics of the lithium market, leading to a surge in lithium salt prices in China and delaying the price correction point to the second half of 2026. However, Goldman Sachs still maintains a bearish mid-term outlook, expecting that a supply surplus will re-emerge in 2027, with lithium prices significantly lower than current market expectations
Goldman Sachs believes that the explosive demand for energy storage is rewriting the short-term supply and demand dynamics of the lithium market. The tightness of the short-term market is beyond imagination, but the mid-term oversupply situation has not changed.
According to the Chase Wind Trading Desk, Goldman Sachs acknowledged a significant shift in its report on November 23: the explosive growth in demand for energy storage systems (ESS) is rewriting the short-term supply and demand dynamics of the lithium market.
The price of lithium salts in China has surged from USD 9,200 per ton in mid-September to over USD 11,000 per ton. This has forced Goldman Sachs to raise its price forecast for 2026 and postpone the previously expected price correction to the second half of 2026.
However, it is worth noting that Goldman Sachs maintains its bearish mid-term stance, expecting that oversupply will re-emerge in 2027, at which point supply will exceed demand by 18% unless producers cut back on capacity expansion plans. Goldman Sachs' price forecast for 2027 is USD 9,250 per ton, significantly lower than the CME futures price of USD 14,950 per ton, indicating that the current market may be overly optimistic.
Explosive Demand for Energy Storage Delays Price Correction
Goldman Sachs acknowledges that the recent surge in lithium carbonate prices in China from USD 9,200 per ton in early September to over USD 11,000 per ton is fundamentally driven by demand for energy storage that far exceeds expectations, leading to a rapid tightening of market balance. As a result, the firm has significantly adjusted its demand model, changing the statistical scope of energy storage lithium consumption from terminal installed capacity to a more realistic battery production.
Under the new model, Goldman Sachs has substantially raised its ESS demand forecasts for 2025/2026 to 589/736 GWh, nearly doubling the previous estimates of 275/413 GWh. This means that ESS production in 2025 will reach the previously forecasted installed capacity level of 621 GWh for 2028, achieving leapfrog growth. Specifically, this adjustment increases total lithium demand by 140/209 thousand tons in 2025/2026, with growth rates of 9%/8%.
This adjustment means that lithium demand from the energy storage market alone will account for 44% of the global total demand growth in 2025, with a total share approaching 30%. As a result, Goldman Sachs has postponed the expected price correction to the second half of 2026.
Short-Term Tightness Followed by Mid-Term Oversupply
Despite the optimistic short-term outlook, Goldman Sachs has not changed its core bearish view for the mid-term. The report predicts that as spodumene supply increases and previously suspended lithium mica capacity resumes, market tightness will ease in the second half of 2026, with prices falling from the robust USD 11,000 per ton in the first half to USD 9,500 per ton.
Key factors driving supply growth in the second half include the resumption of operations at CATL's lithium mica project and accelerated global spodumene production. Goldman Sachs expects supply growth to reach 27% in 2026, significantly higher than the 12% in 2025. This will bring the average price for the year to USD 10,250 per ton, but still below the GFEX/CME futures prices of USD 11,530/13,613 per ton Goldman Sachs further stated:
"We maintain the view that the lithium market will remain 'low-for-longer' compared to the peaks of 2022/23, as supply is expected to exceed demand by 18% by 2028 unless producers curb expansion. By 2027-28, we expect prices to remain below our estimated incentive price range of $10,200-11,000 per ton to slow production growth and prevent inventories from rising to unsustainable levels."
Looking ahead to 2027, Goldman Sachs expects the market will need to avoid excessive inventory buildup through supply cuts (project delays). They believe that prices at that time must remain at levels insufficient to incentivize new project investments in order to achieve market rebalancing. In short, the explosive demand for energy storage provides strong short-term support for lithium prices, but cannot change the fate of mid-term oversupply.
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