Fastmarkets monthly BRM market update

Key points

1. Navigating lithium market volatility: ESS growth amid price swings
   From mid‑January through early February, the lithium market was defined by futures‑driven volatility, sharp reversals in carbonate and hydroxide prices, and major divergence between ESS‑driven strength and NCM‑related weakness. Supply‑side tightness (particularly in hydroxide), shifting Chinese export‑rebate policies, and seasonal logistics constraints and a pronounced deterioration in spot liquidity ahead of the Lunar New Year further contributed to market instability. Despite short‑term volatility, medium‑term fundamentals remain supported, primarily by surging ESS installations.
   

2. January lithium surge eases as market corrects ahead of export policy shifts
   Lithium carbonate CIF CJK prices peaked at $20.4/kg, while hydroxide reached $19.6/kg, reflecting month-on-month gains of 57% and 62% respectively across the China Japan Korea (CJK) region. Spodumene CIF China prices also strengthened, climbing above $2,300/tonne by late January. However, this upward trajectory slowed in early February following a steep drop in salt prices. Although spot and GFEX futures markets later rebounded, participants largely attributed the mid-February uptick – bringing lithium carbonate to $18.2/kg, lithium hydroxide to $17.1/kg, and spodumene to $1,900/tonne – to the market correcting from January’s rapid declines rather than any fundamental shift. Meanwhile, battery and cathode manufacturers in China continue to advance shipments into Q1 ahead of export tax rebate changes scheduled for April 1, adding another layer of near-term demand.
   

What do our analysts say?

The lithium market is expected to remain subdued in the third week of February during the Lunar New Year holidays. We await to see what level of price response begins in the latter stages of the month and into March, where OEMs are expected to continue to push material to the export market ahead of tax rebate changes on April 1. In the salts market, lithium carbonate is expected to remain in demand with strong forecast ESS demand post-holidays. Lithium hydroxide demand continues to see challenges, highlighted by Albemarle’s decision to halt processing at its Kemerton site in Australia.

Rob Searle, Fastmarkets

Key points

1. DRC export quotas drive cobalt price surge amid supply constraints
   Cobalt prices rose further in January as the market tightened. The DRC, the world’s top cobalt miner, has imposed cobalt export quotas in an attempt to lift prices. While it has succeeded, exports have barely resumed due to the slow rollout of the infrastructure needed to control material outflows.
   

2. Delayed DRC exports tighten China’s cobalt supply in Q1
   It typically takes around three months for DRC material to reach China, its main export destination. The slow resumption of exports means very little material will reach China in Q1, further tightening the market.
   

3. Export quotas and backlogs keep cobalt prices elevated for now
   Once the export quota system is fully operational, and the backlog of material from Q4 2025 is also being exported, the availability of material should improve. Until then, prices are likely to remain well-supported.
   

What do our analysts say?

The DRC’s quota system will squeeze supply in the next two years, but we expect the market tightness to be particularly acute in Q1 2026 since material from the DRC is unlikely to reach China during this period. Although the DRC has been successful in lifting prices via its supply control, the longer prices remain elevated, the greater the risk that the electric vehicle battery industry – the largest consumer of cobalt – will seek to minimize the cobalt content in batteries or move to cobalt-free chemistries. In the longer term, the DRC’s strategy risks damaging cobalt demand growth prospects.

Olivier Masson, Fastmarkets

Key points

1. Nickel prices stabilize in higher $16,750-$18,750 range
   The nickel cash price has shifted to a new trading range of around $16,750-$18,750 per tonne, up from around $14,000-$16,000 per tonne through 2025.
   

2. Indonesian supply controls drive nickel market rebalance expectations
   This increase in the trading range is due to expectations that the Indonesian government will seek to impose greater supply discipline on its nickel industry. This would involve stricter control of ore mining quotas and could potentially rebalance the market more quickly than anticipated.
   

3. 2026 nickel quota pending, flexibility expected to meet market needs
   The market is still awaiting the final total nickel mining quota for 2026. However, even once the final value is released, we expect some degree of flexibility to respond to market demands.
   

What do our

analysts say?

The nickel market has been oversupplied since 2022, due mostly to the growth in Indonesian production. The rise in prices will need concrete indications of Indonesian supply discipline if it is to be sustained. Although the Indonesian government seems more serious about controlling supply, the market still awaits the definitive ore quota level for the year.

Olivier Masson, Fastmarkets

Key points

1. Battery-grade manganese prices surge amid unexpected Q1 tightness
   China’s battery-grade manganese sulfate exw mainland China prices continued the late-2025 rally in January, with prices firming throughout the month. Expectations of a gradual slowdown in the market as we moved towards the holidays have not yet materialized, with the market tighter than is typical for Q1.
   

2. China’s HPMSM production peaks to meet surging demand
   China’s high-purity manganese sulfate production has remained relatively flat in December and January, with utilization rates of 51-54% at HPMSM sites. The last three months of production have been the strongest in China for several years. Production has ramped up to meet strong demand in Q4 2025 and early 2026, with higher-cost processing sites entering the market.
   

3. Export tax changes boost Q1 demand for battery-grade manganese
   Demand for battery-grade manganese and other precursor materials has remained strong in January and early February. Changes to export tax rebates for cathode materials and lithium-ion batteries have driven a shift in demand into the first quarter, supporting manganese sulfate prices.
   

What do our analysts say?

Strong manganese pricing through January and early February has highlighted the robust demand and tighter market conditions currently playing out in China. Despite some perceived weakness in the NCM market compared to LFP batteries and EVs, we have still seen OEMs in China rush to take advantage of the existing export tax rebate system ahead of changes from April 1.

Rob Searle, Fastmarkets

Key points

1. US trade ruling spurs regional premiums for graphite anode materials
   The final determination in the US International Trade Commission investigation into antidumping and countervailing duties on graphite active anode materials from China laid the groundwork for regional premiums that could support the development of the ex-China supply chain. 
   

2. Grpahite market stagnates amid Lunar New Year lull in China
   Market activity in the dominant Chinese market remains slow, with prices in the graphite market mostly unchanged amid seasonally driven low levels of activity due to the Lunar New Year.
   

3. Trade barriers could disrupt ex-China graphite market in 2026
   While similar trends of low pricing and market oversupply are expected to drive the graphite market in 2026, as they did in 2025, the formation of trade barriers in the US and Europe does create the potential for volatility in the ex-China supply chain.
   

What do our analysts say?

The USITC’s final ruling on antidumping and countervailing duties for graphite anode materials has created the foundation for meaningful regional premiums—opening the door for a more resilient ex-China supply chain. Market activity in China remains muted amid Lunar New Year seasonality and largely unchanged prices, while oversupply and low pricing are expected to persist across 2026. Still, the emergence of new trade barriers in the US and Europe introduces a new layer of uncertainty that could inject volatility into graphite markets outside China. 

Andrew Saucer, Fastmarkets

Key points

1. China’s black mass demand fuels two-tier global market
   China’s surge in black mass imports since August 2023 has driven record-high payables across Asia, as mainland buyers outbid regional competitors for high-purity, low-moisture material that meets strict import standards. This aggressive demand, supported by lower operating costs, tariff reductions, and new domestic recycling regulations, has created a two-tier global market and intensified competition for premium NCM black powder.
   

2. Malaysia’s e-waste ban tightens black mass supply, spurs local recycling 
   Malaysia’s sudden, absolute ban on e-waste imports is set to disrupt feedstock availability for battery, aluminium, and copper recyclers that rely heavily on inbound material, potentially tightening black mass supply and driving up payables. While the move poses short-term logistical and cost challenges, it may also accelerate the development of domestic recycling capacity as regulated local collectors move to fill the supply vacuum.
   

3. Hydrovolt halts French facility amid EOL battery shortfall in Europe
   Hydrovolt has cancelled its planned French battery recycling facility after finding that Europe’s supply of end-of-life (EOL) batteries is far lower than expected, leading the company to refocus on its core Nordic markets. The shortfall in EOL batteries—exacerbated by slow EV adoption, longer battery life spans, and rising second-life uses—has already prompted several major European recyclers to delay or scrap projects, intensifying competition for limited feedstock.
   

What do our analysts say?

Limited supply and rising demand are leading to soaring black mass prices.

Julia Harty, Fastmarkets

Key points

1. Stellantis shifts focus from EVs to hybrids amid $26B write-downs
   Stellantis CEO Antonio Filosa has announced that the company will be turning back from its EV push as it was causing the company to haemorrhage cash. Instead, the company will continue to produce petrol and hybrids for the foreseeable future. The move comes alongside the announcements that Stellantis faced write-downs totalling $26 billion, including scaling back investment in ACC and selling its 49% stake in NextStar Energy to its JV partner LGES for just $100. Stellantis had very few top-selling EV models throughout the group, focused within the Peugeot brand for midsize crossovers, while only the Jeep Avenger sells meaningful volumes within the SUV segment.
   

2. LGES repurposes NextStar facility for energy storage amid EV policy shifts
   In what has become a trend within the US market, LGES plans to convert its now wholly owned NextStar Energy facility in Ontario, Canada, to produce cells for energy storage systems instead of EVs as originally planned. The move signals LGES’s expectations for offtake within the region shifting towards ESS and away from EVs, owing largely to policy changes weakening incentives for electric vehicles and charging infrastructure buildout.
   

3. China’s EV sales drop 20% amid policy shifts and Lunar New Year delay
   The effects of China’s EV subsidy and tax policies are becoming clearer, as the CPCA claims that retail EV sales within China fell 20% to just below 600,000 units, lower in volume terms than both 2024 and 2025. While this one month’s worth of data can’t be taken as an indication for how the rest of the year will play out, a late Lunar New Year delays what would usually be the recovery period within China, so we can expect this downturn to be protracted relative to previous years.
   

What do our analysts say?

Weakening Chinese EV sales are a symptom of the country’s new focus on quality over quantity, as the government aims to reverse the current dynamic of exporting quality and selling quantity domestically. In adapting their current vehicle model offerings, OEMs will likely look at exporting old and non-compliant stock to international markets now that they aren’t competitive domestically.

Connor Watts, Fastmarkets

Key points

1. China’s ESS sector booms with 160% January sales surge amid VAT rebate phase-out
   Supported by robust domestic demand and the phased reduction of the ESS VAT export rebate (from 9% to 6% starting 1 April 2026, with full removal scheduled for 1 January 2027), 2026 is expected to remain a high-growth year for China’s ESS sector. Leading cell manufacturers are running at full production capacity to meet both domestic and overseas orders. Our channel checks suggest that January sales rose by over 160% compared with the same period last year. 
   

2. Long-duration energy storage gains momentum in China and US
   The significance of long-duration energy storage is steadily increasing in 2026, driven by policy changes in China and shifting energy needs in the United States. China’s NDRC recently introduced a pricing model for grid-side standalone storage that ties capacity payments more closely to how long systems can discharge, making longer-duration solutions—those beyond the standard 2 to 3-hour range—more attractive economically. In the US, higher electricity consumption due to AI-powered data centres is prompting project reviews to focus more on reliability and resilience, where extended-duration storage supports both power generation and upgrades to the grid. Although the definition varies, systems capable of at least 6 hours of discharge often require double or triple the energy capacity compared to short-duration setups with the same power rating. This means greater demand for batteries and system components, even if installed power doesn’t rise proportionally. In summary, the move toward longer-duration storage signals a fundamental growth driver for the industry, rather than a temporary trend.
   

3. US manufacturers pivot to ESS amid slowing EV sales growth
   More manufacturers in the US are shifting or upgrading their EV production lines to focus on stationary storage since there are currently greater demand and clearer prospects in the ESS sector, such as AIDC. This change comes as EV sales growth slows, but utility-scale and commercial storage projects remain steady. Additionally, prismatic and pouch cell manufacturing equipment can be adapted easily. Lithium raw material prices have recently stabilized, making costs easier to predict for developers and integrators, which helps encourage new installations for the rest of the year. While this shift doesn’t mean that all production capacity will move from EVs to ESS, it shows growing supply-side readiness for storage solutions—potentially easing bottlenecks and boosting project deployments as more pipelines develop.
   

What do our analysts say?

In 2025, the global ESS industry recorded another year of strong expansion, with total cell shipments estimated at around 600 GWh, approximately doubling year-on-year. Growth in China was underpinned by both policy support and sustained domestic demand, enabling Chinese suppliers to secure eight of the top ten positions in the global rankings. In the United States, a gradual reallocation of manufacturing capacity from EV batteries to stationary storage has emerged, reflecting comparatively clearer visibility in ESS pipelines, particularly those linked to AI-driven data centre power demand.

Walter Zhang, Fastmarkets

Key points

1. Europe’s battery industry rebalances amid Northvolt collapse and ACC setbacks
   Europe has seen a major rebalancing of its battery manufacturing industry. As investors continue to lick their wounds from Northvolt’s collapse, the dream of rapidly building out Europe’s battery manufacturing capacity is being further jeopardised by ACC, a company backed by Stellantis, shelving plans to build gigafactories in both Germany and Italy. Meanwhile, Spain, Poland, and Hungary have continued to see massive Chinese investment, unabated by Europe’s reversal of a total ICE ban by 2035. 
   

2. Renewed interest in sodium-ion batteries amid lithium price volatility
   A turbulent lithium price has led to renewed interest in sodium-ion batteries. Since the last spike in interest in 2022/23, there have been significant developments in the sodium-ion sector. Last year, BYD reported EV pack gravimetric capacities of 175 Wh/kg, similar to mid-tier LFP batteries. Whilst sodium-ion batteries perform well at low temperatures, the major draw lies in the potential 10,000-cycle EV battery lifespan, meaning an EV could last well over 25 years on a single battery. While less price-sensitive automotive consumers may still opt for the extra range of lithium-ion batteries, the longer cycle life and cheaper, more abundant raw materials have driven increasing interest in sodium-ion from BESS companies.
   

3. China’s cell makers max out capacity ahead of VAT rebate cut
   China’s cell makers are operating at or above full utilisation, with reports that tier-one manufacturers are having to temporarily lease tier-two production capacity to meet demand. This has been spurred by cell producers racing to fulfil orders before the Chinese government cuts VAT rebates from 9% to 6% on April 1. The frenzied market activity has resulted in a scramble for tier-one batteries, contributing to tighter availability and upward pressure across downstream supply chains.
   

What do our analysts say?

Volatile lithium prices have reignited interest in sodium-ion technology. Unlike the last lithium price spike, which caused a surge in sodium-ion interest in 2022/23, there have now been major leaps in gravimetric capacity. Whilst gigafactory production for sodium-ion is still being ramped up, a growing scenario is emerging in which sodium-ion’s cheaper, less volatile, and more geographically dispersed raw materials, combined with surging BESS demand driven by AIDC deployment, spur large-scale demand for sodium-ion cells.

Dr. Luke Sweeney, Fastmarkets

Key points

1. Lithium prices soar amid supply strains and market uncertainty
   Lithium prices have staged a dramatic rebound, with spot battery-grade lithium carbonate on the seaborne market rocketing from around $11 per kg in early December to over $16 per kg by early January, and the rally shows no sign of abating. This explosive surge is not just a story of numbers but of mounting supply-side tension: persistent delays to the reopening of CATL’s Jianxiawo lepidolite mine, facility maintenance at other producers, and a scramble to secure inventories for long-term contracts have all combined to squeeze availability. The feverish price action has been further stoked by speculative trading, as bullish sentiment sweeps through the market. Yet, beneath the headline gains, the market is gripped by uncertainty—buyers and sellers alike are holding back, wary of being caught on the wrong side of the next move, leaving spot liquidity thin. We are observing a market where every rumor, policy shift, or operational hiccup could trigger the next major swing.
   

2. Spodumene prices surge, sparking potential Australian mine restarts
   Spodumene prices have mirrored lithium’s meteoric ascent, surging past $2,000 per tonne in January, a threshold not breached since October 2023, when spot battery-grade lithium carbonate was trading at $24 per kg. Critically, these elevated prices have shifted the economics for Australian producers, many of whom curtailed or suspended operations when prices slumped below $900 per tonne. If current price levels persist, a wave of Australian mine restarts is increasingly likely, as operators move to capitalize on improved margins. The timing and scale of these restarts will be pivotal: a rapid return of Australian spodumene, supplemented by additional African material, could ease market tightness and temper further price rises, but operational lead times may delay this. The key question is whether this price environment will trigger a decisive new phase of Australian supply and how quickly these restarts could rebalance a market currently defined by scarcity and volatility.
   

What do our analysts say?

Lithium prices appear to have moved ahead of the fundamentals, propelled by speculative buying, bullish sentiment and a backdrop of heightened geopolitical risk. Yet we may also be finally witnessing demand catch up with the supply surge of recent years. The key takeaway is to brace for more volatility – this is a market where a single headline, project delay or policy shift can rewrite the outlook overnight.

Paul Lusty, Fastmarkets

Key points

1. Cobalt prices climb amid DRC export restrictions and looming deficits
   Cobalt prices continued to rise in December as the market adjusted to the new undersupplied market fundamentals. With the DRC, the world’s top producer of mined cobalt, restricting exports to 87,000 tonnes per year in both 2026 and 2027, the market will face deficits in both years.
   

2. Cobalt prices double year-on-year as export delays persist
   The average December price for cobalt standard grade, in warehouse Rotterdam, rose by 3% compared to November’s average and was more than double its December 2024 average. Prices kept rising as it emerged that exports had been slow to resume, even though they had been permitted since mid-October.
   

3. DRC cobalt export delays tighten cobalt market, relief expected post-Q1
   The DRC government has implemented a control system to enforce its quotas. However, there was a delay in publishing this framework, and until that happened, producers could not export material. Fastmarkets understands that the system was being tested towards the end of the month. The result is that, given shipping times, material is unlikely to arrive in China before the end of Q1, leaving the market even tighter than expected. Since the delay was caused by the slow publication of the export framework, the government will allow the Q4 2025 quotas to be exported in Q1. This should improve the availability of feed to China after Q1.
   

What do our analysts say?

The DRC’s quota system will squeeze supply in the next two years unless the country revises quotas higher. Because of the delay in publishing the framework under which quotas can be exported, there has been a delay in shipping material out of the DRC, which will leave the market particularly tight in Q1. Prices have therefore continued to rise, and they are likely to remain high for as long as current quota levels remain in place. Cobalt is mostly used in batteries, and the longer prices remain elevated, the more likely it becomes that EV manufacturers will seek to move to low-cobalt or cobalt-free chemistries, where feasible. This could slow demand in the medium term.

Olivier Masson, Fastmarkets

Key points

1. Nickel prices surge on fears of Indonesian mining quotes
   The nickel cash price rallied aggressively toward the end of December due to the risk that Indonesia—the world’s top producer—would limit nickel ore mining quotas in 2026, even though quotas have yet to be announced.
   

2. Nickel prices rebound on Indonesian supply risk despite oversupply
   Although the market remains in a state of structural oversupply, the risk that the Indonesian government could take a stronger stance and show greater supply discipline was enough to push the nickel price higher toward the end of the month. For the first three weeks of December, the price was below the $15,000 per tonne level, as it had been in November. However, in the last week of December, supply risk pushed the price higher, ending the month at close to $16,500 per tonne.
   

3. Uncertainty looms as 2026 nickel quotas remain unannounced
   There has not been any announcement of the final quotas for 2026. Indeed, in the absence of such a quota, PT Vale Indonesia has halted mining activity. It is only once these quotas have been announced that the market will have a clear view of possible supply levels.
   

What do our

analysts say?

The nickel market has been in a structural surplus since 2022, due to an oversupply of – mostly Indonesian – material. If the recent run-up in prices is to be sustained, then Indonesia needs to show supply discipline. However, the market still awaits the announcement of final 2006 quota levels.

Olivier Masson, Fastmarkets

Key points

1. Manganese sulfate prices surge as buyers stock up ahead of Q1 slowdown
   Chinese battery-grade manganese sulfate prices turned bullish in the second half of December as buyers looked to build stock ahead of the expected slowdown in manufacturing activity in Asia in Q1 2026. Firming sulfuric acid prices in China were also observed in the second half of December, likely supporting manganese sulfate price increases as well. Manganese sulfate exw mainland China prices ended the month at 5,900–6,200 yuan per tonne. Prices at the high end of the range reached levels not seen since March 2025.
   

2. China’s manganese sulfate output hits three-year high on strong battery demand
   China’s high-purity manganese sulfate production continued to rise in November. Processing output in the country reached 26,200 tonnes for the month, the highest monthly production figure since November 2022. The continued growth in battery-grade manganese production has likely been driven by increased orders for Tier 1 battery producers’ products ahead of year-end.
   

3. China’s November manganese demand dips 2% MoM but soars 44% YoY
   China’s monthly pCAM production stats showed a small decline in manganese demand in November. Total demand was 11,800 tonnes for the month, down 2% month-on-month but 44% higher year-on-year.
   

What do our analysts say?

Looking ahead to the coming weeks and months, it is likely we won’t see too much further upward pressure on prices. Asian markets are heading towards the seasonal lull in demand and manufacturing activity in February as the Lunar New Year holidays begin. At the same time, there are concerns around what China’s EV demand outlook looks like in Q1 2026, with changes to subsidy schemes potentially leading to softening consumption of battery-grade manganese.

Rob Searle, Fastmarkets

Key points

1. Natural graphite battery market faces ongoing challenges in 2026
   The battery segment of the natural graphite market is expected to continue facing many of the same challenges in 2026, with many Chinese producers operating below full capacity at the end of 2025. 
   

2. China’s synthetic graphite production expands to meet growing EV and ESS demand
   Synthetic graphite producers in China are operating at full capacity with planned expansions in 2026. This is driven by performance characteristic preferences and relative cost parity with natural graphite, making synthetic anodes more attractive to both EV and ESS manufacturers.
   

3. Graphite flake market struggles amid weak steel industry demand
   Graphite flake faced a challenging end to 2025 as many steelmakers in China reduced production throughout the year, weighing on demand. This market overabundance is expected to linger through 2026, with few signs of improved demand from the steel industry.
   

What do our analysts say?

The synthetic side of the market is gaining steam going into 2026, as its performance characteristics and current near-cost parity with natural materials make synthetic an increasingly attractive choice for battery makers. Meanwhile, natural graphite continues to struggle with weak battery demand and idle capacity. Still, the overall graphite market is working through an abundance of material that is weighing down prices and hurting investment prospects. 

Andrew Saucer, Fastmarkets

Key points

1. NCM black mass payables hit record highs amid strong Asian demand and tight supply
   On 7 January 2026, NCM CIF South Korea black mass reached an all-time high of 87.5% for cobalt and nickel payables, driven by strong demand from China and Southeast Asia and a rally in battery metal prices. High-purity NCM black powder meeting China’s strict import standards saw payables exceed 100%, reflecting its higher metal content and limited availability. European supply remains inconsistent, while LCO black mass prices have risen amid Indian export restrictions. Overall, nickel and cobalt payables have climbed across regions, highlighting tightening supply and robust Asian buying interest.
   

2. China’s high-grade black power imports reach 405.6 tonnes amid trade data ambiguities 
   China has documented imports of 405.6 tonnes of high-grade, production-scrap black powder since August 2025, though further shipments may have occurred but remain undisclosed. Ambiguities in HS code definitions mean some non-black mass materials may be included, distorting trade data. Notable shipments include 200 tonnes to Ningbo by Zhejiang Tianneng in October, 47 tonnes to Tianjin by CRRG, and earlier deliveries to Ningbo, Guangzhou, and Longnan. A confirmed 100-tonne cargo arrived in December for Zhejiang Tianneng Group from Southeast Asia.
   

3. India’s black mass bottleneck disrupts global supply chains amid tightened export rules
   India faces a significant mismatch between black mass production and refining capacity in 2026. Shredders have the capacity to process roughly 140,000 tonnes of scrap batteries, but domestic refiners only have the capacity for 83,000 tonnes of that, and utilisation rates are likely to be very low. Export regulations have tightened since October 2025, classifying black mass as hazardous waste and halting shipments to retain critical metals for domestic recycling. This has disrupted global supply chains and contributed to price spikes, with 200–300 tonnes stranded at Indian ports and reports of 3,000 tonnes illegally exported in 2025. Future rules may further restrict exports, reduce spot market liquidity and leaving much of India’s black mass unrefined or stockpiled.
   

What do our analysts say?

Rising battery metal prices, high demand for black mass in Asia, and export restrictions in India & Europe have pushed global black mass payables to record highs, while persistent regulatory uncertainty and limited refining capacity continue to disrupt supply chains and reshape trade flows across the sector.

Julia Harty, Fastmarkets

Key points

1. China’s NEV sales surpass 60% penetration amid sluggish total vehicle market
   Preliminary data from China’s CPCA indicates that NEV sales within the country surpassed 60% penetration for the first time, as retail sales hit nearly 1.4 million for December. This was partly a result of an uncharacteristically low number of total vehicle sales for December, with sales down 13% relative to December 2024. Overall, sales grew 7% year-over-year and 5% month-over-month.
   

2. US EV sales stumble in Q4 2025 amid subsidy cuts and economic pressures
   The US’s full-year EV demand picture is starting to take shape, as Q4 appears to have erased the EV sales growth achieved through the first three quarters of 2025, despite the chaotic regulatory environment. This can be largely attributed to the removal of consumer EV subsidies, alongside weakening macroeconomic conditions and consumer confidence. November saw 45% fewer EV sales relative to November 2024.
   

3. UK EV market achieves 44% December penetration, leading European growth in 2025
   The UK EV market grew strongly in 2025, seeing nearly 44% EV penetration in December and 34.5% over the full year. Strong subsidies, alongside relative political stability and lowering interest rates, have driven sales through the year despite consistent negative sentiment. The UK’s continued leadership in rising EV sales, despite its strong base, puts it in contrast to other leading countries in 2025, which either fell in 2024, like Germany, or grew from low bases, like Italy and Spain.
   

What do our analysts say?

The first quarter of 2026 represents a reset following a strong year for EV sales globally, where the US and France were the only significant points of weakness amidst widespread strength elsewhere. Potential weakness in China following changes to subsidies could see volume EV sales struggle despite continued progress in other regions like Europe and other areas benefiting from competitively exported EVs from China. 2026 will be the year where Chinese companies truly establish footholds internationally.

Connor Watts, Fastmarkets

Key points

1. Lithium price surge spurs shift to sodium-ion batteries for EVs and ESS
   Lithium prices have nearly doubled over the past two months, driving battery cell costs up by 15–20% to around $46–48 per kWh at the start of 2026. This sharp increase has renewed industry attention on sodium-iron battery technology as a viable alternative for both electric vehicles (EVs) and energy storage systems (ESS). Leading manufacturers, including CATL, are accelerating large-scale deployment of sodium batteries in 2026. As a highly price-sensitive sector, the ESS market is expected to be an early beneficiary of this shift. With its cost advantages, stable raw material supply, and improving performance profile, sodium-based technology is poised to play a pivotal role in the next phase of ESS development. 
   

2. IRA tariffs and incentives boost Korean battery makers in US market
   In the U.S. market, the Inflation Reduction Act (IRA) positions Korean cell makers to gain a substantial competitive edge over Chinese battery manufacturers. Starting in 2026, import tariffs on Chinese-made cells will surge to 48.4%, while Korean producers will continue to face only minimal tariff rates. The IRA further enhances their advantage: U.S.-manufactured battery cells qualify for incentives of $35/kWh, with an additional $10/kWh available for modules, alongside a 30% base Investment Tax Credit (ITC) for ESS projects. As U.S. lenders place increasing emphasis on geopolitical exposure and supply-chain resilience, dependence on China is increasingly viewed as a bankability risk—further bolstering the market position of U.S. and Korea-aligned suppliers in the American energy storage sector.
   

3. Global energy storage market shifts to market-drive models
   China’s energy storage market is undergoing a rapid transformation—from policy-driven “solar-plus-storage” mandates to a more market-oriented model where standalone storage assets can monetize value through capacity-style payments and price arbitrage under increasingly flexible power-market rules. A similar investment rationale is now driving expansion across Europe, where batteries capture revenues from volatile electricity prices and ancillary-service markets. Against this global backdrop, Fastmarkets’ expectation that battery shipments will exceed 580 GWh in 2025 aligns with the industry’s broader trajectory: accelerating deployment of energy storage systems supported by clearer commercial signals, diversified revenue streams, and maturing regulatory frameworks.
   

What do our analysts say?

In 2025, global energy storage system (ESS) shipments grew at an exceptional pace, achieving a near 90% year-on-year increase. China remained the primary driver of this expansion, supported by the widespread deployment of independent energy-storage plants and a rapidly maturing market structure. In the United States, manufacturers increasingly shifted their focus from EV batteries to grid-scale storage as federal EV tax credits phased out and demand for utility-scale ESS rose—marking a strategic supply-chain reorientation. Europe maintained steady growth in ESS deployment, while emerging markets such as Australia and the Middle East expanded rapidly under strong policy incentives and rising renewable-energy integration.

Walter Zhang, Fastmarkets

Key points

1. EU softens EV regulations, delays full ICE ban to 2035
   The EU has once again diluted its previously ambitious EV regulations. Instead of implementing a complete ban on ICE engines by 2035, the E.U. has decided to introduce a new category of small, affordable EVs and set an emissions reduction target of 90% by 2035. This is considered a significant win for automotive manufacturers and increases the likelihood that this legislation may be further weakened as we approach 2035. 
   

2. Nickel market turmoil sparks concerns over NCM cell cost volatility
   Trouble in the nickel market is creating uncertainty, with participants recalling uneasy flashbacks to when the DRC banned the export of cobalt in early 2025. Unlike cobalt, whose composition can vary significantly in NCM cathodes, nickel typically makes up at least 50% of modern NCM cathodes. This makes NCM cell costs highly sensitive to nickel price fluctuations. In the short term, all eyes will be on Indonesia as the market waits for the announcement of its nickel ore quotas.
   

3. US EV battery investments falter amid shifting political landscape
   With Trump’s America in full swing, U.S. car manufacturers have been scaling back investments in the battery space, as highlighted by Ford’s cancellation of its $6.5 billion long-term EV supply deal with LG. This decision will disappoint South Korean manufacturers, who were relying on the United States favouring them over China. In Europe, the shift from ICE to EV feels inevitable; in America, it increasingly seems like a matter of consumer preference.
   

What do our analysts say?

The dilution of the EU’s ICE 2035 ban raises alarm bells for Europe’s ambition to build a home-grown EV sector. ICE’s incompatibility with CO₂ emission targets has been widely recognized for well over 15 years. Nevertheless, while China accelerated electrification and Tesla took bold risks, Europe’s car industry stagnated. Intentional or not, this has now left legacy manufacturers with few options other than to plead with policymakers for extensions and delays in EV implementation.

Luke Sweeney, Fastmarkets

Key points

1. Volatile lithium market reacts to forecasts, rumors and futures-driven swings
   Lithium prices swung sharply in November and early December, with sentiment and news driving the market. A pivotal moment came when Ganfeng Lithium’s chairman forecasted 30% demand growth for 2026, sparking a rapid price rally. Prices then reversed on rumours of CATL’s mine restart, highlighting the market’s acute sensitivity to headlines and speculation. The Guangzhou Futures Exchange (GFEX) amplified these swings, with futures-led volatility spilling over into spot prices and prompting sellers to hold back cargoes while buyers paused.
   

2. China’s ESS boom: lithium carbonate demand set to soar
   While EV sales growth has remained solid globally, the real story is the exceptional strength of the energy storage systems (ESS) market, which has powered robust lithium demand. Chinese battery manufacturers are running at full capacity to meet surging ESS orders, a trend amplified by international subsidies and policy support, especially in the US and Australia, prompting a rush to secure supply before incentives expire. Even as year-end caution sets in, cathode and battery production schedules remain strong, supporting ongoing inventory drawdowns and reinforcing a stronger outlook for lithium in 2026.
   

3. China’s lithium inventory declines as cathode and battery demand soars
   Modelling shows that a pronounced drawdown in lithium salt inventories continued, with China’s stocks falling to roughly 227,000 tonnes. This destocking, intensified since August, reflects strong purchasing by the cathode and battery sectors. Future lithium prices will depend on how effectively these inventories are absorbed by EV and ESS sales.
   

What do our analysts say?

The lithium market’s direction now hinges on three critical factors: the pace of inventory drawdown, the timing of mine restarts, and the resilience of ESS demand in 2026. If mine restarts are delayed while energy storage demand remains strong, prices could surge. However, any weakness in ESS uptake, negative headlines, or rapid supply additions could swiftly turn sentiment and trigger a sharp reversal.

Paul Lusty, Fastmarkets

Key points

1. DRC export quotas drive cobalt prices higher amid looming supply deficit
   Cobalt prices continued to rise in November, albeit to a lesser extent than they did in October, following the DRC’s unveiling of its export quota system. The market is coming to terms with the new dynamics now that the DRC, the world’s top producer of mined cobalt, is restricting exports to 87,000 tonnes per year in both 2026 and 2027. This will leave the market facing a supply deficit in both years.
   

2. Cobalt prices double year-on-year as market stabilizes
   Average November prices for cobalt standard grade, in warehouse Rotterdam, rose by 12% compared to October averages and were more than double the November 2024 average. The slowdown in the price increase suggests that the market has adjusted to the new conditions it will face in the coming two years.
   

3. DRC cobalt exports resume, but supply delays loom until Q1 2026
   The DRC has allowed cobalt exports to resume, but Fastmarkets understands that material has not yet left the country. Given shipping times between the DRC and China (the main destination for the DRC’s cobalt), Chinese refinery feedstock is unlikely to increase until well into the first quarter of 2026.
   

What do our analysts say?

The DRC’s quota system is set to squeeze supply in the next two years—unless the country revises quotas higher. Prices are already considerably higher than they were at the beginning of the year, and they are likely to remain elevated for as long as current quota levels remain in force. Cobalt is mostly used in batteries, and the longer prices remain elevated, the more likely it is that EV manufacturers will seek to move to low-cobalt or cobalt-free chemistries where feasible. This could slow demand in the medium term.

Olivier Masson, Fastmarkets

Key points

1. Nickel prices hit seven-month low, dropping below $15,000 per tonne
   The nickel cash price traded below the $15,000 per tonne level in November, dropping to a low of $14,280 per tonne, the lowest since Donald Trump’s “Liberation Day” sell-off in April.
   

2. Oversupply weighs on nickel market, limiting price recovery
   The market remains in a state of significant oversupply, leaving little room for bullishness. The coming months are likely to see a further decline in prices or, at best, a return to sideways consolidation.
   

3. Nickel oversupply persists, but Indonesian policy could shift market dynamics
   Although the market remains in a state of structural oversupply—and is expected to remain in surplus until 2028—supply-side risks are mounting. Indonesia, the world’s top miner of nickel, could take a firmer stance on restraining the country’s supply. There could also be delays in issuing mining permits in the New Year.
   

What do our

analysts say?

The nickel market has been in surplus since 2022, thanks to structural oversupply. With Fastmarkets forecasting the market to remain oversupplied until 2028, there is little scope to be bullish on prices in the near term. A recovery in prices will require greater supply discipline from Indonesia, the world’s top miner of nickel.

Olivier Masson, Fastmarkets

Key points

1. Battery-grade manganese sulfate prices stabilize after early November dip
   Battery-grade manganese sulfate prices lost some of the upward momentum seen in the latter stages of October, with prices weakening in early November. The range settled at 5,700–6,000 yuan per tonne for the remainder of the month.
   

2. Rising production in China tempers manganese price gains
   Price increases in November were likely tempered by rising battery-grade manganese production in China during the prior month. After rates fell to 42% in September, Chinese processors ramped up output again, with rates averaging 50% across the month.
   

3. China’s pCAM sector drives 32% surge in manganese demand
   Manganese demand from the pCAM sector in China rose in October, up 6% month-on-month and 32% year-on-year, reversing the trend seen in September.
   

What do our analysts say?

Despite some challenges arising in EV demand globally, NCM pCAM production and manganese demand continued to rise in October. One reason for this could be buyers restocking material in anticipation of higher raw material prices—namely cobalt sulfate—in the remainder of the year and early 2026.

Rob Searle, Fastmarkets

Key points

1. US-China trade agreement brings stability to natural battery anode market
   Natural battery anode markets have been more stable since the announcement of a trade agreement between the US and China, which is expected to provide a clearer picture of the restrictions faced by graphite markets over the course of the years-long agreement. 
   

2. Sythentic battery anode markets cool after recent gains
   Synthetic battery anode markets remain more active than the natural side of the market, but these markets have cooled after seeing gains across October and November.
   

3. Graphite flake market slows amid oversupply and weak demand
   Graphite flake is heading toward a quiet end of the year, with the market continuing to face both abundant supply and weak demand, with few signs that this dynamic will change in the near term.
   

What do our analysts say?

Graphite had a volatile start to the fourth quarter with the announcement of export restrictions on graphite by the Chinese government, followed by an agreement between the US and China weeks later that overrode that decision. Still, the current picture of what Chinese and US trade restrictions on graphite will look like for the next year now gives people a clearer view of a major factor that will help shape the market amid the current supply and demand dynamics. 

Andrew Saucer, Fastmarkets

Key points

1. India’s black mass export ban disrupts global supply chains and spurs price spikes
   India has tightened regulations on black mass exports, classifying it as hazardous waste and halting shipments since October 2025. The crackdown aims to retain critical metals for domestic recycling, disrupting global supply chains and driving price spikes. Future rules may include licensing and long-term contracts, reducing spot market liquidity. Around 200–300 tons of black mass remain stranded at Indian ports, with reports of 3,000 tons illegally exported earlier this year.
   

2. Black mass payables hit record high amid supply shortages and aggressive buying
   Fastmarkets NCM black mass CIF South Korea nickel and cobalt payables hit an all-time high of 85% on November 26, 2025. This is driven by a supply shortage following the apparent Indian black mass export ban alongside increased demand for secondary metals following cobalt export restrictions from the DRC and rising lithium prices. South Korea and Southeast Asia saw aggressive buying, with NCM black mass payables reaching the highest levels since 2023. High-grade black powder commanded premiums above 100%.
   

3. US battery recycling projects shift focus to private funding amid DOE grant losses
   American Battery Technology Company (ABTC) lost its $57.7 million DOE grant for a Nevada lithium refinery, though it plans to proceed using private capital and loan options. Ascend Elements forfeited a $316 million DOE grant for its Kentucky recycling plant after failing to meet milestones, leaving its expansion uncertain. Redwood Materials, once approved for a $2 billion DOE loan, withdrew voluntarily, opting for private financing, including a $350 million Series E round. These shifts highlight a growing reliance on private investment for critical recycling infrastructure.
   

What do our analysts say?

Black mass prices are soaring to record highs, supported by an undersupply of primary cobalt, a lithium price recovery, and global black mass supply shortages aggravated by an apparent Indian black mass ban.

Julia Harty, Fastmarkets

Key points

1. Weak EV sales growth in China amid policy shifts and market decline
   November’s retail EV sales growth rate appears weak within China despite imminent policy changes set to weaken momentum further from January. EV sales were up just 3% year-over-year, while the overall passenger car market fell 11% year-over-year. However, retail passenger EV sales have grown a strong 20% year-to-date, and exports from the country continue to grow significantly. This retail EV growth rate in the struggling overall market puts November’s month-to-date EV penetration rate at over 61%, or 53.4% year-to-date as of mid-November.
   

2. CATL & Stellantis begin construction on 50GWh LFP battery plant in Spain
   CATL & Stellantis have broken ground on their joint venture battery plant in Spain, which is expected to begin operating next year to produce LFP cells for Stellantis’ mass-market vehicle offerings. The plant’s 50GWh capacity is enough to supply 1 million vehicles per year, depending on Stellantis’ pack size requirements, and will likely help lower EV prices in Europe, as the region still heavily relies on expensive high-nickel batteries.
   

3. UK introduces mileage-based tax for EVs, sparking concerns over electrification goals
   As part of the UK government’s budget announced on November 26th, plans have been introduced for drivers of electric vehicles to pay a mileage-based tax rate of 3p/mile for BEVs and 1.5p/mile for PHEVs. The intent is to account for lost tax revenue from EVs not paying fuel duty, but it is contributing to mixed messaging regarding the government’s electrification ambitions due to the expected reduction in EV sales resulting from this new disincentive.
   

What do our analysts say?

US EV sales fell significantly in October, with BEVs bearing the brunt of the impact of losing subsidies. US BEV sales fell 33% year-over-year, while PHEVs fell a comparatively strong 21%, though this is relative to a historically strong October period that set records last year. Growing EV sales elsewhere in the world will mitigate the US’s lost sales volume, though considering this administration’s hostility toward EVs, a protracted weakness in US EV sales shouldn’t be ruled out.

Connor Watts, Fastmarkets

Key points

1. Europe surpasses 100 GW energy storage milestones, led by battery systems
   Europe’s energy storage milestone is being driven overwhelmingly by battery energy storage systems (BESS). Recent reports show that Europe (including the EU, the UK, and Nordic countries) has surpassed 100 GW of deployed storage capacity as of November 2025, with BESS accounting for the dominant share of new installations and the primary engine of growth. This highlights the central role of battery storage in Europe’s clean-energy transition, underpinning renewable integration, grid flexibility, and the shift toward a more resilient power system. 
   

2. North American BESS integrators struggle amid supply chain challenges and margin pressures
   Despite booming global interest in battery storage, insufficient local cell supply has placed significant pressure on North American BESS integrators. In FY2025, we observed a disappointing performance from a major system integrator, with simultaneous declines in both top-line and bottom-line results. This underscores how even leading players struggle amid contract delays, margin compression, and an increasingly competitive supply-chain environment. These challenges reflect broader systemic issues across U.S.-based battery storage integrators, many of which rely heavily on imported battery cells and lack the vertical integration or financial resilience needed to absorb cost fluctuations and delivery delays.
   

3. China’s ESS battery shipments surge amid policy reforms and market growth
   China’s ESS battery shipments have risen month-on-month since July, supported by the rollout of the national “Document No. 136” and accelerating provincial incentives. The policy shifts renewable power fully to market-based pricing and removes the previous requirement for new wind and solar projects to include mandatory storage, allowing ESS to grow through market demand and emerging revenue streams such as arbitrage and ancillary services. Coupled with new local capacity-compensation schemes, these reforms have strengthened project economics and stimulated procurement activity, driving a steady rebound in domestic ESS battery orders and shipments.
   

What do our analysts say?

A new growth direction is emerging for the battery storage sector as AI data centers (AIDC) rapidly expand their power demand. Historically, energy storage in most markets has been deployed primarily as backup power and for frequency regulation, typically requiring only 1–2 hours of discharge duration. By contrast, AIDC-driven applications are shifting storage toward a peak-shaving plus backup model, with required durations rising to around 6 hours as data-center loads create more sustained stress on local grids. After months of exploration and discussion in the first half of this year, AIDC-related storage is now moving into concrete planning and production scheduling, and the market is expected to enter its first real growth phase next year.

Walter Zhang, Fastmarkets

Key points

1. Battery cell costs spike in October amid rising demand and cobalt prices
   Battery cell costs for both NCM and LFP chemistries rose sharply in October, with NCM cells seeing the largest month-on-month increases of up to 6.5%. This surge was primarily driven by excess demand for tier-one lithium-ion batteries and significant price hikes in key raw materials, especially cobalt. 
   

2. DRC’s cobalt export restrictions highlight tensions with Chinese trade partners
   The Democratic Republic of Congo’s (DRC) recent introduction of cobalt export restrictions underscores the growing divergence of interests between China and its Central African trade partners. While Chinese companies aim to maximize profit margins by controlling the entire ore-to-sulfate value chain, tensions are emerging as ore-producing nations like the DRC become increasingly focused on developing their own domestic refining capabilities.
   

3. Automation gains in battery production offset by rising raw material costs through 2030
   Looking ahead, Fastmarkets forecasts that, while automation and manufacturing efficiencies are expected to reduce production costs for NCM and LFP cells by up to 37%, these savings will be offset by rising costs for critical raw materials. Rising raw material prices will be the primary driver of the increase in CAM costs. Despite the recent downward revisions in lithium and nickel prices, Fastmarkets’ BCI predicts that higher CAM raw material costs will drive a gradual increase in cell costs through 2030.
   

What do our analysts say?

Strengthening lithium and cobalt prices have been the primary driver for NCM cell costs increasing 5.8–6.5%. While there has been a general trend of increasing nickel content in NCM cells, low cobalt prices in 2024 and early 2025 shifted the dial toward lower nickel NCM chemistries as many cell producers opted for the less moisture-sensitive, higher cobalt NCM chemistries. As the DRC continues to implement their quota on the export of cobalt ore, we predict the market will continue to shift production, favoring higher nickel chemistries.

Luke Sweeney, Fastmarkets