Lithium Shock: Why AI Energy Storage Is Reshaping the Market in 2026

A sudden surge in battery storage demand and tightening Chinese supply has turned the lithium market on its head, and forced hedge funds into a scramble.

Lithium has stormed into 2026 with its strongest rally in more than two years, blindsiding hedge funds and lighting a fire under Australia's bruised battery-metal sector. After 18 months of falling prices, inventory build-ups, and shrinking margins, the market has flipped.

Chinese lithium carbonate prices have surged 20% year-to-date to 141,000 yuan (A$30,151) per tonne. Australia-mined spodumene has jumped 22% to US$1925/t, more than tripling from its June 2025 lows.

For context: while these prices remain well below the historic 2022 peak, they are a dramatic reversal from last. . .

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