China policy signals boost to energy storage, lithium demand outlook

China's policy signals supporting energy storage deployment during the country's annual "Two Sessions" event are expected to fuel long-term growth in the sector and lift demand for lithium, China-based market sources said March 5-6.

The "Two Sessions" refer to the annual meetings of China's top legislative and political advisory bodies: the National People's Congress (NPC) and the Chinese People's Political Consultative Conference.

In the government work report released on March 5, Premier Li Qiang highlighted efforts to build a new type of power system, accelerate the development of smart grids, develop new energy storage solutions, and increase the use of green electricity.

The policy signals from the Two Sessions will support energy storage development, but their impact is not yet clear, a Chinese analyst said.

Robust demand from the energy storage sector had already been anticipated, Chinese market sources said.

The Central Committee of the Communist Party of China's proposal to formulate the 15th Five-Year Plan for National Economic and Social Development highlighted the importance of vigorously developing new energy storage technologies in October 2025.

China has set a national target of reaching over 180 GW of new energy storage capacity. The plan also outlines that the technology road map will continue to be dominated by lithium-ion batteries, according to the Special Action Plan for the Large-Scale Construction of New Energy Storage (2025-2027) published in September 2025.

The energy storage system market began to experience explosive growth starting in the third quarter of 2025. Lithium-ion battery industry insiders widely anticipated that China's energy storage system shipment growth in 2026 could sustain a rate of approximately 40%-60%, with its share of total battery production expected to increase further, Platts reported early this year.

Lithium carbonate market

China's lithium carbonate market edged higher as of March 6 after falling for four straight sessions through March 4, lifted by lingering uncertainty around Zimbabwe's export restrictions and improving demand expectations for March.

The most active May 2026 lithium carbonate contract on the Guangzhou Futures Exchange (GFEX) rose 2%, or Yuan 3,300/metric ton, from the previous settlement to close at Yuan 158,800/mt ($23,010/mt) as of midday of March 6, exchange data showed.

The contract, China's only listed lithium futures contract, had declined for four consecutive days after a strong post-holiday start following the Lunar New Year break that ended Feb. 23.

Market attention has recently shifted away from fundamentals toward potential black swan risks, a Chinese market source said.

Zimbabwe's Cabinet approved an indefinite ban on exports of raw lithium concentrates and unprocessed minerals on March 3, following an earlier announcement from the Ministry of Mines and Mining Development in late February, according to state-owned Xinhua News.

Chinese market participants said there was no timetable for when the export restrictions may be lifted.

Platts, part of S&P Global Energy, assessed battery-grade lithium carbonate at Yuan 151,800/mt DDP China on March 5, up Yuan 2,300/mt day over day but down Yuan 18,200/mt, or 10.7%, week over week.

Market participants expected China's lithium carbonate market to remain volatile in the near term.