Admitting that energy storage demand has exceeded expectations, Goldman Sachs still remains "bearish on lithium prices in the medium term."

Goldman Sachs believes that explosive growth in energy storage demand is rewriting the short-term supply and demand structure of the lithium market, with the degree of tightness in the short term exceeding expectations, but the medium-term oversupply pattern remains unchanged.

According to Chasing Wind Trading Desk, Goldman Sachs admitted an important shift in its November 23 report: the explosive growth in demand for energy storage systems (ESS) is rewriting the short-term supply and demand landscape for lithium.

Chinese lithium salt prices have surged from $9,200/ton in mid-September to above $11,000/ton. This forced Goldman Sachs to raise its 2026 price forecast and postpone the previously expected price correction to the second half of 2026.

However, it is worth noting that Goldman Sachs maintains its bearish medium-term outlook, predicting that oversupply will reappear in 2027, and unless producers cut expansion plans, supply will exceed demand by 18% at that time. Goldman’s price forecast for 2027 is $9,250/ton, far below the CME futures price of $14,950/ton. This huge price gap suggests that the current market may be excessively optimistic.

Explosion of Energy Storage Demand Delays Price Correction

Goldman Sachs acknowledges that the recent surge in Chinese lithium carbonate prices from $9,200/ton at the beginning of September to above $11,000/ton is fundamentally driven by energy storage demand far exceeding expectations, which has quickly tightened the market balance. Therefore, the bank has significantly adjusted its demand model, changing the statistical basis for energy storage lithium consumption from terminal installed capacity to the more realistic battery production volume.

Under the new model, Goldman Sachs has sharply raised its forecast for ESS demand in 2025/2026 to 589/736GWh, almost double the previous estimates of 275/413GWh. This means that ESS output in 2025 will reach the previously forecast 2028 installed capacity level of 621GWh, achieving leapfrog growth. Specifically, this adjustment will increase total lithium demand in 2025/2026 by 140,000/209,000 tons, with growth rates of 9%/8%, respectively.

This adjustment means that in 2025 alone, lithium demand from the energy storage market will account for 44% of the global total demand growth, amounting to nearly 30% of total demand. As a result, Goldman Sachs has postponed the expected time of price correction to the second half of 2026.

After Short-Term Tightness, Medium-Term Oversupply Remains

Despite the optimistic short-term outlook, Goldman Sachs has not changed its core bearish medium-term view. The report predicts that with the growth in spodumene supply and the restart of previously suspended lithium mica capacity, market tightness will ease in the second half of 2026, with prices falling from $11,000/ton in the first half of the year to $9,500/ton.

Key factors driving supply growth in the second half of the year include: CATL's lithium mica project resuming operations, and accelerated global spodumene production. Goldman Sachs expects supply growth in 2026 to reach 27%, significantly higher than the 12% in 2025. This will bring the average annual price to $10,250/ton, but still below GFEX/CME futures prices of $11,530/$13,613 per ton.

Goldman Sachs further stated:

“We maintain our view that the lithium market will remain ‘low-for-longer’ in the medium term compared to the highs of 2022/23, because unless producers restrain expansion, supply will still exceed demand by 18% by 2028. By 2027-28, we expect prices to stay below our estimated incentive price range of $10,200-11,000/ton, to slow output growth and prevent inventories from rising to unsustainable levels.”

Looking ahead to 2027, Goldman Sachs expects the market will need to cut supply (project delays) to avoid excessive inventory buildup. They believe that by then, prices must be kept at levels insufficient to incentivize new project investment 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 medium-term oversupply.

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