Macquarie's recent research note, informed by conversations with lithium and energy storage supply-chain specialists in Shanghai and Hong Kong, concludes that the recent downward move in lithium prices is driven more by liquidity and technical pressures in the futures market than by a deterioration in fundamental demand.
The analysts identify several mechanics behind the correction. A swift unwinding of speculative positions in futures contracts removed a layer of upward price pressure. In addition, tighter enforcement of value-added tax rules forced previously undisclosed inventory onto the delivery chain for futures contracts. Macquarie also flagged supply-side developments that contributed to market unease, including the planned resumption of a CATL-affiliated mine and shipments coming from Zimbabwe.
Despite the futures-market volatility, Macquarie reports that the spot market has remained orderly. Battery manufacturers have been stepping up procurement as spot prices have eased, according to the firm, which interprets this as evidence that end-user demand remains intact rather than retracting.
On the investment front, Macquarie frames the price pullback as creating more attractive entry points. The firm named Ganfeng Lithium and Tianqi Lithium as preferred names. It also noted a favorable stance toward Sungrow Power Supply, highlighting that company for its exposure to solid-state technology and its position in the high-end energy storage segment.
Macquarie revised its near-term outlook for energy storage system shipments higher for 2026. The firm increased its shipment forecast from 900 GWh to a range of approximately 1,000-1,100 GWh for that year. At the same time, the analysts caution that visibility after 2026 is limited; numerous market participants expect demand to soften in 2027 or 2028.
Still, Macquarie retains a relatively constructive view on the potential length of the cycle. The firm cites several factors supporting a longer cycle - domestic policy measures that are still in early stages of implementation, accelerating demand outside China especially in residential and commercial segments, and growing requirements for power system stability.
From a cost-pass-through perspective, supply-chain contacts told Macquarie that battery makers have been largely successful at passing higher lithium costs into pricing for energy storage systems. The same contacts indicated less success in passing through those higher costs into electric vehicle batteries. At the system integration level, the analysts report rising competition in the mid to low-end of the market, while price transmission is reportedly more effective in the high-end segment.
Macquarie also warned about margin pressure for some participants. The analysts expect margins to remain under strain in the second and third quarters of 2026, in part because of delayed revenue recognition.
What this means for markets and investors
- Macquarie sees the recent price decline as a tactical buying opportunity rather than a signal of weakening demand.
- Higher 2026 energy storage shipment forecasts support the view of sustained demand in the near term.
- Near-term margin pressure and uncertain visibility beyond 2026 create risks for manufacturers and integrators.