January 2026 has brought renewed volatility to battery raw materials. Lithium prices are converging as futures align with spot market realities, driven by better-than-expected downstream demand. Conversely, the cobalt market is bracing for a supply shock as DRC export quotas create logistical bottlenecks. This analysis dissects the current pricing trends for lithium, cobalt, nickel, and manganese, highlighting the structural shifts in supply chains and the growing "security premium" being priced into critical minerals.
After a volatile 2025, the lithium market is finding a new equilibrium. A key trend observed this week is the convergence of futures and spot prices. The contract settlement price (140,460 yuan/mt) has aligned closely with the battery-grade index (138,842 yuan/mt).
This stabilization is driven by two factors:
Destocking Cycle Ending: Upstream smelter inventories have dropped significantly, from over 20 days in H1 2025 to around 5 days currently.
Downstream Demand: The EV and ESS markets performed better than expected in late 2025, forcing cathode plants—who had cut safety stocks to less than 10 days—to re-enter the market.
However, the "soaring rally" in futures was tempered by downstream resistance to high prices, forcing a narrowing of the spread. The market is now tilting toward spot orders as immediate physical demand takes precedence over speculative positioning.
The cobalt market is facing immediate bullish pressure due to regulatory changes in the Democratic Republic of Congo (DRC). The introduction of a new export quota system and verification requirements has created a temporary but severe bottleneck.
Export Delays: Despite the lifting of some suspensions, very little material is expected to reach China—the primary processing hub—in Q1 2026.
Price Response: Smelters are restocking only for rigid demand, but the structural tightness is providing solid support for prices. We forecast a market deficit of over 10,000 tonnes in 2026 unless export quotas are revised.
Processing Restarts: In response to high prices and tight supply, idle capacity is coming back online, including Nornickel’s Monchegorsk facility and Jervois’s Sao Miguel Paulista refinery.
The nickel market is caught in a "fierce tug-of-war" between bullish policy expectations (Indonesian constraints) and bearish physical realities (high inventory). While Nickel Pig Iron (NPI) prices are rising due to trader sentiment and upstream costs, refined nickel inventories remain high, creating a ceiling for price rallies.
In the manganese sector, port inquiry activity has declined slightly, but prices remain firm due to rising overseas offers from majors like Comilog and CML. However, a divergence is emerging: northern SiMn producers are buying, while southern alloy plants are running at low rates, leading to inventory accumulation at Qinzhou Port.
Sentiment: Bullish for Lithium and Cobalt; Neutral/Bearish for Nickel.
Lithium: Prices will likely remain supported in the short term as cathode makers replenish critically low inventories.
Cobalt: Expect a price spike in late Q1 2026 as the gap in DRC shipments hits Chinese refineries.
Nickel: Upside is limited by the inventory overhang, despite macro noise regarding tariffs.