Three raw materials dictate lithium-cell pricing: cobalt, nickel, and the lithium compounds themselves. For small-format cells, cobalt is still the structural factor; for bigger-format packs, nickel-heavy NMC chemistries and LFP are competing on total cost of ownership. Here’s how we read the next 12–24 months.
Cobalt: oversupplied, but concentrated
Cobalt prices remained below the 2022–2023 peaks through 2025 and are expected to stay there into 2027. The structural reality hasn’t changed: roughly three-quarters of mined cobalt comes out of the DRC, and most refined material flows through China. Supply is not the problem in 2026; concentration risk is.
For OEMs shipping to the EU and US, the new regulatory angle matters more than the price. Battery Passport disclosure (see separate article) and various supply-chain due-diligence rules mean that “cobalt provenance” is now a procurement question, not just a sustainability narrative.
Nickel: long-term tightening
Nickel tells the opposite story. Indonesian supply continues to grow, keeping prices in check through 2025 and into 2026. But the grade matters — Class 1 nickel (battery-grade) has structurally tighter supply than Class 2 nickel used in stainless steel. Any meaningful shift of automotive programs toward high-nickel NMC in 2026–2028 could tighten the Class 1 market faster than most procurement plans assume.
For consumer-electronics cell buyers, the direct impact is indirect: automotive-grade nickel pricing tends to pull on small-cell cathode costs with a 2–4 quarter lag.
LFP: the quiet winner in bigger formats
Lithium iron phosphate has been gaining share in EVs and stationary storage for four years running. For consumer electronics the story is different — LFP’s lower energy density still disqualifies it from most wearables and AR products. But for charging-case batteries, larger IoT gateways, and industrial handhelds, LFP is increasingly the economic choice.
Pricing has stabilised after the dramatic 2023–2024 compression. We’d expect modest (2–5%) increases through 2026 as capacity shifts toward automotive and grid storage, then softness again in 2027 as new Chinese LFP capacity comes online.
Lithium compounds: two markets, not one
Lithium carbonate and lithium hydroxide tell different stories. Hydroxide (used in high-nickel NMC) has tighter supply and a small premium to carbonate. For 2026, we’re modelling roughly flat pricing with upward risk if EV demand surprises on the high side.
The practical takeaway: if your cell chemistry depends on lithium hydroxide, ask your supplier for their hedge position. Most tier-1 cell suppliers have 3–6 month raw-material coverage at any given time, but smaller ones run closer to spot.
What procurement teams should lock in
- Index clauses, not fixed prices. Fixed-price contracts in a volatile market transfer risk to your supplier, who will either fail to honour them or price in risk premium. Better: index to a public benchmark with agreed collar.
- 12-month volume commitments with price reviews every 6 months. This matches how most Chinese cell suppliers structure their raw-material buys.
- Dual-source by chemistry, not just by vendor. One supplier on LCO and another on LCO from a different refinery gives you little real diversification.
- Ask for supply-chain due diligence data now — before regulation forces the question. Mine of origin, refinery, smelter: your cell supplier should be able to answer at least down to refinery level.
One scenario worth planning for
A disruption in Indonesian nickel supply (weather, policy, or export-control shift) remains our most-watched downside risk. It wouldn’t change cobalt-dominated small-cell pricing immediately, but a Class 1 nickel squeeze in 2026 would cascade into NMC cathode prices within six months and affect any product using > 1 Ah cells. It’s worth having a contingency in the buy plan, even if it stays dormant.