The adjustment of export tax rebates has triggered a chain reaction in the lithium battery industry chain.

On January 9, 2026, the Ministry of Finance and the State Taxation Administration of China issued an announcement that, effective April 1, 2026, the export tax rebate for photovoltaic and other products would be cancelled. From April 1, 2026 to December 31, 2026, the export tax rebate rate for battery products would be reduced from 9% to 6%; from January 1, 2027, the export tax rebate for battery products would be cancelled altogether. The list of battery products includes lithium primary batteries and battery packs, lithium-ion batteries, and vanadium redox flow batteries. The gradual cancellation of export tax rebates for lithium batteries provides a clear buffer period for lithium battery exporters. There are less than three months until the export tax rebate rate is reduced from 9% to 6%. CITIC Securities believes this move aims to reduce trade frictions, promote industrial upgrading, and prevent “internal competition.” It is estimated to impact export tax rebates by approximately US$2.2 billion in 2026 and US$6.6 billion in 2027. In the short term, the policy has a transition period, allowing companies to offset the impact through price adjustments, potentially triggering a rush to export. Historically, capacity utilization typically declines during the Spring Festival, and the first quarter is traditionally a slow season. However, the policy has led to a dramatic reversal in lithium battery exports in the first quarter, turning it from a slow season to a peak season. The entire lithium battery industry chain is experiencing a chain reaction of “rushing to buy” from downstream to upstream. A leading lithium battery company stated, “Of course, we will be affected by the policy. We will be ‘rushing to buy’ goods before April and again before December. Moreover, due to the rising price of lithium carbonate, our overall costs will also increase, depending on whether customers are willing to accept it. Currently, our company’s production capacity in the first quarter is continuing from last year’s level, operating at full capacity.” CITIC Securities stated that considering the tiered reduction in export tax rebates, the battery industry is expected to see a rush to export throughout the year, further boosting overseas demand. In the medium to long term, the policy benefits companies with overseas production capacity. In recent years, leading Chinese battery companies have successively established overseas production capacity in Southeast Asia and Europe, and 2026-2027 is a period of intensive production release, which will help further increase overseas market share and profitability. Following the policy announcement, the lithium carbonate futures market surged. Since the beginning of 2026, lithium carbonate futures prices have experienced a strong upward trend, with the main contract 2605 successively breaking through three important psychological barriers: 150,000 yuan/ton, 160,000 yuan/ton, and 170,000 yuan/ton. On January 12, the Guangzhou Futures Exchange’s lithium carbonate futures contract 2605 hit its daily limit, closing at 156,100 yuan/ton. On January 13, the lithium carbonate futures contract 2605 fluctuated and strengthened in the morning session, briefly touching the daily limit, before the gains receded in the afternoon, ultimately closing at 166,900 yuan/ton, a gain of 7.44%. Compared to the closing price of 121,600 yuan/ton at the end of 2025, the main contract 2605 has seen a cumulative increase of 37.25% since the beginning of the year. The cumulative increase exceeded 37% in just 13 calendar days. The spot market is also booming. On January 12th, Mysteel’s evening trading session showed that the average price of battery-grade lithium carbonate increased by RMB 13,800/ton, a 9.89% increase, compared to the previous trading day; the average price of industrial-grade lithium carbonate increased by RMB 14,600/ton, a 10.64% increase. On January 13th, Mysteel’s evening trading session showed that the average price of battery-grade lithium carbonate increased by RMB 10,500/ton, a 6.81% increase, compared to the previous trading day; the average price of industrial-grade lithium carbonate increased by RMB 9,950/ton, a 6.58% increase. Currently, China’s new energy industry chain has established global advantages in technology, production capacity, and cost. However, fierce competition among domestic companies often extends to overseas markets in the form of “price wars,” leading to continuous pressure on the export prices of some products and even triggering anti-dumping and other trade restrictions in overseas markets. The policy of gradually phasing out export tax rebates for advantageous industries aims to guide enterprises away from solely relying on price competition and towards focusing on technological upgrading and brand building. This prevents the disorderly transfer of domestic overcapacity pressure to the international market, thereby achieving healthy development of the industrial chain and sustainable enhancement of global competitiveness. This adjustment to the export tax rebate policy aligns with the guiding principles of the symposium on power and energy storage batteries jointly held on January 7th by the Ministry of Industry and Information Technology, the National Development and Reform Commission, and other departments. CITIC Securities estimates that the impact on export tax rebates in 2026 and 2027 will be approximately US$2.2 billion and US$6.6 billion, respectively.